Leave salary calculation in UAE

The leave salary calculation is a bit confusing topic for employees and companies. However, this topic is very important for companies and interesting to employees as well.
This article will cover everything related to employee annual leave and leave salaries in the UAE. Furthermore, we will help you understand how to calculate leave salaries in the UAE with some examples.

What are the different types of leave calculation in UAE?

Understanding the applicable number of leave days in the UAE is crucial for calculating leave salary in the region. Moreover, those employees who fall sick during their working days are entitled to various benefits while they recover from their health condition. Below are various leave types applicable in UAE:

1. Annual leaves

Employees are eligible for 30 days of full paid leave if they completed a minimum of 1 year of service in the company. Employees can avail two days leaves per month if they have completed a minimum of six months in the company. Annual Leave entitlement is calculated as below:

a. Less than 6 Months of Service: No Leave.
b. More than Six months but less than 1 year service: 2 days leave per month.
c. One year or more service period: 2.5 days per month leave.

2. Sick Leaves

Employees are entitled to request sick leave in order to recuperate from an illness or injury. In the United Arab Emirates, employers are required to allocate a specified number of sick leave days to their employees. Additionally, employers are obligated to offer certain salary benefits during these leave periods.
Here are some rules regarding sick leaves that employees and the employer must keep in mind:

1. An employee is eligible for sick leave if they have completed a minimum of 3 months in the organization. However, they cannot be absent for more than 90 days in a calendar year.

2. For the first 15 days of sick leave, employees are paid in full.

3. Then, for the next 30 days, they will receive 50% of their total salary amount.

4. For the rest of 45 sick leave days, employees will not receive any salary from their employer. It is called unpaid leave.

5. Injury caused to workers due to misconduct at work is not considered as a paid sick leave.

6. Health issues caused by alcohol consumption are excluded from sick leave as per the labour law guidelines.

7. Employees are not provided with any salary if they are found working with another employer during their sick leave.

3. Maternity leave

According to the new amendments to maternity leave in UAE, employers permit women up to 90 days of maternity leave. They are provided full pay for 45 days, half salary for 30 days and no salry for the remaining 15 days.

If a woman has completed at least one year of service with the company, she is entitled to full maternity leave. If she has worked for less than one year, the company pays her half of her salary during the maternity leave period.

Leave salary calculation method in UAE?

As per article 75, the labour law states that employees have the right to get an annual leave of 30 days, if they complete one year with the company. In case the employees have completed at lease six months with the organization, they can apply for the leave under certain conditions.

Employees will receive a basic salary along with their housing allowance for the annual leave period.

a. Employers have to provide a 30-days annual leave salary to employees for each service period. This amount depends on the salary of the employee.

This calculation also includes the benefits mentioned in the employment contract along with the basic salary. However, employee and employer can decide the date of annual leave as per their mutual understanding.

What is the formula for leave salary calculation in UAE?

First of all, lets understand that the leave salary is calculated when employees take their leave in UAE.

Leave salary calculation example

a. Employee has completed one year of service and going for 30 days of leave.
b. Employee's Basic Salary: 2000, Housing Allowance 1000.
c. In this case: An employee will receive a leave salary of 3000/- for 30 days.

In Conclusion

Leave salaries are calculated based on the employee’s salary and duration of their annual leave entitlement as per their completed service period. The above blog on leave salary calculation is only a quick reference guide and not an official document.