Leave Salary Calculation UAE: Formula & Calculator
Use this UAE leave salary calculator to estimate unused annual leave encashment owed at resignation, termination, or end of contract. The calculation follows Article 29(9) of Federal Decree-Law No. 33 of 2021.
Sofia, a marketing manager in Dubai, resigned after three and a half years with AED 12,000 in basic salary. Her employer paid her one month's notice and her gratuity. But they gave her nothing for 22 days of accrued annual leave.
That omission cost her AED 8,800. She did not know she was legally entitled to it. Thousands of employees leave UAE jobs every year with underpaid or missing leave salary in their final settlement.
This article explains how leave salary is calculated under Article 29 of Federal Decree-Law No. 33 of 2021. It covers when encashment is owed and how unpaid leave affects your accrual. It also shows what your employer can and cannot do with your leave balance.
Written by: Noura Al-Qaseer – Senior HR Manager & UAE Labour Law Advisor (20+ years’ UAE private-sector HR experience)
Legally reviewed by: Adv. Marwan A. Hamid – UAE Labour Law Advocate
Last updated: September 7, 2026 | Next review: December 2026
Leave Salary Calculation: Step-by-Step Quick Reference
Use this sequence every time you need to calculate leave salary or unused leave encashment.
- Confirm your basic salary from your most recent payslip.
- Calculate your daily wage: monthly salary basis divided by 30.
- Confirm your leave balance: total days accrued minus days taken. Adjust for any unpaid leave periods.
- Multiply daily wage by leave days owed.
- Cross-check against your contract to see if any more favourable provision applies.
How to Use the Leave Encashment Calculator
- Enter your basic monthly salary and the number of unused leave days.
- The calculator shows your encashment amount and the daily wage used to reach it.
- It covers the separation scenario only, meaning resignation, termination, or end of contract.
For your gratuity, use our UAE Gratuity Calculator.
What Is Leave Salary in the UAE?
Leave salary is the wage you receive while taking approved annual leave, or the cash equivalent paid out when you leave employment with unused leave days. Under Article 29 of Federal Decree-Law No. 33 of 2021, this is a statutory entitlement. Your employer cannot reduce it, defer it indefinitely, or refuse to pay it at final settlement.
Is Leave Salary Based on Basic Salary or Full Wage?
This is the single most common payroll error in UAE final settlements. The law uses two different standards depending on the context.
- During employment, when you take approved annual leave, the payment is based on your full wage. Under Article 29(1) of Federal Decree-Law No. 33 of 2021, this means basic salary plus any fixed, regular allowances stated in your contract, such as housing and transport allowances.
- At termination or resignation, unused leave is encashed on basic salary only. Article 29(9) and Article 19(2) of Cabinet Resolution No. 1 of 2022 state this clearly. Commissions, overtime, and variable payments are excluded unless your contract includes them. To see how basic salary shapes your wider package, read is gratuity part of CTC in UAE.
Note: In limited circumstances, an employee and employer may agree to encash the carried-forward portion of unused leave during employment. This is not a standalone right. It applies to the carried-forward portion of your annual leave, up to half the annual entitlement. It requires mutual agreement and is governed by Article 19(1) of Cabinet Resolution No. 1 of 2022, read with Article 29(8) of Federal Decree-Law No. 33 of 2021.
Did you receive a partial encashment during employment and are now separating? If so, then your employer must reconcile that payment against your remaining balance.
How to Calculate Annual Leave Days in the UAE
Every private sector employee on the UAE mainland accrues paid annual leave from the first day of service. The entitlement depends on how long you have worked for the employer, under Article 29 of Federal Decree-Law No. 33 of 2021.
Entitlement by Length of Service
The entitlement is tiered and based on continuous service.
| Service Period | Leave Entitlement |
|---|---|
| Less than 6 months | No statutory entitlement (employer may grant advance or unpaid leave) |
| More than 6 months, less than 1 year | 2 calendar days per month |
| 1 full year and beyond | 30 calendar days per year |
Annual leave is counted in calendar days. Weekends and public holidays that fall within your leave period count toward the 30 days. This surprises many employees who assume leave counts only in working days. For sick, maternity, and other leave types, see the UAE Labour Law 2026 guide.
Does Leave Accrue During Probation?
