Using the wrong salary figure is the most common reason a self calculated gratuity doesn't match the final settlement. The rule is different in each country, and the gap between the right and wrong figure can be large.
| Country | Wage used for gratuity | Source |
|---|---|---|
| Saudi Arabia | Actual wage: basic salary plus fixed allowances such as housing and transport | Labour Law, Articles 2 and 84 |
| UAE | Basic wage only | Federal Decree Law No. 33 of 2021, Articles 1 and 51 |
| Qatar | Basic wage only | Labour Law No. 14 of 2004, Article 54 |
| Bahrain | Last wage, in practice basic plus any fixed social allowance | Labour Law No. 36 of 2012, Article 116 |
Saudi Arabia uses the broadest definition in the GCC. The actual wage in Article 2 of the Labour Law includes the basic salary and the fixed allowances paid with it, most commonly housing and transport. Leaving the allowances out is a common mistake that understates the award.
The one exception is Article 86. Commissions and sales percentages can be excluded from the wage used for the award if the contract says so.
In the UAE and Qatar, allowances are excluded and only the basic salary counts. Because many packages in both countries put a large share of pay into allowances, the difference is often dramatic. An employee earning 25,000 AED a month in total with a basic of 12,500 AED has their gratuity calculated on 12,500 AED, not 25,000 AED.
If a contract describes your salary as a single "all inclusive" figure without splitting out a basic, the position becomes less clear and is worth raising with HR or MOHRE in the UAE, or the Ministry of Labour in Qatar, rather than assuming either way.
Bahrain's law refers to the last wage. In practice employers use basic salary plus any fixed social allowance, and exclude variable pay. Since March 2024, part of the indemnity is funded through monthly SIO contributions based on the wage your employer registers, so check that figure too. Our Bahrain guide explains the split.
In Saudi Arabia and the UAE the law uses your last wage, and in practice employers in Qatar and Bahrain do the same. A pay rise shortly before you leave therefore raises the gratuity for your entire service, not just the final months.
The reverse is also true. A pay cut before you leave, for example moving to a lower paid role inside the same company, lowers the gratuity for all your years. If you're negotiating a change like this near the end of your employment, it's worth understanding the effect first.
Across all four countries, variable and one off payments are normally left out: annual bonuses, overtime, performance incentives, reimbursements of expenses, and one off payments such as relocation or joining bonuses. Benefits in kind, such as company provided housing or a car, are also not added to the basic wage in the UAE and Qatar.
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.