UAE Leave Salary Calculation 2026: Formula, Examples and Common Mistakes

Direct answer. Under UAE Federal Decree-Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022, an employee earns 30 calendar days of paid annual leave per year after one full year of service, and 2 days per month for service between six months and one year. Leave salary is paid at the employee's basic wage for unused leave days at the end of service, and at basic wage plus allowances when leave is actually taken during employment. This guide walks through the exact formula, three worked examples, and the four mistakes that cost employees money every month.

The rule in one sentence. Article 29 of Federal Decree-Law No. 33/2021 sets the minimum entitlement; allowances are included only when the leave is taken in real time, and unused-leave cash-out at the end of service is calculated on basic wage only.

What Counts as "Leave Salary" Under UAE Labour Law

Leave salary (sometimes called annual-leave pay or vacation pay) is the wage the employer must pay you for paid annual leave under the UAE Labour Law. The current governing instruments are:

• Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, in force since 2 February 2022.
• Cabinet Resolution No. 1 of 2022 on the Implementing Regulation of the law.
• Ministry of Human Resources and Emiratisation (MOHRE) guidance published on the official portal u.ae and mohre.gov.ae.

The law distinguishes two situations, and the calculation differs in each:

1. Leave taken during employment — you receive your full wage (basic plus all regular allowances) for each day of leave.
2. Unused leave cashed out at end of service — you receive basic wage only for each accrued, unused day, unless the employment contract or company policy is more generous.

The distinction matters: an employee on AED 12,000 total with AED 7,000 basic and AED 5,000 allowances who cashes out 30 unused days at termination receives roughly AED 7,000 — not AED 12,000. Article 29 of Decree-Law 33/2021 sets this baseline.

The Annual-Leave Entitlement Table

Public holidays, sick leave, and maternity leave are separate entitlements and do not reduce annual leave. Source: MOHRE Annual Leave page on u.ae and Article 29 of Federal Decree-Law 33/2021.

The Core Formula: How to Calculate Leave Salary in the UAE

The base formula works the same way in every case — what changes is which wage figure you plug in.

Leave Salary = (Daily Wage) × (Number of Leave Days)

To get Daily Wage:

Daily Wage = Monthly Wage ÷ 30

The UAE Labour Law and MOHRE guidance both use a 30-day month for wage division, even in months with 28, 29, or 31 calendar days. This is the convention WPS (Wage Protection System) uses for salary computations.

Which "Monthly Wage" do you use?

• For leave taken during employment → Monthly Wage = Basic Salary + Allowances (housing, transport, etc.)
• For unused leave paid at end of service → Monthly Wage = Basic Salary only

That single distinction is responsible for most of the disputes filed with MOHRE on this topic.

Worked Example 1: One Year of Service, Leave Taken During Employment

Scenario. Aisha has worked at a Dubai marketing agency for exactly one year. Her contract shows:

• Basic salary: AED 8,000
• Housing allowance: AED 3,000
• Transport allowance: AED 1,000
• Total monthly wage: AED 12,000

She wants to take her full 30 days of annual leave in March.

Step 1 — Daily wage (for in-service leave, use total wage):

AED 12,000 ÷ 30 = AED 400 per day

Step 2 — Leave salary for 30 days:

AED 400 × 30 = AED 12,000

Aisha receives her full monthly salary of AED 12,000 for March — exactly the same as if she had worked the whole month. That is the legal floor under Article 29.

Worked Example 2: Three Years of Service, Unused Leave Cashed Out at Resignation

Scenario. Rahul has worked at a Sharjah engineering firm for three years. He resigns and has 22 unused leave days carried over.

• Basic salary: AED 6,500
• Housing allowance: AED 2,500
• Transport allowance: AED 500
• Total monthly wage: AED 9,500

Step 1 — Daily wage (for cash-out, use BASIC wage only):

AED 6,500 ÷ 30 = AED 216.67 per day

Step 2 — Cash-out for 22 unused days:

AED 216.67 × 22 = AED 4,766.67

If Rahul had assumed his cash-out would use his total wage of AED 9,500, he would have expected AED 6,966.67 — about AED 2,200 more than the legal minimum. Many employees flag this gap to MOHRE believing the employer underpaid; in fact, the basic-wage rule is the statutory default.

