Leave salary calculation in the UAE often raises questions for both employers and employees alike. You might be curious about the payment structure during this period—whether it will be based on your basic salary or if you will receive your salary in full. Or you may want to know other factors that influence the leave salary as an employer. Clarifying these aspects helps provide transparency and understanding for all parties involved.
This article is your comprehensive guide, addressing all your inquiries about leave salary and beyond in UAE. Know where you stand as an employee and employer, and get the best tips to make the most from the leave salary.
What is a Leave Salary in UAE? Upon completing one year with the company, an employee is entitled to receive a full month’s pay along with 30 days off (or whatever is there in the contract). This pay is the leave salary that employees get without working for that duration.
Fully-Paid Leaves Entitlement
Following Article 29 of Federal Decree-Law No. 33 of 2021, the allocation of annual leaves is contingent upon the duration of an employee’s tenure within the organization. Fully compensated leaves are categorized based on the length of the employee’s service, as follows:
- 30 Days Leave: Employees, who have completed one year of service, are entitled to 30 days of fully paid leave.
- 2-Day Leave: For individuals with a service tenure of at least six months but less than one year, the entitlement is set at two days of fully paid leave per month.
- Part-Time Leave: Part-time employees are eligible for annual leave based on the actual hours worked as stipulated in their employment contract.
Please be aware that in the event of the termination of an employee’s service before utilizing their accrued annual leave balance, they will be granted leave corresponding to a fraction of the last year of their service.
How to Calculate Leave Salary in UAE
The calculation of leave salaries is transparent and tied to the employee’s salary and the duration of their annual leave entitlement.
However, the employer must follow certain rules:
- Employer must pay the employee their full salary for the work they did right before their leave starts.
- It is mandatory to compensate the employee for their annual leave before the commencement of the leave period.
- The annual leave calculations hinge on the full salary, encompassing the employee’s basic salary, housing allowance, and any other standard allowances applicable in a typical working month.
Factors to Consider and Formula for Calculating Leave Salary
Case#1: 30-Day Annual Leave after 12 Months of Employment
Per Article 29 (1) of the UAE Labour Law, when an employee takes a 30-day annual leave after completing 12 months of employment, they are entitled to receive their full monthly salary, comprising both the basic salary and allowances.
The leave salary can be calculated as follows:
Leave Salary = (Basic Salary+Allowances ÷ 30) x Number of Leave Days
Example:1
When an employee, earning AED 10,000 inclusive of basic salary and allowances, opts for a 30-day leave, the leave salary can be computed as follows:
Leave Salary = (10,000 ÷ 30) x 30 = AED 10,000
Example:2
If an employee’s total earnings amount to AED 10,000, encompassing both the basic salary and allowances and he plans to take a 24-day leave, the leave salary can be determined as follows:
Leave Salary = (10,000 ÷ 30) x 24 = AED 8,000
The employer will count the remaining six days as normal working days.
Case#2: Annual Leave Claim at Termination of Contract after 12 Months of Employment
In alignment with Article 29 (9), in the event of an employee claiming annual leave salary upon termination of employment after 12 months, the calculation will be based solely on the individual’s basic salary, exclusive of any additional allowances.
Case#3: Service between 6 to 12 Months
If a full-time employee has completed six months of service, their entitlement is limited to 2 days of leave per month until they reach one year of employment.
Case#4: Service Less than 6 Months
Employees with a tenure of less than six months are not eligible for any leave entitlement.
UAE Labour Law about Leave Salary
According to Article 29 of Federal Decree-Law No. 33 of 2021, cooperates must follow the following rules related to leave salary:
- Workers can take their entitled leave during the year. The employer can suggest leave dates based on work needs, agreed upon with the worker, or rotated among employees for smooth workflow. The employer must inform the worker of the leave date at least a month in advance.
- The employee has the flexibility to choose the start of their leave, but they need to provide a heads-up at least 10 days in advance.
- With the employer’s approval and following establishment rules, a worker can carry over unused annual leave to the next year.
- The worker will receive their regular pay during their annual leave.
- If legal or agreed-upon holidays coincide with the worker’s annual leave, they’re considered part of the leave, unless the employment contract or rules at the workplace benefit the worker more.
