Gratuity rewards continuous service, so anything that looks like a fresh start matters: a renewed contract, a move to a sister company, a takeover of your employer. In most of these cases the law keeps your service running. The exceptions are where people lose money, often without noticing.
Every GCC formula pays more per year once you pass a threshold: after five years in Saudi Arabia and the UAE, after three years in Bahrain. Saudi resignation rules also depend on continuous service, with the full award only after ten years. A restart doesn't just shorten your service. It can push you back below a threshold you had already crossed.
| Country | Fixed term renewal | Service across renewals | Sale, merger or change of owner |
|---|---|---|---|
| Saudi Arabia | Becomes indefinite after three renewals or four years, whichever is less (Article 55). Non Saudi contracts stay fixed term (Article 37). | Not stated in one article, treated as continuous in practice | Contracts continue and service is continuous, joint liability for past dues (Article 18) |
| UAE | All contracts fixed term and renewable, no maximum since September 2022 (Article 8) | Renewals added to continuous service (Article 8) | Contracts remain in force, new employer responsible (Article 48) |
| Qatar | Up to five years, renewable (Article 40) | Service counted from first joining (Article 40) | Contract continues, joint liability (Article 52) |
| Bahrain | Becomes indefinite once original and renewed terms exceed five years (Article 98) | New contract within 30 days counts as the same contract (Article 118) | Contracts not terminated, joint liability (Article 7) |
UAE. Article 8 of Federal Decree Law No. 33 of 2021 makes every contract fixed term. Federal Decree Law No. 14 of 2022 removed the original three year maximum. When a contract is extended or renewed, the new period counts as an extension of the original one and is added to continuous service. Renewal is not a new start.
Qatar. Article 40 of Law No. 14 of 2004 says a renewed period extends the previous one and service is calculated from the date the worker first joined. Continuing to work after expiry without a formal renewal turns the contract into an indefinite one on the same terms.
Bahrain. Article 118 of Law No. 36 of 2012 treats successive contracts with the same employer as one contract if the gap is under 30 days. Better terms in the new contract count as an amendment.
Saudi Arabia. Article 55 converts a renewed fixed term contract into an indefinite one, subject to Article 37 for non Saudis, whose contracts must be fixed term. Since February 2025, Article 37 says a non Saudi contract without a stated term runs for one year and renews for the same period if work continues. Article 55 itself was not amended.
● General principle, less specific sourcingSaudi law has no single sentence equivalent to the UAE or Qatar rule, but Article 84 counts the whole period of service with the employer, and renewals without a break are treated as continuous.
All four laws protect you when the business changes hands. Saudi Article 18 keeps contracts in force through a transfer of ownership, merger or division and deems service continuous. The old and new owners are jointly liable for rights accrued before the change. For an individually owned firm, they may agree to pass those rights to the new owner only with your written consent, and if you refuse you can end the contract and claim from the old owner. UAE Article 48, Qatar Article 52 and Bahrain Article 7 also keep contracts alive, with joint liability in Qatar and Bahrain.
None of the four laws has a specific rule for moving between companies in the same group. Each company is a separate legal employer, so a transfer usually means ending one contract and starting another, with a new work permit or Qiwa transfer. Continuity then depends on the paperwork. Some groups carry service over in writing. Others settle gratuity at the move. Ask which applies before you sign.
Some employers pay gratuity at each renewal. Where a genuine settlement was paid, the next calculation generally starts from the new date. The cost is the higher rate you never reach.
In the UAE and Qatar, where the law says renewals extend the original period, a break in service on paper may be challenged if you never actually stopped working. Keep the settlement documents either way.
Checked against the published labour law text for each country. Where the law is unclear or interpretations differ, we say so. Last verified 5 October 2026.