The law does not prohibit accrual during probation. Whether an employer allows leave to be taken during probation is at their discretion. If the employee completes probation and continues service, the days accrued during probation count toward the 6-month and 12-month thresholds.
Part-Time Employee Leave
Part-time employees registered under MOHRE earn annual leave on a pro rata basis. Their entitlement matches their contracted hours against a full-time standard. The calculation formula is the same. Only the entitlement days differ.
Example: A part-time employee works 4 hours a day against a full-time 8-hour standard. They get 50% of the 30-day entitlement, which is 15 calendar days.
Note: Domestic workers follow separate rules under Federal Decree-Law No. 9 of 2022. If you employ help at home, use the domestic worker gratuity calculator and guide to understand annual leave and any applicable end-of-service benefits.
How Is Annual Leave Accrual Calculated in the UAE?
After your first full year of service, annual leave accrues at 2.5 calendar days per completed month. This follows from the 30-day annual entitlement under Article 29(1) of Federal Decree-Law No. 33 of 2021, divided across 12 months. Your leave balance is your total accrued days minus the leave days you have already taken. If you took unpaid leave during the year, subtract those days from your service period before calculating accrual.
Leave Balance = Total Accrued Days − Leave Days Already Taken
Monthly Accrual After Year 1 = 30 ÷ 12 = 2.5 Days per Month
Annual Leave Encashment and Privilege Leave: Are They the Same?
Some contracts use the term "privilege leave" instead of annual leave. This wording is common in contracts written outside the UAE. Privilege leave encashment and annual leave encashment mean the same thing under UAE law. Both follow the Article 29(9) formula, no matter which label your contract uses.
How Is Leave Salary Calculated in the UAE?
UAE leave salary is your monthly salary divided by 30 to find your daily wage. You then multiply that daily wage by the number of leave days owed. During employment, the base is your full wage. At resignation or termination, unused leave is paid on basic salary only, per Article 29(9).
Daily Wage = Monthly Salary ÷ 30
Leave Salary = Daily Wage × Number of Leave Days
For monthly-paid employees, the standard practice uses a 30-day month to convert monthly salary into a daily wage. See how our calculators work for the full methodology behind every figure.
How Do You Calculate Leave Salary in Excel?
Enter your basic monthly salary in cell A2 and unused leave days in cell B2. Then use this formula in cell C2:
= (A2 / 30) * B2
For leave taken during employment, replace the basic salary in A2 with your full monthly wage including fixed allowances. For unused leave encashment at resignation or termination, use basic salary only.
Worked Example 1: Full Annual Leave During Employment
Tariq works in Abu Dhabi with a basic salary of AED 9,000 and a fixed housing allowance of AED 2,500. He takes his full 30 days of annual leave.
| Step | Calculation | Result (AED) |
|---|---|---|
| Total monthly wage (basic + housing) | 9,000 + 2,500 | 11,500.00 |
| Daily wage | 11,500 ÷ 30 | 383.33 |
| Leave salary for 30 days | 383.33 × 30 | 11,500.00 |
His employer must pay AED 11,500 before or with the monthly payroll when leave commences.
Worked Example 2: Unused Leave Encashment at Resignation
Tariq resigns after 3 years and has 18 unused leave days. At termination, encashment uses basic salary only.
| Step | Calculation | Result (AED) |
|---|---|---|
| Daily wage (basic only) | 9,000 ÷ 30 | 300 |
| Unused leave encashment | 300 × 18 | 5,400 |
This AED 5,400 must appear as a line item in his final settlement. It is separate from his gratuity.
Worked Example 3: Resignation Before One Year
Priya joins a company in Sharjah at a basic salary of AED 7,500. She resigns after 9 months without taking any leave.
Important: This 2-days-per-month rate applies to your full service period once you pass 6 months. It does not start only from the 6-month mark. If Priya served exactly 9 months, she accrued 18 days total.
| Step | Calculation | Result (AED) |
|---|---|---|
| Leave days accrued (9 months × 2 days) | 9 × 2 | 18 days |
| Daily wage (basic only) | 7,500 ÷ 30 | 250 |
| Unused leave encashment | 250 × 18 | 4,500 |
| Scenario | Basic Salary | Basis | Days | Amount (AED) |
|---|---|---|---|---|
| Leave taken during employment (Tariq) | AED 9,000 | Full wage | 30 | 11,500 |
| Encashment at resignation (Tariq) | AED 9,000 | Basic only | 18 | 5,400 |
| Resignation before 1 year (Priya) | AED 7,500 | Basic only | 18 | 4,500 |
Does Unpaid Leave Affect Your Annual Leave Balance?
