Understanding leave salary calculation in the UAE is important for both employees and employers. Most employees wonder whether they are entitled to a full salary or just basic pay during their annual leave. Likewise, it is equally important for employers to ensure that their computations for leave entitlements and payments comply with the UAE Labour Law.
The guide provides an insight into everything about leave salary-from methods of calculation, entitlements, and the important provisions under the UAE Labour Law.
Leave Salary in the UAE
A leave salary is the payment an employee receives during their annual leave. Under Article 29 of the UAE Federal Decree-Law No. 33 of 2021, every employee who has completed one year of continuous service is entitled to 30 days of fully paid annual leave. Employees who have worked for more than six months but less than a year are entitled to two days of paid leave for each month worked.
To summarize, Employees are entitled to annual leave based on their length of service:
| Length of Service | Leave Entitlement |
| Less than 6 months | No statutory leave |
| 6 months to 1 year | 2 days per month |
| More than 1 year | 30 calendar days per year |
Part-time employees are entitled to receive annual leave based on their working hours as stated in their employment contract.
Fully-Paid Leave Entitlement Under UAE Labour Law
According to Article 29, employers must pay employees their full salary during annual leave, which includes:
- Basic salary
- Housing allowance
- Transportation allowance
- Any other fixed monthly allowance
If an employee terminates their employment before taking his/her leave, they are entitled to payment for any unused annual leave, regardless of its duration. They are also entitled to payment for leave accrued for part of the year, calculated on the basis of their basic salary.
How to Calculate Leave Salary in the UAE
In the UAE, calculating leave salary depends on the salary of the worker and the number of leave days owed to them.
Leave Salary Formula:
Leave Salary = (Basic Salary + Fixed Allowances)/30 × Number of leave days
Example 1:
An employee with a salary of AED 10,000/month (which includes allowances) on 30 days of leave will get:
(10,000 ÷ 30) × 30 = AED 10,000
Example 2:
For the same employee who now takes 24 days of leave:
(10,000 ÷ 30) × 24 = AED 8,000
Leave Salary at the End of Employment
Unused annual leave shall be compensated upon resignation or termination of a contract, in terms of basic salary only. For example, if there are 10 days of annual leave unused with basic salary of AED 8,000.
(8,000 ÷ 30) × 10 = AED 2,666.67.
General Rules for Annual Leave in the UAE
- Use of Annual Leave:
Employees must take their annual leave in the same year it is due.
- Leave Scheduling by Employer:
The employer can set the leave dates based on business needs, in agreement with the employee. Leave can also be given in rotation among employees to ensure smooth operations. The employer must give at least one month’s notice before the leave starts.
- Carrying Forward Unused Leave:
Employees may carry forward unused leave (or part of it) to the next year — but only with employer approval and according to company policy. If the leave is carried forward, the employee is still entitled to the basic salary for those unused days.
- Limit on Preventing Leave
An employer cannot stop an employee from using their accrued annual leave for more than two consecutive years, unless:
-
- the employee chooses to carry the leave forward, or
- the employee prefers to receive cash payment for the unused leave (in line with company policy and the Implementing Regulations of the Labour Law).
- Public Holidays During Annual Leave
If a public holiday or approved leave falls within the annual leave period, it is counted as part of the annual leave, unless the employment contract or company policy gives a better benefit to the employee.
- Payment for Unused Leave When Leaving a Job
If an employee resigns or is terminated before using their annual leave, they must be paid for any unused leave — even if it is only a partial year of service. This payment is calculated using the employee’s basic salary.
Other Types of Leave in the UAE
1. Weekly Rest & Public Holidays
- At least 1 paid rest day per week.
- Official public holidays are fully paid; work on these days may require extra pay or a substitute day off.
2. Maternity leave
- The female Worker shall be entitled to maternity leave of (60) sixty days, according to the following:
- The first forty-five (45) days with full pay.
- The following fifteen (15) days with half pay.
3. Study Leave
- 10 days paid per year for employees with 2+ years of service to sit exams at a recognised UAE educational institution.
4. Bereavement (Compassionate) Leave
- Paid leave for the death of a close family member: usually 3–5 days depending on the relationship.
5. Parental & Paternity Leave
- Parents: 5 working days paid leave after the child’s birth (within six months).
- Fathers: 5 days paid leave.
6. Hajj Leave
- Up to 30 days unpaid leave for Muslim employees performing pilgrimage; usually once per employment.
7. Sabbatical / National Service Leave
- For Emirati nationals performing national service: duration varies and depends on company policy—can range from a few weeks to several months.
Frequently Asked Questions (FAQs)
- What is leave salary?
Leave salary is the pay you get during your annual leave. It includes the usual portion of your basic pay as well as other fixed allowances which you would usually take as part of your monthly pay.
- When must leave salary be given?
Employers must pay you your leave salary before you start your leave or as agreed upon in the contract. It allows you to spend your free time without any financial worries.
- How should leave salary be computed?
A widely used formula is:
Leave Salary = (Monthly Salary/30) * Number of Leave Days
For an instance, in a case where AED 6000 is the monthly income and request for 15 days leave:
6000/30 = 200 (daily rate) 🡪 200 x 15= AED 3000 leave pay.
- What happens to my leave if I haven’t availed it all and I resign?
While terminating the employment of a worker, any unused leaves will have to be paid to the employee. Such an amount would be computed based on the basic salary.
- Am I able to carry over unused leave into the next year?
Yes, but only if the employer permits according to company policy. Unused annual leave may be carried forward to the next year with written approval. If the leave is not taken within two years, the employee is entitled to payment in lieu for the balance of days, unless the delay was caused by the employer.
- Are public holidays included in leave days?
Yes. Public holidays or approved leave days that fall during the period of annual leave are considered as leave days unless the contract or such other company policy stipulates in contrary.
How Payroll Middle East Can Assist You?
PayrollMiddleEast makes salary calculations and payroll management in the UAE quite easy and simple. Our HR team makes sure of accurate leave pay, smooth integration with attendance systems, and fast, compliant payroll processing.
We help businesses comply with UAE Labour Law, avoid errors, and pay employees on time. Whether you are an employer wishing to streamline HR and payroll work, or an employee wanting clarity on leave entitlements, we provide payroll solutions across the UAE.
Reach out to PayrollMiddleEast today for a seamless handling of leave management and payroll compliance.
