UAE Leave Salary Calculation – Complete Guide for Employees and Employers

Understanding your salary rights in the UAE can sometimes seem confusing, especially if you’re new to the country or your job. An important part of the UAE Labour Law is the leave salary calculation. Whether you are an employee planning your annual vacation or an employer who wants to follow MOHRE (Ministry of Human Resources and Emiratisation) rules, it is important for both to understand how leave pay works.

The UAE Labour Law, officially known as Federal Decree Law No. 33 of 2021, clearly states how much annual leave an employee is entitled to and how the leave salary is calculated. MOHRE is the government body that enforces these rules and ensures fair treatment of both employers and employees. Also Read More MOHRE Enquiry UAE

Leave salary is not just an issue of getting salary on holidays – it is a balance between work and personal life. This ensures that employees get fair compensation even during their off time. Many employees get confused as to which allowances, overtime, and bonuses are included in leave salary. On the other hand, employers are tense as to how to correctly calculate leave pay for part-time staff, employees who resign, or who have been terminated.

In this guide, we will explain step by step the UAE leave salary calculation – entitlement rules, formulas, examples, special cases (like resignation and termination), and different types of leave. By the end, you will have a clear and practical understanding of how the leave salary system works in the UAE.

Leave salary is the amount an employee receives during their annual leave. According to the UAE Labour Law, it is calculated on the employee’s basic salary, not on the entire total package. That means allowances such as housing, transportation, and bonuses are not normally included in it.

Key Points:

• Leave salary = basic salary received during the annual leave period.
• This ensures that employees are not financially at a loss when they take their legally entitled leave.
• This rule applies to both full-time and part-time employees, provided they have completed the minimum service requirement.

The relevant law is Article 29 of Federal Decree Law No. 33 of 2021, which defines annual leave entitlement. MoHRE ensures that employers of private sector companies follow this rule.

Many people consider “leave salary” to be the full monthly salary. But according to UAE law, the formula is based only on the basic salary. Sometimes employers are more generous and include allowances also in leave pay, but the legally minimum requirement is only the basic wage.

This distinction is important because the basic salary is the base for other legal payments, such as gratuity (end-of-service benefits).

As per UAE law, annual leave entitlement depends on the length of service of the employee. The breakdown is as follows:

• Less than 6 months of service: No annual leave is given.
• 6 months to 1 year of service: 2 days leave per month.
• 1 year or more: 30 days paid annual leave per year.

For part-time employees, leave is calculated pro rata, i.e., based on the actual number of hours/days worked.

Important Rules to Know:

• Employees have to take their annual leave in the same year in which it is earned. The employer can decide the dates, but at least 1 month’s notice must be given.
• The leave can be carried forward to the next year with employer approval, but unused leave cannot be ignored for more than 2 years.
• If employment ends and the leave is not used, the employee gets cash compensation for unused leave.

Table for Quick Reference

Service Duration	Annual Leave Entitlement
Less than 6 months	No annual leave
6 months – 1 year	2 days per month
1 year or more	30 days per year
Part-time employees	Pro-rated leave

This entitlement system ensures fairness and balances both employee rights and employer obligations.

The official formula for leave salary in the UAE is:

Daily Wage = Basic Salary ÷ 30
Leave Salary = Daily Wage × Number of Leave Days

Example 1:

Basic Salary = AED 9,000
Leave Days = 20
Daily Wage = 9,000 ÷ 30 = 300
Leave Salary = 300 × 20 = AED 6,000

Example 2: Part-Time Employee

Basic Salary = AED 6,000
Working hours = 50% of full-time
Annual Leave = 30 × 50% = 15 days
Daily Wage = 6,000 ÷ 30 = 200
Leave Salary = 200 × 15 = AED 3,000

This simple formula applies across most situations, unless company policy provides extra benefits.

When employment ends, unused leave becomes a part of the final settlement.

• Resignation before 1 year: No annual leave pay is given (if the company policy allows, then it is a different matter).
• Resignation after 1 year: Employee gets payment for unused annual leave, which is calculated on basic salary.
• Termination by employer: Employee gets compensation for unused leave.

Example:
Employee has 10 unused leave days.
Basic Salary = AED 12,000
Daily Wage = 12,000 ÷ 30 = 400
Leave Salary = 400 × 10 = AED 4,000

This ensures employees are fairly paid for all time worked.

Apart from annual leave, UAE law also provides other leave types:

• Maternity Leave: 60 days (45 days fully paid, 15 days half-paid).
• Parental Leave: 5 days fully paid.
• Sick Leave: up to 90 days (first 15 days full pay, next 30 days half pay, last 45 days unpaid).
• Public Holidays: Fully paid, as declared by the UAE Cabinet.
• Study Leave, Hajj Leave, Mourning Leave: As per Law.

Each leave type is regulated under its own rules, but annual leave salary calculation principles apply only to annual vacation leave.

Employers must maintain compliance to avoid penalties:

• Use payroll software so that leave salary is calculated correctly.
• Stay updated with MoHRE announcements.
• Maintain leave balance record of each employee.
• Pay leave salary on time through the Wage Protection System (WPS).

The UAE Leave Salary Calculation system is designed to keep employees protected and ensure fairness in the workplace. Thanks to clear MoHRE rules, both employers and employees can easily calculate their entitlements.

If you understand the formulas, entitlements, and special cases (such as termination), you can easily remain compliant with UAE Labour Law and protect your financial rights.