Leave Salary Calculation in the UAE 2026

You are about to take annual leave or leave your job, and you want to know exactly what leave pay you will get. But the numbers confuse you, because you have heard different answers: some say it is your full salary, others say only your basic. Getting this wrong is the single most common cause of leave-pay disputes in the UAE.

Here is the key that most guides miss. Your leave salary depends on the situation. When you take annual leave while still employed, you get your full wage, basic plus allowances. When you cash out unused leave on resignation or termination, you get your basic salary only. This guide explains both clearly, with the formula, worked examples, and the exact rule under UAE Labour Law, so you always know what you are owed.

How Leave Salary Is Calculated

Your leave salary depends on one thing: whether you are taking leave or cashing out unused leave.

For example, with a basic salary of AED 10,000 and AED 2,000 in allowances, 20 days of leave taken while employed pays AED 8,000 (full wage). But 20 unused days cashed out on exit pays AED 6,667 (basic only). Same days, different amounts, because the salary base changes. The calculator above applies the right base automatically once you pick your situation.

What Is Leave Salary in the UAE?

Leave salary is the pay you continue to receive while you are on approved annual leave. In simple terms, you do not lose income just because you take your legal time off. Your employer keeps paying you, so you can rest or travel without a gap in your earnings.

Under UAE Labour Law, this is a protected right, not a bonus. Once you qualify for annual leave, your employer must pay your leave salary, and in most cases they must pay it before your leave begins. This applies across the private sector, whether you work in Dubai, Abu Dhabi, or any other emirate.

There are really two forms of it. The first is the pay you get while actually on leave. The second is leave encashment, which is the cash you receive for annual leave days you earned but never used, usually paid when your job ends. Both come from the same annual leave entitlement, but as you saw above, they use a different salary base.

Leave Salary: Basic Salary or Basic + Allowances?

This is the question that causes the most confusion, and the most disputes, so here is the clear rule under Article 29 of UAE Labour Law.

When you take annual leave (still employed): your employer pays your full wage. The law says you receive your “wage” during leave, and wage means your basic salary plus your fixed allowances, such as housing and transport. So you should get the same monthly pay on leave as you do at work.

When you cash out unused leave (resignation or termination): the payment is based on your basic salary only. Allowances are excluded, even if they were part of your normal monthly pay. This is set out in Article 29(9) of the law.

Why does this matter so much? Because the two bases give different amounts. Take an employee with AED 10,000 basic and AED 2,000 in allowances:

Same 20 days, but a difference of over AED 1,300. This is exactly where employees get underpaid, because some employers wrongly apply basic-only to leave taken during service, or others forget the encashment rule. One more point: if your contract lists a single total salary with no separate basic, the authorities usually treat the whole amount as basic for encashment.

Who is eligible for leave salary in the UAE?

Leave salary is tied to your annual leave entitlement, so eligibility follows the same rules. Here is who qualifies and how much leave they earn.

A few extra points to know. You must have approved leave, or accrued unused leave, to claim leave salary. Your right to leave pay does not depend on your contract type, since all mainland contracts are now fixed-term and treated the same way. And if you resign or are terminated, any unused leave you earned must still be paid to you in your final settlement.

How to Calculate Leave Salary (Formula and Examples)

Working out your leave salary takes just two steps: find your daily wage, then multiply by your leave days. The only thing that changes is which salary you start with.

Step 1: Find Your Daily Wage

Divide your salary by 30 to get your daily wage. Use your full wage (basic + allowances) if you are taking leave, or your basic salary only if you are cashing out unused leave.

Step 2: Multiply by Leave Days

Multiply your daily wage by the number of leave days.

Worked Examples

Example 1 — Taking annual leave. Basic AED 9,000 + allowances AED 3,000 = AED 12,000 full wage, taking 15 days.

