Does UAE Annual Leave Mean 30 Working Days or 30 Calendar Days?
UAE annual leave calculation 2026 is governed by Article 29 of Federal Decree-Law No. 33 of 2021. Every private sector employee is entitled to 30 calendar days of paid annual leave after completing one year of service. Calendar days means weekends and public holidays that fall within the leave period count as part of those 30 days, not in addition to them. This single point is the most common annual leave calculation error UAE employers make.
In this guide, Qaspro Global breaks down the full annual leave formula, worked AED examples, carry-forward rules, and what employers must pay when an employee resigns or is terminated.
What Is UAE Annual Leave Entitlement Under Article 29?
Annual leave entitlement in the UAE private sector is set by Article 29 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relationships. The entitlement depends entirely on how long the employee has been continuously employed by the same company.
| Service Period | Leave Entitlement | Notes |
|---|---|---|
| Less than 6 months | No entitlement | No annual leave right during first 6 months |
| 6 months to less than 1 year | 2 calendar days per month worked | Maximum 12 days accrued during this period |
| 1 year or more | 30 calendar days per year | Accrues at 2.5 days per month throughout the year |
The 30 calendar days is a statutory minimum. Any employment contract or company policy that offers more days is valid and must be honoured. A contract cannot legally reduce the entitlement below this minimum. Part-time employees receive annual leave on a pro-rata basis calculated by actual hours worked as stated in the employment contract.
How Is Annual Leave Pay Calculated in UAE 2026?
The annual leave pay formula under UAE Labour Law uses basic salary only. The standard formula applies for both leave taken during employment and leave encashed at termination: Basic Monthly Salary divided by 30, multiplied by the number of leave days.
The divisor is always 30, regardless of the actual number of days in the month. This is a fixed legal standard under Cabinet Resolution No. 1 of 2022. Housing allowance, transport allowance, and other variable payments are excluded unless the employment contract explicitly states otherwise.
Leave Salary Formula
Leave Pay = (Basic Monthly Salary / 30) x Number of Leave Days
Worked Example 1: Employee Taking 15 Days Leave on AED 10,000 Basic
- Basic salary: AED 10,000 per month
- Leave days taken: 15 calendar days
- Leave pay = (10,000 / 30) x 15 = 333.33 x 15
- Leave pay = AED 5,000
The employer pays the employee AED 5,000 as leave salary for those 15 days. The remaining 15 days of the month’s salary continue to be paid as normal.
Worked Example 2: First-Year Employee Leaving After 8 Months
- Service period: 8 months (crosses the 6-month threshold)
- Annual leave accrued: 2 days x 8 months = 16 calendar days
- Leave days taken before leaving: 0
- Basic salary: AED 12,000
- Encashment = (12,000 / 30) x 16 = 400 x 16
- Encashment payable at termination = AED 6,400
Worked Example 3: Second-Year Employee With Partial Year Accrual
- Employee completes their first year on July 1, 2025 and resigns January 31, 2026
- That is 7 months into the second annual leave year
- Days accrued in current year: 2.5 x 7 = 17.5 days
- Days already taken in current year: 10
- Unused balance: 17.5 – 10 = 7.5 days
- Basic salary: AED 15,000
- Encashment = (15,000 / 30) x 7.5
- Encashment payable = AED 3,750
Calendar Days vs Working Days: The Error That Triggers MOHRE Complaints
The most common payroll error Qaspro Global identifies in UAE compliance reviews is calculating annual leave in working days instead of calendar days. Many HR teams assume 30 days of annual leave equals 30 working days. It does not. The result is that employees either receive fewer leave days than the law requires, or employers dispute encashment amounts that should be straightforward.
| Calculation Approach | Actual Days Given | Legal Position |
|---|---|---|
| 30 calendar days (correct) | 30 consecutive days including weekends | Compliant with Article 29, FDL 33/2021 |
| 30 working days (incorrect) | Approximately 42 calendar days | Exceeds minimum, compliant but over-entitles |
| 22 working days only (incorrect) | Excludes 8 weekend days from a 30-day period | Non-compliant, triggers MOHRE complaint risk |
If an employee begins a 30-calendar-day leave on a Monday, that leave ends 30 days later on the following Tuesday, including the four weekend days within that period. The employee does not receive extra days to replace the weekends.