- If the employee extends their leave beyond the annual leave period, no additional payment will be made for those extra days.
- The employer can’t stop the worker from using leave accrued for over two years unless the worker chooses to carry it forward or receive a cash allowance. This follows the rules at the workplace and the applicable regulations.
- If an employee leaves before using accrued leave days, they’re entitled to a wage for those days, regardless of the leave duration. The leave wage for parts of the year is proportionate to the time spent working and calculated based on the basic salary.
- During the probationary period, the employer may allow the worker to use some annual leave. If the worker doesn’t pass the probation, they retain the right to be compensated for the remaining leave balance.
- During annual leave, no termination of the contract is allowed.
Provisions of Unused Leaves & Deductions
If an employee doesn’t use their yearly leaves, they can opt for “cash in lieu.” The calculation is based on their monthly basic salary. The choice to receive compensation instead of taking the leave can be made collaboratively between the employee and the company.
However, the employee may want to take extra leave the following year. In these situations, the UAE Labour Law permits employees to carry over some of their leftover leave to the next year. It’s essential to consider any stipulations on leave carry forward and adjust the leave salary calculation accordingly.
When a worker opts for leaves without pay (LWOP), it influences both their overall salary and leave salary calculations. Deducting LWOP days from the total leave entitlement is necessary when computing leave salary.
Other Leave Types
The UAE provides its employees with more than just annual leave under some special conditions.
Maternity Leave: Under Article 30 of Federal Decree-Law No. 33, female workers are entitled to a distinctive 60-day maternity leave, encompassing 45 days at full pay and an additional 15 days at half-pay.
Parental Leave: Under Article 32 of Federal Decree-Law No. 33, parents of newborns are bestowed with a unique privilege, a 5-day fully paid leave, ideally to be availed within six months of the birth.
Hajj And Umrah Leave: Private sector employees are allowed a distinctive provision for Hajj leave, granting up to 30 days. Notably, this leave is unpaid and is a one-time entitlement during their employment.
You can read more about other forms of leaves here.
Leave Salary Management with Bayzat
As the company expands, managing employee attendance and leave becomes increasingly challenging. Streamline and simplify this complex process effortlessly with the assistance of Bayzat.
How Bayzat Can Help?
Unlock unparalleled command over time-tracking through Bayzat, equipping your workforce for seamless productivity across remote work, office settings, and varied client engagements. The simplicity of a single tap on the mobile app allows employees to easily check in and check out so you can track their work hours.
For those whose needs are conventional, Bayzat seamlessly integrates with your biometric system, eradicating the hassle of sifting through data on numerous spreadsheets. Tailoring a solution to your unique time management demands, Bayzat ensures precision and efficiency in your workforce operations.
Optimize your Bayzat experience by seamlessly synchronizing our attendance management system with time off, shift scheduling, and payroll products.
Gain real-time access to comprehensive attendance data, all presented in a singular, centralized view for effortless management and enhanced operational efficiency.
With Bayzat, be efficient in management by easily handling leave requests, allowances, and histories, and identifying any overlaps. Facilitate the process of granting annual leaves with enhanced ease and precision.
Bayzat Can Do More Than That!
Bayzat is an all-in-one HR solution in UAE. It can further take care of other businesses expertly including:
- Automating and running payroll
- Providing health insurance solutions
- Allowing employees to get connected through a smartphone app
- Creating trackable goals for employees
- Giving feedback to boost the team’s productivity
Pro Tips about Leave Salary for Employers
Tip # 1
Within your policy, ensure clarity on the designated holiday year. This may align with the conventional calendar year (1st January to 31st December) or commence from the employee’s start date.
However, simplify management processes by aligning all employees to a uniform leave year. This cohesive approach enhances efficiency and consistency in leave management across the entire workforce.
Tip # 2
Emphasize in your policy the vital requirement for employees to proactively coordinate all annual leave with their line managers. This proactive approach ensures that holiday plans and commitments are made only after obtaining proper authorization, preventing any unauthorized scheduling or commitments.
Tip # 3
Acknowledge the peak times when employees yearn to cherish moments with their families, such as during Eid and special holidays. In your policy, consider incorporating the ‘’first come first served’ rule but with flexibility. This ensures a fair and equitable distribution of holidays throughout the year.