• Daily wage: 12,000 ÷ 30 = AED 400
• Leave salary: 400 × 15 = AED 6,000

Example 2 — Encashing unused leave on exit. Basic AED 9,000 only (allowances excluded), 15 unused days.

• Daily wage: 9,000 ÷ 30 = AED 300
• Leave salary: 300 × 15 = AED 4,500

Example 3 — Left before one year. Basic AED 5,000, resigned after 8 months, no allowances.

• Leave earned: 2 × 8 = 16 days
• Daily wage: 5,000 ÷ 30 = AED 166.67
• Leave salary: 166.67 × 16 = AED 2,667

The calculator above does all of this for you, and it picks the right salary base once you choose your situation.

Leave Encashment: Payment for Unused Leave

If you do not use all your annual leave, you do not simply lose it. UAE Labour Law lets you carry some over or cash it out, so those earned days still hold value.

Here is how it works:

• Carry forward. You can carry over up to half of your annual leave into the next year, if your employer’s policy allows it.
• Cash in lieu. You can agree with your employer to receive cash for unused days instead of taking them.
• On exit. When you resign or your job ends, any unused leave you earned must be paid out in your final settlement.

The key rule to remember: encashment is always calculated on your basic salary only, never your allowances. So for 15 unused days on a basic salary of AED 6,000, you receive (6,000 ÷ 30) × 15 = AED 3,000. Your employer must include this in your final settlement, alongside your gratuity and any other dues, within 14 days of your last working day. If they leave it out or use the wrong salary base, you have grounds to raise it with MOHRE.

Leave Salary for Part-Time Employees

Part-time workers earn leave salary too, just on a pro-rata basis. Your annual leave is worked out in proportion to the hours you work, compared with a full-time employee in the same role.

Here is the simple idea. If you work half the hours of a full-time job, you earn about half the annual leave, and so about half the leave salary. Your daily wage still comes from your salary divided by 30, and the same rule applies for the base: full wage while taking leave, basic salary only when cashing out unused days.

For example, if a full-time role gets 30 days a year and you work 50% of full-time hours, you earn around 15 days of paid leave. You must still complete the qualifying service, and your exact entitlement depends on the hours set in your contract. So always check your part-time contract for your agreed hours, since that figure drives your leave and your pay.

When Is Leave Salary Paid?

The timing depends on which type of leave payment you are getting, so here is what to expect in each case.

• Before you go on leave. When you take annual leave, your employer must pay your leave salary in advance, before your leave starts. This is your right under UAE Labour Law, so you have your money for the time off.
• With the monthly payroll. Some companies instead pay your leave salary as part of your normal monthly cycle, if that is their policy and it does not leave you short.
• In your final settlement. If you are cashing out unused leave on resignation or termination, that payment comes with your final settlement, alongside your gratuity, within 14 days of your last working day.

If your employer delays your leave salary without a valid reason, or pays it late, that breaks the law. So keep a record of your leave dates and your payslips, and raise any delay with your employer first, then with MOHRE if it stays unresolved.

Leave Salary vs Gratuity (End of Service)

People often mix up leave salary and gratuity, because both can appear in your final settlement. But they are two separate payments, calculated in different ways. Here is the difference.

When you leave a company, your final settlement usually bundles both together: your unused leave encashment plus your gratuity, along with any pending wages. So check that both appear as separate lines, and that each uses the correct basis. To work out your end-of-service figure, use our gratuity calculator.

Conclusion

Leave salary in the UAE comes down to one simple idea: the salary base changes with your situation. When you take annual leave, you get your full wage, basic plus allowances. When you cash out unused leave on exit, you get your basic salary only. Getting this right is what stops you from being underpaid, since it is the most common leave-pay mistake in the country.

So before your next holiday or your final settlement, know your numbers. Check your basic salary and allowances, count your leave days, and use the calculator above to work out the exact amount for your situation. When you know what you are owed, no employer can shortchange you, and you can raise any gap with confidence, or with MOHRE if needed.

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