Annual Leave Salary Calculator UAE

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Annual Leave Entitlements

Annual leave entitlements in the UAE depend on how long an employee has worked for the organization. Below are the key rules:

1. 30 Days Leave
   Employees who have completed one year of service are entitled to 30 days of fully paid annual leave.
2. 2-Day Leave
   For those with at least six months of service but less than one year, the entitlement is set at two days of fully paid leave per month.
3. Part-Time Leave
   Part-time employees are granted annual leave based on the actual hours worked, as outlined in their employment contract.

What Happens to Unused Leave?

If an employee’s service is terminated before they have taken their accrued annual leave, they are entitled to receive payment for the unused leave. This is calculated based on the fraction of the last year of service.

For example:

1. If an employee has worked for nine months, their leave entitlement would be 15 days (2 days per month × 9 months).
2. Any unused portion of these 15 days would be compensated at the time of termination.

Factors to Consider and Formula for Leave Salary Calculation in UAE

To calculate leave salary in UAE, the following formula is used:

Leave Salary = (Basic Salary + Allowances ÷ 30) × Number of Leave Days

Example: Leave Salary Calculation

According to Article 29 (1) of the UAE Labour Law, employees who take 30 days of annual leave after completing 12 months of employment are entitled to their full monthly salary, which includes both the basic salary and allowances.

Let’s break this down with an example:

1. Basic Salary: AED 8,000
2. Housing Allowance: AED 2,000
3. Transport Allowance: AED 1,000
4. Total Gross Salary: AED 11,000

Scenario 1: Leave Salary for 30 Days

1. Daily Leave Pay: AED 11,000 ÷ 30 = AED 366.67
2. Total Leave Salary: AED 366.67 × 30 = AED 11,000

Scenario 2: Unused Leave for 10 Days

1. Daily Leave Pay: AED 366.67
2. Unused Leave Salary: AED 366.67 × 10 = AED 3,666.70

Leave Salary Calculation at Termination of Contract After 12 Months of Employment

As per Article 29 (9) of the UAE Labour Law, if an employee claims annual leave salary upon termination of their contract after 12 months, the calculation will be based on the basic salary only, excluding any additional allowances.

Service Between 6 to 12 Months

For employees who have completed six months of service, they are entitled to 2 days of leave per month until they reach one year of employment.

Service Less Than 6 Months

Employees with less than six months of service are not entitled to any leave.

By following these guidelines, employers and employees can accurately calculate the leave salary in UAE.

What is UAE Labour Law Regarding Leave Salary?

According to Article 29 of Federal Decree-Law No. 33 of 2021, certain rules regarding leave salary in UAE must be followed by employers:

1. Employees are entitled to take their leave during the year. The employer may suggest leave dates based on work needs, agreed upon with the employee, or rotate them among employees for smooth operations. The employer must inform the employee of the leave date at least one month in advance.
2. Employees have the flexibility to choose when to begin their leave, but they must provide at least 10 days’ notice.
3. With the employer’s approval and following company rules, unused annual leave can be carried over to the next year.
4. During annual leave, employees will receive their regular pay.
5. If legal or agreed-upon holidays fall during the annual leave, those days are counted as part of the leave unless the employment contract or company rules offer a greater benefit to the employee.
6. No additional payment will be made if the employee extends their leave beyond the annual leave period.
7. Employers cannot prevent employees from using accrued leave that is over two years old, unless the employee opts to carry it forward or receive a cash allowance. This follows workplace rules and applicable regulations.
8. If an employee leaves the company before using all accrued leave days, they are entitled to receive wages for the unused leave days. The leave wage for partial years is calculated based on the basic salary.
9. During the probationary period, the employer may allow the employee to use some annual leave. If the employee does not pass the probation, they are still entitled to compensation for the remaining leave balance.
10. The employment contract cannot be terminated during the employee’s annual leave.

Unused Leaves and Deductions Under UAE Labour Law

If an employee doesn’t use their annual leave, they can choose to receive "cash in lieu". This payment is calculated based on their monthly basic salary. The decision to receive cash instead of taking leave can be made by mutual agreement between the employee and employer.

In some cases, employees may wish to take extra leave the following year. UAE Labour Law allows employees to carry forward some unused leave to the next year, but it is important to check company rules and adjust the leave salary calculation in UAE accordingly.

When an employee opts for leave without pay (LWOP), it affects both their overall salary and leave salary calculations. Deducting LWOP days from the total leave entitlement is necessary when calculating the leave salary.

Pro Tips for Accurate Leave Salary Calculation in UAE

1. Understand Your Contract: Ensure that the terms regarding allowances and gross salary are clear in your contract.
2. Double-Check Input Data: Accurate numbers must be entered into the leave salary calculation tool to ensure correctness.
3. Consult HR: If there is any confusion, HR should be consulted to confirm the correct details.
4. Review Labor Law Updates: Stay updated on any changes in UAE labor laws that might affect the calculation of leave salary.
5. Clarify the Leave Year: Within your policy, clarify the designated holiday year. It may follow the standard calendar year (January 1st to December 31st) or start from the employee’s hire date.
6. Align the Leave Year: For better management, consider aligning all employees to a consistent leave year. This makes the leave management process more efficient and uniform across the organization.
7. Coordinate with Managers: Make it clear in your policy that employees must coordinate their annual leave with their line managers in advance. This ensures that all leave requests are authorized and prevents unauthorized holiday plans.
8. Plan for Peak Times: Acknowledge popular holiday periods like Eid and other special holidays. A “first come, first served” rule may be added to the policy with flexibility, ensuring a fair distribution of leave.
9. Streamline Leave Tracking: Leave tracking and payroll management can be simplified by seeking assistance from professionals, making the process more efficient and accurate.

By following these tips, leave salary calculation in UAE can be accurately and easily managed, ensuring both compliance and fairness.

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