Do Public Holidays Count as Part of Annual Leave?
Public holidays that fall within an annual leave period count as part of the 30 calendar days under UAE Labour Law, unless the employment contract or company policy provides more favourable terms. If Eid Al Adha occurs while an employee is on annual leave, those days are absorbed within the leave count rather than added on top.
Many UAE companies choose to add public holidays back to leave entitlement as a benefit. Where such a policy exists, it must be applied consistently. MOHRE considers any written policy or established practice as binding on the employer.
What Is the Monthly Annual Leave Accrual Rate in UAE?
After completing one year of service, UAE employees accrue annual leave at 2.5 calendar days per month (30 days divided by 12 months). This rate applies continuously from the completion of year one.
| Employee Status | Monthly Accrual | Annual Total |
|---|---|---|
| 0 to 6 months service | No accrual | 0 days |
| 6 months to 1 year | 2 days per month | Up to 12 days in this window |
| After 1 year completed | 2.5 days per month | 30 days per full year |
The monthly accrual figure matters for employers running monthly payroll and bookkeeping. Unused annual leave is a real balance sheet liability. For a team of 10 employees each on AED 10,000 basic salary, unpaid leave grows as a liability at (10,000 / 30) x 2.5 x 10 employees = AED 8,333 per month if no leave is taken. Companies should provision for this in their financial accounts.
Can Unused Annual Leave Be Carried Forward in UAE?
Article 19 of Cabinet Resolution No. 1 of 2022 permits employees to carry forward up to half of their annual entitlement (15 days) to the following year, subject to employer agreement. An employer may also agree to pay a cash allowance in place of the carried-forward portion, calculated at the employee’s wage at the time the leave became due.
The critical rule is this: an employer cannot prevent an employee from accessing their annual leave for more than two consecutive years. Even if the two-year carry-forward period appears to have lapsed, the employee’s right to those accrued days does not disappear. MOHRE treats any attempt to deny or forfeit accrued leave as a labour law violation.
Carry-Forward Rules at a Glance
- Maximum carry-forward: up to 50% of annual entitlement with employer consent
- Cash in lieu of carry-forward: allowed by mutual agreement at the rate applicable when leave accrued
- Two-year rule: employer cannot block leave use for more than two consecutive years
- Automatic encashment: not permitted unless the employee agrees or it is written into the contract
Annual Leave Encashment on Termination: What Employers Must Pay
When employment ends, whether by resignation, termination, or end of a fixed-term contract, all unused accrued annual leave must be paid to the employee. This obligation applies regardless of the reason employment ended, and includes fractions of the current year.
Under Article 53 of Federal Decree-Law No. 33 of 2021, all wages and entitlements, including unused leave salary, must be paid within 14 days from the last day of employment. Missing this deadline is a labour law violation. Employees can file a complaint with MOHRE, which may result in WPS suspension or restrictions on hiring new staff.
Calculating the correct encashment amount at resignation is closely related to end of service gratuity calculation, which follows a separate formula but shares the same 14-day payment deadline.
| Item | Rule Under FDL 33/2021 |
|---|---|
| Salary basis for encashment | Basic salary only (no allowances) |
| Days included | All unused accrued days, including partial-year fractions |
| Payment deadline | 14 days from last working day (Article 53) |
| Applies after resignation | Yes, regardless of who initiated termination |
| Employer directing leave during notice | Permitted, but any remaining balance after notice must be paid out |
Annual Leave During Probation in UAE
Employees on probation are not entitled to annual leave during the probation period itself. The maximum probation period under UAE Labour Law is 6 months. Since annual leave entitlement begins at the 6-month mark, an employee who completes a full 6-month probation and is then confirmed has no retroactive leave credit for the probation period. Leave accrual starts from the day probation ends.
Can an Employer Require an Employee to Take Annual Leave?
Yes. UAE Labour Law gives employers the right to schedule when employees take their annual leave, provided reasonable advance notice is given. Employers commonly direct employees to take leave during quieter business periods or during notice periods before termination. This is lawful as long as the employer does not use this to cancel or reduce the employee’s total entitlement.
