Discover how Leave salary calculation in UAE is done in 2023

Understanding leave salary calculation in the UAE is critical to keeping your staff happy. Employees’ hard work should have compensation with paid time off as part of a healthy employer-employee relationship. In the context of leave, this involves providing employees with a specific amount of vacation days (and remuneration, when applicable) that they are legally entitled to.

In this article, you will learn that mishandling leave salary calculation in UAE can result in strained relationships and unwelcome (and costly) lawsuits. Furthermore, providing employees more leave days than they are entitled to (without justification) might result in a loss of productivity in the workplace. To prevent the two circumstances described above and preserve a strong connection with your staff, you and your HR department must grasp what the law says about leave and how to effectively manage leave salary calculation in the UAE.

  1. Introduction to leave salary calculation in the UAE
  2. Let us help you understand how leave salary calculation in the UAE work
  3. Know other forms of leave available under UAE labor legislation
  4. Takeaways

1. Introduction to leave salary calculation in the UAE

leave salary calculation in the UAE

Leave salary Calculation in UAE is a problem that frequently causes uncertainty among employees and employers. However, this is an important issue since both parties must learn to grasp their rights. What is the leave salary calculator? How is leave salary calculated in UAE?

What labor law UAE leave salary says about varied leaves and specific provisions in national legislation is critical. As a result, if you want information on how to calculate leave salary, we will simplify the procedure for you.

A leave salary format is essentially formal authorization granted to your staff to miss work for a specific number of days. This leave may be compensated (such as yearly leave) or unpaid (such as the Hajj leave).

In the United Arab Emirates, leave days are now governed by Federal Law No. 33 of 2021, which went into effect on February 2, 2022 and abolished UAE Federal Law No. 8 of 1980. According to this legislation, UAE workers are entitled to the following types of leave: yearly leave, sick leave, maternity leave, parental leave, disability leave, compassionate leave, study leave, compensating leave, and Hajj leave.

Though, from the employer’s perspective, a leave may appear to be ineffective, it really promotes excellent physical and mental health in the workplace and enhances people’s work-life balance, which decreases stress and unplanned days off. The net result of these benefits is increased, not decreased, productivity.

To increase productivity, comply with labor rules, maintain excellent relationships with employees, and avoid litigation, it is critical that your HR team knows and uses relevant leave legislation prudently.

Now that we have defined leave, let us look at how to compute leave salary calculation in the UAE. We will begin with the most important: yearly leave.

2. Let us help you understand leave salary calculation in the UAE

The computation of annual leave calculation salary in the UAE for unlimited contract might be hard, but we will simplify it here.

To begin, once a full-time employee has worked for your organization for a year, he or she is entitled for 30 days of paid UAE annual leave. However, if a full-time employee has only been with the company for six months, he or she is only entitled to two days of leave each month until they have worked for a year.

You will compute yearly leave for part-time employees depending on what is provided in their employee contract. The UAE Labour Law does not contain a set number of days for part-time workers. However, while dealing with part-time employees, you must follow the Executive Regulations.

2.1 In the UAE, how can you calculate the annual salary leave?

You must be aware of the following UAE leave salary rules when doing annual leave pay calculation:

  • The employer pay the employee’s full wage for tasks completed immediately before the leave begins.
  • You must also pay the employee for the yearly leave before it begins.

In the UAE leave salary calculator, yearly leave must be calculated using outstanding salary: the employee’s basic salary negotiation + housing allowance plus any additional customary allowance available during the normal working month. In essence, the employee’s most recent wage.

2.2 Is there a formula for calculating leave?

To begin, it is important to know that leave salary formula compensation calculation of leave salary in UAE is paid to employees prior to their vacation. Companies and employees, on the other hand, are presumably wondering how to correctly determine the precise amount of money for yearly absences. So, in order to comply with legal industry obligations, both parties must consider the following:

  • During their yearly leave, employees have the right to receive 30 days of their usual pay. This amount is determined by the worker’s current wage for the fiscal year in question.
  • Other labor perks already established in the contract between firms and workers may be included in this computation. However, both partners must agree on the date of the yearly leave as well as the financial advantages.

