Understanding how to calculate leave salary in UAE is essential for every employee and HR professional. The updated UAE Labor Law ensures that all workers, whether full-time or part-time are entitled to fair paid annual leave.
Knowing the exact calculation method helps you manage your finances, plan time off responsibly, and confirm that your employer is following legal standards. In this guide, we’ll break down every detail from eligibility to step-by-step calculation with 2026 updates under the UAE Labour Law (Federal Decree-Law No. 33 of 2021).
Did you know? According to MOHRE data (2024), 78% of private-sector employees in the UAE use their annual leave benefits each year but less than half know how their leave salary is calculated correctly.
What Is Leave Salary in the UAE?
Leave salary refers to the amount paid to an employee during their annual leave period, based on their basic salary. It ensures that employees can enjoy their vacations without financial concerns.
Under the UAE labor law:
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Employees who complete one year of service are entitled to 30 calendar days of paid annual leave.
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Those who have worked more than six months but less than a year are entitled to two days of paid leave per month.
For more information, you can visit the MOHRE official website — which governs all employment and labor regulations in the UAE.
Eligibility for Paid Leave in the UAE:
Every employee working under a valid UAE employment contract is entitled to paid leave, provided they’ve completed the minimum service period.
Key eligibility points:
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Full-time Employees: Entitled to 30 calendar days after 12 months of continuous service.
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Probation Period: Leave accrues during probation but cannot be availed until after confirmation.
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Unpaid Leave: Any unpaid days are excluded from the calculation.
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Part-time Employees: Receive leave salary on a pro-rata basis based on working hours.
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Carry Forward Leave: With mutual agreement, unused leave can be carried forward or compensated.
Tip: Always maintain a record of your accrued and used leave days through your HR portal or payslip.
How to Calculate Leave Salary in UAE?
The leave salary formula is simple and defined clearly under UAE labor law:
Leave Salary = (Basic Monthly Salary ÷ 30) × Number of Leave Days
Let’s break it down with an example:
| Employee | Basic Salary (AED) | Leave Days | Daily Rate (AED) | Leave Salary (AED) |
|---|---|---|---|---|
| A | 7,000 | 15 | 233.33 | 3,499.95 |
| B | 10,000 | 30 | 333.33 | 9,999.90 |
| C | 12,000 | 10 | 400.00 | 4,000.00 |
Step-by-Step Example:
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Find your basic monthly salary (excluding allowances).
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Divide by 30 to get your daily rate.
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Multiply the daily rate by your total leave days.
That’s your total leave salary, which must be paid before the start of your annual leave.
Legal Note: According to Article 29 of UAE Labour Law, employers must pay leave salary before the employee proceeds on leave.
What Happens to Leave Salary During Final Settlement?
If you resign or your contract ends, unused leave will be converted into cash and added to your final settlement.
Formula remains the same:
(Basic Monthly Salary ÷ 30) × Unused Leave Days
For instance, if you earn AED 9,000 and have 10 unused leave days, your employer owes you AED 3,000.
Tip from PEO Middle East: Always cross-check your final settlement sheet before signing to ensure that unused leave compensation is correctly included.
Emergency Leave and Leave Salary:
Emergency leaves are separate from annual leaves but may be paid or unpaid depending on company policy. However, the calculation method for paid emergency leave is the same as annual leave salary.
Check your company’s HR policy — some employers allow converting unpaid emergency leave into paid days later.
UAE-Specific Considerations:
When calculating leave salary, HR teams must comply with the UAE Wage Protection System (WPS) and local data privacy rules.
Employers must:
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Pay leave salary through registered WPS channels.
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Maintain accurate records of leave balances.
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Avoid any unlawful deductions.
Additionally, public holidays during annual leave are not counted as part of leave days.
For compliance support, visit PEO Middle East’s HR and Payroll Services to automate your payroll and leave management processes.
Why Accurate Leave Salary Calculation Matters:
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Builds employee trust and retention.
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Prevents legal disputes under UAE labor laws.
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Improves payroll accuracy and compliance.
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Reflects professionalism in HR operations.
A 2024 HR survey revealed that companies using automated payroll systems reduced salary disputes by 40% compared to manual calculations.
Pro Tips for Employees:
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Always review your employment contract for leave terms.
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Keep a record of leave balances in writing.
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Request your leave salary slip before taking time off.
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Discuss discrepancies with HR immediately.
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Refer to MOHRE’s employee grievance portal if your leave salary is unpaid.
Final Thoughts:
Understanding how to calculate leave salary in UAE gives employees confidence and employers clarity. Whether you’re planning your annual vacation or preparing a final settlement, accuracy is key to compliance and fairness.
At PEO Middle East, we specialize in HR outsourcing, payroll management, and compliance support across the UAE and GCC. Our team ensures your business meets legal standards while keeping employees satisfied and informed.
📞 Get in touch today to streamline your payroll and HR compliance across the Middle East.
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