Yes. Days spent on approved unpaid leave are excluded from your service period for accrual purposes. This directly reduces both your annual leave entitlement and your end-of-service gratuity.
How Many Leave Days Do You Lose for Each Unpaid Day?
Say you took 30 days of unpaid leave in a 12-month service year. Your effective service for that year becomes 335 days, not 365. Your leave accrual is reduced proportionally.
Take an employee earning AED 8,000 basic. If they take 45 days of unpaid leave in a year, they lose roughly 3.7 leave days. At AED 266.67 per day, that reduces their accrued entitlement value by approximately AED 987 for that year alone. Across multiple years, the impact compounds.
If you have taken unpaid leave at any point, ask your HR team for a formal leave balance statement before resigning. Do not rely on a rough count from memory. Errors in this calculation are common and can go in either direction.
Use this formula to work out the loss.
Leave Days Lost = (Unpaid Leave Days ÷ 365) × 30
Take 45 unpaid days in one year. Divide 45 by 365, then multiply by 30. You lose 3.7 leave days that year.
Can Your Employer Carry Forward or Withhold Your Annual Leave?
Your employer cannot block your annual leave indefinitely. The law sets clear limits on carrying leave forward, paying it out, and how long unused days can pile up. Article 29(8) of Federal Decree-Law No. 33 of 2021 sets the ceiling.
What the Law Allows
Under Article 29(8) and Article 19 of Cabinet Resolution No. 1 of 2022:
You may carry forward up to half of your annual leave to the following year with your employer's agreement.
You may agree with your employer to take a cash payment instead of carrying leave forward. This payment uses the wage you earn at the time of entitlement.
Your employer cannot stop you from using accrued leave for more than two consecutive years. The only exception is if you choose to carry it forward or encash it.
Note: There is no automatic right to demand encashment of unused leave during employment year after year. Encashment during employment requires the employer's agreement. The absolute right to cash payment arises only at the end of employment.
What Happens If Your Employer Refuses Leave
An employer can schedule leave timing based on operational needs. They can decline a specific request. What they cannot do is deny all leave for more than two years.
Warning: Do not confuse two things. Employer scheduling of annual leave is lawful. Refusing all annual leave for over two years is unlawful. The first is an operational right. The second is a statutory breach. Has your employer blocked all your leave for over two consecutive years with no carry-forward or encashment? That is a violation you can raise with MOHRE.
Leave Encashment Calculation When Your Employment Ends
When employment ends, the employer must pay unused leave encashment as a standalone line item in your final settlement. This applies to resignation, termination, and contract expiry. The leave formula is the same for limited and unlimited contracts, though settlement timing can differ.
| Item | Basis | Notes |
|---|---|---|
| Unused annual leave days (full years) | Basic salary ÷ 30 × unused days | Statutory, cannot be waived |
| Unused leave days (partial year) | Basic salary ÷ 30 × pro-rated days | Applies if employment ends mid-year |
| Leave taken but not yet paid | Full wage basis | If leave was taken but payroll not processed |
Important: Article 44 lets an employer dismiss you for gross misconduct. This dismissal does not forfeit your unused leave entitlement. Article 29(9) confirms the right to leave pay applies if you quit before using leave, irrespective of the leave duration. The Article 44 dismissal removes the notice period and may affect other benefits, but the leave encashment right survives.
Leave Salary Calculation After Resignation in UAE
When you resign, your unused leave is encashed on basic salary only. Divide your basic monthly salary by 30, then multiply by your unused annual leave days. This amount must appear as a separate line item in your final settlement. It cannot be merged with gratuity or offset against notice pay.
When Must Leave Salary Be Paid?
Your employer must pay leave salary before your annual leave starts, or with the payroll cycle that covers your leave. At resignation or termination, unused leave encashment is paid as part of your final settlement. Both fall under the Wages Protection System timeline. Late payment can trigger a WPS violation and a MOHRE complaint.
Has your employer withheld leave salary you are owed? You can file a complaint through the MOHRE app, online at mohre.gov.ae, or by calling 600-590-000. The process is free. Review the UAE Labour Law 2026 guide for the full complaint process and limitation periods.