For employers using WPS for salary payments, leave pay must be processed correctly in the WPS file. Any underpayment or delayed settlement of leave salary during or after employment can trigger a WPS non-compliance flag with MOHRE.
Sick Leave vs Annual Leave in UAE: Key Differences
| Leave Type | Days Per Year | Pay Rate | Legal Basis |
|---|---|---|---|
| Annual Leave | 30 calendar days | Full basic salary | Article 29, FDL 33/2021 |
| Sick Leave (days 1-15) | 15 days | Full salary | Article 31, FDL 33/2021 |
| Sick Leave (days 16-45) | 30 days | Half salary | Article 31, FDL 33/2021 |
| Sick Leave (days 46-90) | 45 days | No pay | Article 31, FDL 33/2021 |
| Maternity Leave | 60 days total | Full pay (first 45 days), half pay (final 15 days) | Article 30, FDL 33/2021 |
Sick leave cannot substitute for annual leave. If an employee falls ill during annual leave and provides a valid medical certificate, company policy may allow the sick days to be reclassified, but UAE Labour Law does not automatically require this conversion.
Frequently Asked Questions
How many annual leave days is an employee entitled to in UAE 2026?
Employees who have completed one year of continuous service are entitled to 30 calendar days of paid annual leave per year under Article 29 of Federal Decree-Law No. 33 of 2021. Employees who have completed between 6 and 12 months receive 2 calendar days per month. Employees with less than 6 months of service have no annual leave entitlement.
Is UAE annual leave in calendar days or working days?
UAE annual leave is in calendar days, not working days. The 30-day entitlement includes weekends and public holidays that fall within the leave period. This is confirmed by Article 29 of Federal Decree-Law No. 33 of 2021 and is one of the most common payroll errors among UAE employers in 2026.
What is the leave salary calculation formula in UAE?
The formula is Basic Monthly Salary divided by 30, multiplied by the number of leave days. For example, an employee earning AED 12,000 basic salary who takes 10 days of annual leave receives AED 4,000 as leave pay (12,000 / 30 x 10). The calculation always uses basic salary only, not total package including allowances.
Can an employer refuse to approve annual leave in UAE?
An employer can decide when leave is taken and may defer a specific request for operational reasons. However, under Article 19 of Cabinet Resolution No. 1 of 2022, no employer can deny an employee access to their accrued annual leave for more than two consecutive years. After that threshold, the employee’s right to those days remains legally intact.
What happens to unused annual leave when an employee resigns in UAE?
All unused accrued annual leave, including any partial-year fraction, must be paid out at termination. The calculation uses basic salary only (Basic Salary / 30 x unused days) and must be settled within 14 days of the last working day under Article 53 of Federal Decree-Law No. 33 of 2021. This applies whether the employee resigned, was terminated, or reached the end of a fixed-term contract.
Does annual leave continue to accrue during sick leave in UAE?
Yes. Annual leave accrues continuously during sick leave. While an employee is on sick pay under Article 31 of the Labour Law, their annual leave balance keeps growing at the standard rate of 2.5 days per month (for employees past their first year). Sick leave and annual leave are completely separate entitlements.
Can an employer pay cash instead of granting annual leave in UAE?
Not automatically. Under Article 19 of Cabinet Resolution No. 1 of 2022, an employer and employee can agree to cash encashment of the carried-forward portion of leave (up to 15 days) based on the wage at the time the leave was due. However, employers cannot routinely substitute cash for leave without the employee’s option to take the actual days off.
How much annual leave does a part-time employee get in UAE?
Part-time employees in the UAE are entitled to annual leave on a pro-rata basis, calculated according to the actual hours worked as specified in the employment contract. The same 30-calendar-day benchmark applies, adjusted proportionally. If a part-time employee works half the standard weekly hours, they receive 15 calendar days of annual leave per year after completing one year of service.
Need Help With UAE Payroll and Annual Leave Compliance?
Annual leave calculation errors are among the most common reasons UAE employers receive MOHRE complaints and WPS flags. Qaspro Global’s accounting and payroll team helps UAE businesses set up compliant leave tracking systems, calculate correct encashment on termination, and ensure payroll records meet both FTA and MOHRE requirements. Contact us today for a free payroll compliance review.