Overview
Understanding leave salary calculation in UAE is crucial for both employees and HR departments. Whether you’re planning your annual vacation or calculating end-of-service benefits, knowing the rules under UAE Labour Law ensures you get what you’re entitled to. In this guide, we’ll break down the calculation process, provide examples, and highlight key points every employee should know.
Direct Answer
In the UAE, leave salary is calculated based on your basic salary, not including allowances. For each year of service, employees are entitled to 30 calendar days of paid annual leave. The formula is:
Leave Salary = (Basic Monthly Salary ÷ 30) × Number of Leave Days
For example, if your basic salary is AED 9,000 and you take 15 days of leave:
(9,000 ÷ 30) × 15 = AED 4,500 leave salary.
Understanding Leave Entitlements in UAE
According to UAE Labour Law (Federal Decree-Law No. 33 of 2021), employees are entitled to annual leave after completing six months of continuous service. The entitlement is:
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2 days per month if service is between 6 months and 1 year.
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30 days per year after 1 year of service.
Step-by-Step Leave Salary Calculation Process
Step 1: Identify Your Basic Salary
Leave salary is calculated on your basic wage only, excluding housing, transportation, or other allowances.
Step 2: Determine Leave Days
Check your employment contract and leave balance in your HR system (many companies, like Max HR, provide real-time leave balance tracking).
Step 3: Apply the Formula
Leave Salary = (Basic Salary ÷ 30) × Leave Days
Step 4: Factor in Pending Leave
If you have unused leave from the previous year, it may be encashable based on company policy.
Example Leave Salary Calculation Table
| Basic Monthly Salary (AED) | Annual Leave Entitlement | Leave Taken (Days) | Leave Salary (AED) |
|---|---|---|---|
| 5,000 | 30 days | 10 | 1,666.67 |
| 8,000 | 30 days | 15 | 4,000 |
| 12,000 | 30 days | 30 | 12,000 |
Special Cases in UAE Leave Salary
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Public Holidays: If public holidays fall within your leave, they are not deducted from your annual leave balance.
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Part-Time Workers: Leave salary is calculated proportionally to their working hours.
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End-of-Service: Unused leave days are compensated at the basic daily rate.
Tax and Deductions
The UAE does not levy income tax on leave salary. However, deductions can occur if you took unpaid leave or had salary adjustments in the calculation period.
Common Mistakes Employees Make
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Confusing gross salary with basic salary.
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Not checking if unused leave is encashable.
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Forgetting to verify leave balance in the HR system before applying.
Why Accurate Calculation Matters
Getting your leave salary right ensures fairness and compliance. For HR teams, especially those using platforms like Max HR, automation minimizes errors and ensures legal compliance.
Conclusion
Understanding leave salary calculation in UAE empowers employees to claim their rightful benefits and helps HR maintain transparency. By following the step-by-step process and keeping track of your basic salary, leave days, and legal entitlements, you can avoid disputes and ensure accurate payment. leave salary calculation in uae
FAQs:
1. Is leave salary in UAE based on basic or gross salary?
It’s based on your basic monthly salary, excluding allowances.
2. How many leave days am I entitled to after one year?
You’re entitled to 30 calendar days of paid annual leave.
3. Do public holidays count as part of my leave?
No, public holidays during your leave are not deducted from your annual leave balance.
4. How is leave salary paid if I resign?
Any unused leave is paid out based on your basic daily wage at the time of resignation.
5. Can part-time employees get leave salary in UAE?
Yes, but it’s calculated proportionally to their agreed working hours. leave salary calculation in uae