Worked Example 3: Five Years of Service, Mid-Year Termination With Carry-Over

Scenario. Maria has worked at an Abu Dhabi hospitality group for five years. She is terminated on 30 June. She used 15 leave days last year but carried over 15 days; for the current year, she has accrued leave for 6 months without taking any.

• Basic salary: AED 10,000
• Allowances: AED 4,000
• Total monthly wage: AED 14,000

Step 1 — Accrued leave this year:

(30 days ÷ 12 months) × 6 months = 15 days

Step 2 — Total unused leave at termination:

15 days carried over + 15 days accrued this year = 30 days

Step 3 — Daily basic wage:

AED 10,000 ÷ 30 = AED 333.33 per day

Step 4 — Leave salary cash-out:

AED 333.33 × 30 = AED 10,000

This AED 10,000 sits on top of Maria's end-of-service gratuity, notice-period pay, and any other final-settlement components. All of these together form what MOHRE and labour courts call the final settlement.

When Allowances Count and When They Don't

This is the single most contested issue in UAE leave-salary calculations. The rule, simplified:

Exception. If the employment contract, company policy, or collective agreement is more generous than the statute (for example, it promises full-wage cash-out of unused leave), the more generous term wins. UAE labour law sets a floor, not a ceiling. Check your contract and any written HR policy before disputing the figure.

The Four Common Mistakes That Cost Employees Money

1. Employer divides by 26 instead of 30

Some employers calculate daily wage as Monthly Salary ÷ 26 (treating weekends as unpaid). The UAE convention under WPS and MOHRE is 30 days. Division by 26 inflates the daily rate on paper but reduces the total in some calculations, and is not the standard the labour courts apply.

2. Carry-over leave is "forfeited" without consent

Under Article 29(9) of Decree-Law 33/2021, an employee can carry forward leave days or be cash-compensated for them. A company handbook saying "unused leave expires on 31 December" cannot override the statutory right. If your leave was zeroed out without your written consent, you have grounds for a complaint.

3. Allowances stripped during the leave month

Some payroll systems pay only basic salary during a leave month and withhold housing and transport. For leave taken in service, this is incorrect. You are entitled to the same total wage as a working month.

4. Leave salary excluded from gratuity base

End-of-service gratuity is calculated on the last drawn basic wage — leave salary is paid separately from gratuity. If your employer is offsetting one against the other or combining them into a single lump that looks short, that is not how the law structures the settlement.

What to Do If Your Employer Underpays Leave Salary

1. Recalculate the figure yourself using the formulas above and your contract's wage breakdown.
2. Request a written payroll statement showing how the employer arrived at their number.
3. Raise it internally first — most cases are payroll errors, not bad faith.
4. If unresolved within 14 days, file an MOHRE complaint via the MOHRE smart app, the 80060 hotline, or the MOHRE Tas'heel service centres. Complaint filing is free.
5. If MOHRE [mediation](/en/dictionary/mediation) fails, MOHRE issues a referral letter and the case proceeds to the UAE Labour Court. Employee labour claims below AED 100,000 are typically exempt from court filing fees.

If your case involves a significant sum, a complex contract, or termination disputes, browse verified UAE labour lawyers on LEXAI before you file. Many offer a free initial consultation and can confirm in 20 minutes whether MOHRE or the Labour Court is the right starting point.

Quick Reference: One-Page Summary

• Entitlement: 30 days/year after 1 year of service; 2 days/month between 6–12 months. (Article 29, Decree-Law 33/2021)
• Daily wage: Monthly Wage ÷ 30.
• In-service leave pays at basic + allowances.
• End-of-service cash-out pays at basic wage only, unless contract is more generous.
• Unused leave can be carried over or cash-compensated — never silently forfeited.
• MOHRE complaint is the first step if your employer underpays — it is free and can be filed entirely through the MOHRE smart app.

For the official statute, see Federal Decree-Law No. 33 of 2021 published on the UAE government portal at https://u.ae and MOHRE's annual-leave guidance at https://www.mohre.gov.ae.

If you would like a UAE-licensed labour lawyer to review your specific payroll breakdown, find a labour lawyer in your emirate. LEXAI's free AI legal assistant can also walk you through a first-pass calculation in English or Arabic.

This article provides general legal information about UAE labour law and is not a substitute for legal advice. Confirm any figure or procedure with MOHRE or a licensed UAE labour lawyer before acting on it.