Tip # 4
Effortlessly manage leave tracking and streamline payroll with the assistance of a professional. Simplify these processes by leveraging the capabilities of Bayzat. It saves time and makes this system flawless.
FAQs about Leave Salary Calculation in UAE
Q1. Is leave salary calculated based on basic salary or gross salary?
If an employee completes a 12-month service in a company, then he/she will get a leave salary that includes basic salary plus all allowances that are paid monthly to the employee.
If an employee terminates the contract and claims annual leave, the leave salary will be calculated using basic salary only.
Q2. Can employees be terminated during annual leave?
According to the UAE labor law, terminating employees while they are on holiday is strictly prohibited, ensuring their job security during their time off.
Q3. When is the leave salary paid?
As outlined in the UAE labor law, employees are entitled to receive their leave pay before commencing annual leave. This includes the full salary along with compensation for the earned days. Any leave taken beyond the allotted entitlement will be regarded as unpaid leave.
Q4. Can employees work somewhere else during the annual leave?
Yes, employees can work somewhere else during the annual leave. In accordance with the new UAE Labour Law, employees have the flexibility to engage in part-time or temporary work alongside their primary employment. To facilitate this, a part-time or temporary work permit is essential, and it is the responsibility of the secondary employer to obtain the required authorization.
Q5. Does the leave salary apply if the contract is terminated?
If the contract is terminated, the leave salary calculations are based on the fundamental basic salary. Any outstanding leaves will also be computed solely on the basic salary.
Q6. What if the employee falls ill during the annual leave?
The UAE labor law says when calculating annual leave duration, count in official holidays mandated by law or agreement, as well as any sick leaves within the annual leave period—unless the employment contract or company regulations state otherwise.
Q7. What if the employee doesn’t report after the end of annual leave?
Upon the conclusion of their annual leave, employees are required to promptly report back to work. Failure to do so forfeits the right to receive any payment during their absence.
If the employee remains absent for more than 7-consecutive days after the end of annual leave, the employer gets the right to terminate the contract.
Leave salary calculation in the UAE often raises questions for both employers and employees alike. You might be curious about the payment structure during this period—whether it will be based on your basic salary or if you will receive your salary in full. Or you may want to know other factors that influence the leave salary as an employer. Clarifying these aspects helps provide transparency and understanding for all parties involved.
This article is your comprehensive guide, addressing all your inquiries about leave salary and beyond in UAE. Know where you stand as an employee and employer, and get the best tips to make the most from the leave salary.
What is a Leave Salary in UAE? Upon completing one year with the company, an employee is entitled to receive a full month’s pay along with 30 days off (or whatever is there in the contract). This pay is the leave salary that employees get without working for that duration.
Fully-Paid Leaves Entitlement
Following Article 29 of Federal Decree-Law No. 33 of 2021, the allocation of annual leaves is contingent upon the duration of an employee’s tenure within the organization. Fully compensated leaves are categorized based on the length of the employee’s service, as follows:
- 30 Days Leave: Employees, who have completed one year of service, are entitled to 30 days of fully paid leave.
- 2-Day Leave: For individuals with a service tenure of at least six months but less than one year, the entitlement is set at two days of fully paid leave per month.
- Part-Time Leave: Part-time employees are eligible for annual leave based on the actual hours worked as stipulated in their employment contract.
Please be aware that in the event of the termination of an employee’s service before utilizing their accrued annual leave balance, they will be granted leave corresponding to a fraction of the last year of their service.
How to Calculate Leave Salary in UAE
The calculation of leave salaries is transparent and tied to the employee’s salary and the duration of their annual leave entitlement.
However, the employer must follow certain rules:
- Employer must pay the employee their full salary for the work they did right before their leave starts.
- It is mandatory to compensate the employee for their annual leave before the commencement of the leave period.
- The annual leave calculations hinge on the full salary, encompassing the employee’s basic salary, housing allowance, and any other standard allowances applicable in a typical working month.
Factors to Consider and Formula for Calculating Leave Salary
Case#1: 30-Day Annual Leave after 12 Months of Employment
Per Article 29 (1) of the UAE Labour Law, when an employee takes a 30-day annual leave after completing 12 months of employment, they are entitled to receive their full monthly salary, comprising both the basic salary and allowances.
