Navigating the complexities of employment law can be challenging, especially when it comes to understanding your rights and entitlements. In the UAE, annual leave and leave salary calculation are governed by the Ministry of Human Resources and Emiratisation (MoHRE), under Federal Decree Law No. 33 of 2021, also known as the ‘UAE Labour Law’.
This comprehensive guide will shed light on these crucial aspects, ensuring you are well informed about your annual leave in UAE and how your leave salary calculation in UAE is determined.
Annual Leave Entitlement
To be eligible for annual leave in the UAE, employees must complete at least six months of continuous service with their employer. The duration of annual leave varies based on the length of service:
- One Year or More: Employees who have completed one year or more of service are entitled to a full 30 days of paid annual leave.
- Six Months to One Year: Employees who have completed six months but less than one year of service are entitled to two days of paid annual leave for each month of service.
It’s important to note that if an employee’s service terminates before they have used their full annual leave entitlement, they are still entitled to receive leave pay for the fraction of the year worked. This ensures fair compensation for all employees, regardless of their length of service.
Part-time employees are also entitled to annual leave, calculated proportionally based on their actual working hours as specified in their employment contract and following the Executive Regulations of the Labour Law.
Utilizing Annual Leave
The UAE Labour Law stipulates that employees should utilize their annual leave within the year they are entitled to it. Employers have the right to set the dates of annual leave in agreement with their employees, taking into account work requirements and operational needs. However, employers must provide employees with at least one month’s notice before the start of their leave.
In certain situations, employees may wish to carry over their annual leave to the following year. This is permissible with the consent of the employer and per the company’s internal regulations. If an employee works during their carried-over leave period, they are entitled to receive their basic salary for those working days, in addition to their leave salary.
It’s crucial to remember that employers cannot prevent employees from using their accrued annual leave for more than two years. This provision safeguards employees’ rights and ensures they receive adequate rest and time off.
When calculating the duration of annual leave, official public holidays specified by law or agreement, and any sick leave days that fall within the annual leave period are included, unless the employment contract or company regulations specify otherwise.
Leave Salary Calculation
The calculation of leave salary in the UAE is based on the employee’s basic salary. It’s important to understand that the basic salary typically excludes any additional allowances, bonuses, or other variable components of an employee’s remuneration.
To calculate the leave salary, the following formula is used:
- Daily Wage: Basic Salary / 30
- Leave Salary: Daily Wage x Number of Leave Days
Example
An employee with a basic salary of AED 10,000 and taking 20 days of annual leave would have their leave salary calculated as follows:
- Daily Wage: AED 10,000 / 30 = AED 333.33
- Leave Salary: AED 333.33 x 20 = AED 6,666.60
Termination and Leave Salary
Upon termination of employment, employees are entitled to receive payment for any accrued but unused annual leave days. This payment is also calculated based on the employee’s basic salary using the formula mentioned above.
MoHRE’s Role
MoHRE plays a vital role in enforcing the UAE Labour Law and ensuring that employers comply with the regulations related to annual leave and leave salary calculations. They provide guidance and resources to both employees and employers, clarifying any doubts and addressing concerns related to leave entitlements.
Wrapping Up
Understanding your rights and entitlements regarding annual leave and leave salary calculation is essential for all employees in the UAE. This guide provides a comprehensive overview of the key aspects, empowering you to make informed decisions and ensure you receive the correct compensation.
Don’t get shortchanged on your annual leave! UAE labor law is complex, and mistakes can be costly. Davidson & Co., your trusted Dubai lawyers, can help you understand your leave rights, calculate your leave pay, and ensure you receive every dirham you deserve. Contact us today for a free consultation and let our expertise protect your interests. Your leave. Your rights. Our expertise.
