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Notice period and gratuity: does it count, and what if it's paid in lieu?

Your notice period sits at the end of your service, exactly where gratuity is measured. Working it, spending it at home or being paid in lieu can move your end date by a month or two, sometimes across a threshold that changes the rate.

In this guideNotice periods in each countryDoes a worked notice period count?Pay in lieu of noticeGarden leaveLast working day vs contract end dateChecking your final settlement

Notice periods in each country

All four laws require written notice, and make the side that skips it pay the wage for the notice period instead.

CountryArticleMinimum noticeIf notice is not given
Saudi ArabiaArticles 75 and 76, Labour Law as amended by Royal Decree No. M/44 (in force February 2025)Contracts with no fixed end date, wage paid monthly: 30 days if the employee ends it, 60 days if the employer does, with the legitimate reason stated in writingThe wage for the notice period or what remains of it (Art. 76)
UAEArticle 43, Federal Decree Law No. 33 of 2021As agreed in the contract, between 30 and 90 daysA notice allowance equal to the wage for the whole period or the remainder, on the last wage (Art. 43)
QatarArticle 49, Labour Law No. 14 of 2004 as amended by Decree Law No. 18 of 20201 month for up to 2 years of service, 2 months after thatThe basic wage for the notice period
BahrainArticle 99, Labour Law No. 36 of 201230 days. An employer may agree to give longerThe wage for the notice period or the remainder (Art. 99(b))
● Clearly stated in the law

Saudi Article 75 covers contracts without an end date. The 2025 amendments also gave the employer 30 days to respond to a resignation, extendable by up to 60 days with written reasons. Our Saudi guide covers the resignation reductions.

Does a worked notice period count?

Yes. UAE Article 43(2) says the contract stays in force during notice, ends when it expires, and the worker is owed full wage throughout. Bahrain Article 99(a) keeps the contract and all its obligations in force. Qatar Article 50 requires full pay for a notice period worked normally. Gratuity is measured to the last day of notice.

● Clearly stated in the law

Saudi Arabia's amended Article 75 is generally read the same way, but we could not confirm the exact amended wording, so treat it as the accepted position rather than a quoted rule.

● General principle, less specific sourcing

Pay in lieu of notice

Pay in lieu settles the money. The gratuity question is whether the unworked days still count as service.

Bahrain is the only country that answers this directly. Article 99(b) says that when the employer ends the contract without notice, the notice period or its remainder is counted as part of the worker's service. If the worker leaves without notice, the contract ends the day they stop work.

● Clearly stated in the law
Example: Bahrain, monthly wage of 800 BHD, start date 1 February 2023. The employer ends the contract without notice on 31 January 2026, exactly three years in.
Pay in lieu of 30 days' notice: 800 BHD
Service including the 30 days: 3 years and 30 days
Indemnity: 3 × ½ × 800 = 1,200 BHD, plus 30 ÷ 365 × 800 = 66 BHD
Total indemnity: 1,266 BHD
If the worker had walked out on the same day without notice, service would stop at three years (1,200 BHD) and the worker would owe the employer 800 BHD.
Source: Bahrain Labour Law No. 36 of 2012, Articles 99 and 116. Service from March 2024 is funded through SIO contributions.

In Saudi Arabia, the UAE and Qatar the law fixes the payment but not the end date. Many employers close the contract on the release date, which shortens service. Others count the notice period because the employee was entitled to it. Ask in writing which end date was used.

● General principle, less specific sourcing

Garden leave

None of the four laws uses the term. Garden leave means staying at home on full pay while notice runs. The contract is still in force, so it counts as service just like worked notice. Unlike pay in lieu, your employment has not ended: your end date is the last day of notice, and your confidentiality duties and bar on working elsewhere usually continue until then.

● General principle, less specific sourcing

Last working day vs contract end date

Gratuity counts service to the date the contract ends. Three dates often get confused:

The gap matters most near a threshold: five years in the UAE and Saudi Arabia, three in Bahrain, and the one year minimum in the UAE and Qatar.

Example: UAE, basic salary of 15,000 AED, start date 1 April 2021. The employer gives 30 days' notice on 10 March 2026.
Daily basic: 15,000 ÷ 30 = 500 AED
Notice worked or on garden leave, contract ends 9 April 2026: 5 years and 9 days
First 5 years: 5 × 21 × 500 = 52,500 AED
9 days at the 30 day rate: 9 ÷ 365 × 30 × 500 = 370 AED
Gratuity: 52,870 AED
Notice paid in lieu, contract closed on 10 March 2026: 4 years and 344 days
(4 + 344 ÷ 365) × 21 × 500 = 51,896 AED
Difference: about 974 AED, and the 30 day rate is never reached.
Source: UAE Federal Decree Law No. 33 of 2021, Articles 43 and 51.

Checking your final settlement

  1. Ask HR in writing which contract end date they used.
  2. If paid in lieu, check the wage used: basic wage in Qatar, full last wage elsewhere.
  3. Run both end dates through the calculator.

See also our final settlement checklist.

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Reviewed by the Gratuity Tracker editorial team

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.