Overview
The leave salary law in UAE ensures employees are fairly compensated during their annual leave. Governed by the UAE Labour Law (Federal Decree-Law No. 33 of 2021), these rules apply across mainland companies and most free zones. Understanding these updates helps both employees and employers avoid disputes, stay compliant, and maintain healthy workplace relations.
What is the Leave Salary Law in UAE?
The leave salary law in UAE requires employers to pay workers their full basic salary plus housing allowance (if applicable) during annual leave. Employees are entitled to 30 calendar days of paid leave per year after completing 12 months of service.
Direct Answer:
Employees in the UAE are entitled to 30 days of annual leave with full pay (basic salary + allowances). If employment ends before leave is taken, the employer must pay cash in lieu of unused leave.
Key Provisions of UAE Leave Salary Law (2025 Updates)
| Provision | Details |
|---|---|
| Annual Leave | 30 calendar days after 1 year of service |
| Pro-rata Leave | 2 days per month if service is between 6–12 months |
| Payment Basis | Basic salary + allowances (excluding transport/bonuses) |
| Encashment | Cash payout if employee resigns/terminated before taking leave |
| Carry Forward | Subject to employer approval; unused leave may be encashed |
How Leave Salary is Calculated in UAE
The leave salary law in UAE bases the calculation on the employee’s last drawn basic salary plus fixed allowances. For example:
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Basic Salary: AED 8,000
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Housing Allowance: AED 2,000
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Total Monthly Pay for Leave Salary: AED 10,000
If the employee takes 15 days of leave, the payable leave salary = (10,000 ÷ 30) × 15 = AED 5,000.
Updates Employees Must Know in 2025
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Pro-rata entitlement clarity – Employees who work between 6–12 months are entitled to 2 days leave per month.
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Leave encashment is mandatory – Employers must pay for unused leave at termination.
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Advance leave pay – Leave salary must be paid before the employee goes on leave, ensuring financial stability.
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No deduction for public holidays – If a UAE public holiday falls during annual leave, it is not counted against the 30 days.
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Free zones may differ – DIFC and ADGM have slightly different rules, but most follow federal law.
Leave Salary Law in UAE for Resigned or Terminated Employees
Employees who resign or are terminated are entitled to:
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Full encashment of unused annual leave
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Leave salary included in end-of-service settlement
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Calculated on last drawn basic salary + allowances
This protects employees and ensures fair treatment when transitioning between jobs.
Why Compliance Matters for Employers
Non-compliance with the leave salary law in UAE can result in:
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Employee complaints filed with MOHRE (Ministry of Human Resources & Emiratisation)
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Financial penalties for companies
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Reputational risk in retaining talent
Employers often rely on HR software like MaxHR to automate leave tracking, ensuring compliance and transparent calculations without manual errors.
Conclusion
The leave salary law in UAE is designed to safeguard employee rights while promoting fair workplace practices. By staying updated, both employees and employers can avoid conflicts and maintain trust. Whether you are planning your next vacation or managing payroll, understanding these provisions is crucial for smooth operations in 2025 and beyond.
FAQs on Leave Salary Law in UAE
1. How many days of annual leave are employees entitled to in the UAE?
Employees are entitled to 30 calendar days of paid annual leave after one year of service.
2. How is leave salary calculated in the UAE?
It is calculated on the basic salary plus fixed allowances (excluding transport/bonuses), divided by 30 days, multiplied by the number of leave days.
3. What happens if I resign before taking my annual leave?
You are entitled to cash payment for unused leave, included in your final settlement.
4. Do public holidays affect annual leave?
No. Public holidays falling during annual leave do not reduce your leave balance.
5. Can unused leave be carried forward?
Yes, but it requires employer approval. Otherwise, the employer must pay encashment for unused days.
