Leave salary calculator UAE explained for HR teams
A clear breakdown of UAE leave salary and annual leave encashment rules, with accrual rates, sick leave and maternity leave bands for 2026 payroll teams.
A leave salary calculator UAE employers use has to answer two different questions. The first is how much someone is paid while they are away on annual leave. The second is how much they are owed for unused days when their employment ends. The two figures are worked out differently, and mixing them up is one of the most common payroll errors in UAE HR teams.
Leave salary calculator UAE: two different calculations, not one
When an employee takes annual leave during active employment, they continue to receive their normal pay for that period. When employment ends and the person has unused annual leave sitting on the books, that balance is paid out in cash instead, a process usually called leave encashment.
Industry guidance on this distinction describes leave salary during active service as based on the employee's contractual wage, while leave paid out at exit is calculated on the basic wage only, as described by Farahat & Co. This lines up with the primary law text: Federal Decree-Law No. 33 of 2021 and its amendments, read via Article 29(9) on uaelegislation.gov.ae, confirms that leave pay for a fraction of the year is calculated on the basic wage, not the full package of allowances.
Annual leave accrual: 30 days after one year, two days a month before that
The official UAE government portal sets the baseline for private sector annual leave:
| Length of service | Annual leave accrued |
|---|---|
| Under 6 months | No statutory annual leave yet |
| 6 months to 1 year | 2 days per month of service |
| Completed 1 year of service | 30 fully paid days per year |
If someone leaves before completing a full year of eligibility, they are entitled to leave for the fraction of that final year actually worked, calculated on a pro-rata basis rather than losing the balance entirely. Article 29(1)(a) to (c) of the law spells this out in the same terms, as reported by Gulf News.
Leave salary calculation UAE 2026: what changes and what doesn't
The entitlement structure itself has not shifted for 2026: it is still 30 days after a year of service and 2 days a month before that. What HR teams need to keep current each year is the salary figure the calculation is applied to, since basic salary changes with promotions, allowances restructuring or contract renewals. A leave salary calculator UAE payroll teams rely on should pull basic salary and total contractual wage separately, because the two feed different formulas.
Annual leave encashment UAE: how the payout works
When employment ends, any unused annual leave is paid in cash. The government portal is explicit that this applies regardless of how many days are outstanding: an employee is entitled to payment for any unused annual leave, regardless of its duration, and this payment is calculated on basic salary.
The formula
The payout is worked out in two steps. First, find the daily rate by dividing the monthly basic salary by 30. Second, multiply that daily rate by the number of unused annual leave days on record, including any pro-rata days accrued for a partial final year of service.
This figure is paid alongside, not instead of, any end-of-service gratuity the employee is owed. Employers running this alongside gratuity calculations may find it useful to check both figures with the UAE gratuity calculator.
Some employers and employees agree to carry leave forward or cash part of it in during active service rather than waiting until exit. The specific limits on that arrangement sit in the executive regulations under the same Decree-Law, so confirm current terms with MOHRE before applying anything beyond the basic accrual and pro-rata rules above.
Sick leave: up to 90 days a year, in three bands
Sick leave is a separate entitlement from annual leave and only becomes available once probation has ended. The UAE government portal sets the cap at 90 days a year, split into three pay bands:
- First 15 days: full pay
- Next 30 days: half pay
- Remaining 45 days: no pay
An employee is only entitled to this sick leave after the end of their probationary period. If someone exhausts all 90 days and still cannot return to work, the employer may terminate the contract, though end-of-service benefits remain payable.
Maternity leave: 60 days, split full and half pay
Maternity leave follows a similar banded structure. The UAE government's maternity leave page and the wider leave types page confirm a total of 60 days:
- 45 days: fully paid
- 15 days: half paid
Leave can start up to 30 days before the expected delivery date. If the employee has an illness resulting from pregnancy or childbirth and cannot return to work, up to a further 45 unpaid days are available on top of the standard 60.
Building this into payroll
Annual leave accrual, sick leave bands and maternity leave all need to sit against the same payroll record as basic salary, WPS files and gratuity, otherwise HR ends up reconciling three separate spreadsheets every time someone resigns or goes on leave. If your WPS submissions are already under review for the 2026 deadline changes, it is worth checking that leave and payroll data sit in the same system, as covered here.
Axion's People box tracks annual leave accrual, sick leave bands and maternity leave alongside basic salary and WPS salary files, so the same record feeds leave pay, encashment and gratuity calculations without re-entering figures by hand. You can see how the People box fits alongside Finance and payroll in the features overview, or check common setup questions in the FAQ.
Frequently asked questions
Is leave salary calculated on basic salary or full salary in the UAE?
Pay while an employee is actively on annual leave is usually based on their contractual wage, which can include fixed allowances. Encashment of unused leave when employment ends is calculated on basic salary only, as confirmed on the UAE government portal.
Can I encash annual leave without resigning?
Some employers allow leave to be carried forward or partially cashed in during active service by mutual agreement, but the exact limits on that arrangement sit in the executive regulations under the labour law. Confirm the current terms with MOHRE or your HR policy before relying on it.
How many sick days is a UAE employee entitled to?
Up to 90 days a year once probation has ended, split into 15 days on full pay, 30 days on half pay and 45 days unpaid. This is set out on the UAE government's sick leave page.
Does maternity leave affect end-of-service gratuity?
Maternity leave itself does not reduce the underlying gratuity calculation, which is based on years of service and basic salary. Maternity leave is a separate 60-day entitlement of 45 fully paid days and 15 half-paid days.
What happens if I don't take my annual leave before my contract ends?
The employee is entitled to be paid for the unused balance regardless of how many days it comes to, calculated on basic salary. This applies whether the employee resigns or the employer ends the contract.
Sources
- Annual leave | The Official Platform of the UAE Government
- Types of leaves | The Official Platform of the UAE Government
- Sick leave | The Official Portal of the UAE Government
- Maternity leave | The Official Platform of the UAE Government
- Federal Decree-Law No. (33) of 2021
- Federal Decree by Law No. (33) of 2021 Concerning Regulating Labor Relations
- Not paying employees for annual leave: Face repercussions from the UAE Labour Law
- Leave Salary Calculation in UAE (2026) | Calculator, How To Guide, Labour Law & Rules
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