The leave salary can be calculated as follows:
Leave Salary = (Basic Salary+Allowances ÷ 30) x Number of Leave Days
Example:1
When an employee, earning AED 10,000 inclusive of basic salary and allowances, opts for a 30-day leave, the leave salary can be computed as follows:
Leave Salary = (10,000 ÷ 30) x 30 = AED 10,000
Example:2
If an employee’s total earnings amount to AED 10,000, encompassing both the basic salary and allowances and he plans to take a 24-day leave, the leave salary can be determined as follows:
Leave Salary = (10,000 ÷ 30) x 24 = AED 8,000
The employer will count the remaining six days as normal working days.
Case#2: Annual Leave Claim at Termination of Contract after 12 Months of Employment
In alignment with Article 29 (9), in the event of an employee claiming annual leave salary upon termination of employment after 12 months, the calculation will be based solely on the individual’s basic salary, exclusive of any additional allowances.
Case#3: Service between 6 to 12 Months
If a full-time employee has completed six months of service, their entitlement is limited to 2 days of leave per month until they reach one year of employment.
Case#4: Service Less than 6 Months
Employees with a tenure of less than six months are not eligible for any leave entitlement.
UAE Labour Law about Leave Salary
According to Article 29 of Federal Decree-Law No. 33 of 2021, cooperates must follow the following rules related to leave salary:
- Workers can take their entitled leave during the year. The employer can suggest leave dates based on work needs, agreed upon with the worker, or rotated among employees for smooth workflow. The employer must inform the worker of the leave date at least a month in advance.
- The employee has the flexibility to choose the start of their leave, but they need to provide a heads-up at least 10 days in advance.
- With the employer’s approval and following establishment rules, a worker can carry over unused annual leave to the next year.
- The worker will receive their regular pay during their annual leave.
- If legal or agreed-upon holidays coincide with the worker’s annual leave, they’re considered part of the leave, unless the employment contract or rules at the workplace benefit the worker more.
- If the employee extends their leave beyond the annual leave period, no additional payment will be made for those extra days.
- The employer can’t stop the worker from using leave accrued for over two years unless the worker chooses to carry it forward or receive a cash allowance. This follows the rules at the workplace and the applicable regulations.
- If an employee leaves before using accrued leave days, they’re entitled to a wage for those days, regardless of the leave duration. The leave wage for parts of the year is proportionate to the time spent working and calculated based on the basic salary.
- During the probationary period, the employer may allow the worker to use some annual leave. If the worker doesn’t pass the probation, they retain the right to be compensated for the remaining leave balance.
- During annual leave, no termination of the contract is allowed.
Provisions of Unused Leaves & Deductions
If an employee doesn’t use their yearly leaves, they can opt for “cash in lieu.” The calculation is based on their monthly basic salary. The choice to receive compensation instead of taking the leave can be made collaboratively between the employee and the company.
However, the employee may want to take extra leave the following year. In these situations, the UAE Labour Law permits employees to carry over some of their leftover leave to the next year. It’s essential to consider any stipulations on leave carry forward and adjust the leave salary calculation accordingly.
When a worker opts for leaves without pay (LWOP), it influences both their overall salary and leave salary calculations. Deducting LWOP days from the total leave entitlement is necessary when computing leave salary.
Other Leave Types
The UAE provides its employees with more than just annual leave under some special conditions.
Maternity Leave: Under Article 30 of Federal Decree-Law No. 33, female workers are entitled to a distinctive 60-day maternity leave, encompassing 45 days at full pay and an additional 15 days at half-pay.
Parental Leave: Under Article 32 of Federal Decree-Law No. 33, parents of newborns are bestowed with a unique privilege, a 5-day fully paid leave, ideally to be availed within six months of the birth.
Hajj And Umrah Leave: Private sector employees are allowed a distinctive provision for Hajj leave, granting up to 30 days. Notably, this leave is unpaid and is a one-time entitlement during their employment.
You can read more about other forms of leaves here.