Is Leave Salary the Same as End-of-Service Gratuity?
No. Leave salary and end-of-service gratuity are calculated separately under Federal Decree-Law No. 33 of 2021, governed by different articles, and paid for different reasons. One compensates for unused leave days. The other rewards your total years of service.
| Feature | Leave Salary (Encashment) | End-of-Service Gratuity |
|---|---|---|
| Legal basis | Article 29, FDL 33 of 2021 | Article 51, FDL 33 of 2021 |
| Calculation basis | Basic salary only (at termination) | Basic salary only |
| Linked to years of service | No, linked to unused leave days | Yes, directly linked |
| Paid during employment | Yes, when leave is taken | No, only at end of employment |
| Survives Article 44 dismissal | Yes | Subject to conditions |
| Formula | (Basic ÷ 30) × unused days | 21 days/year for first 5 years, then 30 days/year |
Mixing leave salary and gratuity amounts is a common final settlement error. See our guide to UAE gratuity calculation mistakes for the other figures you should check before signing. For a full gratuity calculation with your actual figures, use the UAE Gratuity Calculator. It handles mainland, most free zones, ADGM, part-time, and legacy unlimited contracts, with a transparent math breakdown for every figure.
Tip: Run your gratuity and leave encashment calculations together before submitting your resignation. This shows the exact total you are owed. You can then verify the final settlement before signing any acknowledgement of receipt. If you are about to resign, use our UAE resignation letter template to give your notice in writing and clearly state your proposed last working day. After your employment ends, the gratuity application letter guide shows you how to request your dues in writing.
Free Zone Employees: Does the Same Formula Apply?
The leave salary formula is the same across mainland UAE and most free zones. Employees in zones like JAFZA, DMCC, and IFZA fall under Federal Decree-Law No. 33 of 2021 for leave. The 30-day entitlement, the daily wage formula, and encashment rules at termination are all identical to mainland employment. If you work in JAFZA, use the JAFZA Gratuity Calculator to confirm your combined settlement figures.
DIFC and ADGM Employees
DIFC and ADGM are the only zones where the mainland formula does not apply. Both follow separate employment regulations with meaningfully different leave rules. Employees are entitled to 20 working days of annual leave, not 30 calendar days. Entitlement increases to 25 working days after 3 years of service in DIFC. Leave is counted in working days, not calendar days. Employees in these zones also cannot demand cash in lieu of annual leave during employment.
Do you work in DIFC or ADGM? Verify your leave rights under those specific regulations before using any mainland formula.
Pro Tip: Not sure of your jurisdiction? Check your offer letter or employment contract. The governing law clause will name the applicable authority. If it says MOHRE or references Federal Decree-Law No. 33 of 2021, the formula in this article applies to you.
Common Encashment Mistakes and How to Fix Them
Payroll errors on leave salary appear in a predictable set of patterns. These are the most common mistakes UAE employees encounter, with the correct approach alongside each.
| Mistake | Why It Is Wrong | Correct Approach |
|---|---|---|
| Calculating encashment on full wage (basic + allowances) | At termination, law requires basic salary only | Use basic salary ÷ 30 × unused days |
| Calculating leave pay on basic salary only during employment | During employment, fixed allowances must be included | Use full wage ÷ 30 × leave days |
| Using 26 working days as divisor instead of 30 | UAE law standardises on a 30-day month | Always divide by 30 |
| Excluding probation months from service period | Probation months count toward 6-month and 12-month thresholds | Include probation in service count |
| Not deducting unpaid leave days from accrual period | Unpaid leave days reduce effective service length | Subtract approved unpaid leave days from total service |
| Treating Article 44 dismissal as forfeiting leave balance | Leave encashment survives gross misconduct dismissal | Calculate and pay unused leave regardless of dismissal reason |
Frequently Asked Questions
The Bottom Line on Leave Salary in UAE
Leave salary is not a discretionary benefit. It is a statutory entitlement under Article 29 of Federal Decree-Law No. 33 of 2021. It must appear as a line item in your final settlement. Know your salary basis, confirm your leave balance before you resign, and verify every figure against the formula above. If your employer's calculation does not match, raise the discrepancy in writing before signing any settlement acknowledgement.