2.3 Administrative rules

  • The employee can start his or her leave whenever he or she wants, but he or she must give at least ten days’ notice.
  • The employer may adjust or divide the yearly leave period for reasons related to job obligations (e.g.,15 days this month and 15 days next month).
  • If the employer determines the start date of annual leave, he or she must provide the employee one month’s notice.
  • An employee may carry over annual leave for one year into the following year if the company agrees.

However, the employer cannot bar an employee from utilizing his or her earned annual leave for more than two years (the annual leave of 2015, for example, must be used within the next two years, 2016-2017).

  • If an employee has accrued leave at the time of contract termination, he or she must be paid for it using just basic wage (rather than full salary, which includes allowances).
  • During yearly leave, no contract can be terminated.
  • Public holidays that occur during the yearly leave are also included in the leave (no extra days beyond the 30 days).
  • Similarly, if an employee becomes ill while on yearly leave, no further leave days will be granted.
  • There will be no remuneration for the extra days if the employee does not return to work following his or her yearly leave.
  • If you force your employee to work throughout his or her yearly leave, you must compensate him or her for that time (in addition to the salary already paid for the annual leave).

3. Other forms of leave available under UAE labor legislation

leave salary calculation in the UAE

In addition to yearly leave, HR departments must grasp various forms of leave when learning how to compute leave compensation. They are as follows:

3.1 Illness leave

During a probationary term, an employee is not entitled for any paid sick leave. Paid sick leave is implemented three months after the trial period ends. The legislation now limits sick leave to 90 days per year of service (which can be utilized all at once or spread out throughout the year):

  • The first 15 days are paid in full.
  • Half salary for the next 30 days
  • Following days: no pay.

To calculate leave compensation in this (and other) cases when paid leave is less than or greater than 30 days, convert an employee’s income to a daily wage (divide it by 30) and then multiply it by the number of days of leave.

The daily pay for an employee earning AED 7,000 per month is AED 233. As a result, the compensation for a 15-day absence will be around AED 3,500. (AED 233 x 15).

3.2 Leave of absence for maternity

Maternity leave has been raised from 45 to 60 days by Federal Law No. 33 of 2021:

  • Full salary for the first 45 days.
  • Half salary for the next 15 days.

Employees will also be entitled to maternity leave for stillborn infants and newborns who die after birth. Similarly, women who suffer from pregnancy-related ailments are entitled to 45 days of unpaid leave.

3.3 Paid parental leave

Parental leave, unlike maternity leave, applies to both the mother and the father. They are both entitled to five days of paid leave within six months after giving birth. Parental leave is taken in addition to maternity leave by the mother.

3.4 Medical leave

Mothers with disabled newborns are entitled to 30 days of paid leave and 30 days of unpaid leave (in addition to maternity leave).

3.5 Leave of salary in UAE in case of resignation

Employees are entitled to five days of paid leave following the loss of a spouse and three days of paid leave following the death of a parent, child, sibling, grandchild, or grandparent.

3.6 Study time off

Employees with more than two years of active duty can seek ten days of study leave. However, the law is silent on whether or not the study leave is compensated. As a result, it is dependent on your company’s rules.

3.7 Leave salary on resignation in UAE

You must pay workers who are required to work on public holidays. Compensation is determined as compensatory leave (extra time off) plus a bonus equivalent to 50% or 150% of income.

3.8 Leave for Hajj

Every employee who wishes to do Hajj may take a 30-day unpaid absence. However, this leave is only available once during the employee’s whole tenure.

However, in addition to understanding these regulations, you and your HR staff will want a simple way to manage the payroll process, including tools to track each employee to ensure that you are paying them the correct amount and at the correct time for their paid vacation.

The only thing worse than not giving employees the leave they are entitled to is failing to pay them for it.

4. Takeaways

  • Employee productivity can improve on leave, which benefits both employees and companies.
  • Full-time employees in the UAE are entitled to 30 days of paid leave extension.
  • Other forms of leave available under UAE labor legislation include sick leave, maternity leave, parental leave, and disability leave.
  • To guarantee that employees are compensated for leave (where applicable), you need a smart payroll system that allows you to authorize payments.

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Kate Williams

Kate Williams
Kate is the Global Strategy Director at Connect Group. She is specialized in company formation, international business expansion and employee relocation. She studied in Southampton (United Kingdom) and moved to the UAE in 2014.