Leave Salary Management with Bayzat
As the company expands, managing employee attendance and leave becomes increasingly challenging. Streamline and simplify this complex process effortlessly with the assistance of Bayzat.
How Bayzat Can Help?
Unlock unparalleled command over time-tracking through Bayzat, equipping your workforce for seamless productivity across remote work, office settings, and varied client engagements. The simplicity of a single tap on the mobile app allows employees to easily check in and check out so you can track their work hours.
For those whose needs are conventional, Bayzat seamlessly integrates with your biometric system, eradicating the hassle of sifting through data on numerous spreadsheets. Tailoring a solution to your unique time management demands, Bayzat ensures precision and efficiency in your workforce operations.
Optimize your Bayzat experience by seamlessly synchronizing our attendance management system with time off, shift scheduling, and payroll products.
Gain real-time access to comprehensive attendance data, all presented in a singular, centralized view for effortless management and enhanced operational efficiency.
With Bayzat, be efficient in management by easily handling leave requests, allowances, and histories, and identifying any overlaps. Facilitate the process of granting annual leaves with enhanced ease and precision.
Bayzat Can Do More Than That!
Bayzat is an all-in-one HR solution in UAE. It can further take care of other businesses expertly including:
- Automating and running payroll
- Providing health insurance solutions
- Allowing employees to get connected through a smartphone app
- Creating trackable goals for employees
- Giving feedback to boost the team’s productivity
Pro Tips about Leave Salary for Employers
Tip # 1
Within your policy, ensure clarity on the designated holiday year. This may align with the conventional calendar year (1st January to 31st December) or commence from the employee’s start date.
However, simplify management processes by aligning all employees to a uniform leave year. This cohesive approach enhances efficiency and consistency in leave management across the entire workforce.
Tip # 2
Emphasize in your policy the vital requirement for employees to proactively coordinate all annual leave with their line managers. This proactive approach ensures that holiday plans and commitments are made only after obtaining proper authorization, preventing any unauthorized scheduling or commitments.
Tip # 3
Acknowledge the peak times when employees yearn to cherish moments with their families, such as during Eid and special holidays. In your policy, consider incorporating the ‘’first come first served’ rule but with flexibility. This ensures a fair and equitable distribution of holidays throughout the year.
Tip # 4
Effortlessly manage leave tracking and streamline payroll with the assistance of a professional. Simplify these processes by leveraging the capabilities of Bayzat. It saves time and makes this system flawless.
FAQs about Leave Salary Calculation in UAE
Q1. Is leave salary calculated based on basic salary or gross salary?
If an employee completes a 12-month service in a company, then he/she will get a leave salary that includes basic salary plus all allowances that are paid monthly to the employee.
If an employee terminates the contract and claims annual leave, the leave salary will be calculated using basic salary only.
Q2. Can employees be terminated during annual leave?
According to the UAE labor law, terminating employees while they are on holiday is strictly prohibited, ensuring their job security during their time off.
Q3. When is the leave salary paid?
As outlined in the UAE labor law, employees are entitled to receive their leave pay before commencing annual leave. This includes the full salary along with compensation for the earned days. Any leave taken beyond the allotted entitlement will be regarded as unpaid leave.
Q4. Can employees work somewhere else during the annual leave?
Yes, employees can work somewhere else during the annual leave. In accordance with the new UAE Labour Law, employees have the flexibility to engage in part-time or temporary work alongside their primary employment. To facilitate this, a part-time or temporary work permit is essential, and it is the responsibility of the secondary employer to obtain the required authorization.
Q5. Does the leave salary apply if the contract is terminated?
If the contract is terminated, the leave salary calculations are based on the fundamental basic salary. Any outstanding leaves will also be computed solely on the basic salary.
Q6. What if the employee falls ill during the annual leave?
The UAE labor law says when calculating annual leave duration, count in official holidays mandated by law or agreement, as well as any sick leaves within the annual leave period—unless the employment contract or company regulations state otherwise.
Q7. What if the employee doesn’t report after the end of annual leave?
Upon the conclusion of their annual leave, employees are required to promptly report back to work. Failure to do so forfeits the right to receive any payment during their absence.
If the employee remains absent for more than 7-consecutive days after the end of annual leave, the employer gets the right to terminate the contract.
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