Leave Salary in UAE

Annual leave is a prevalent issue that we constantly hear about. Many individuals have concerns about their entitlement to paid leave. The UAE labor law sets down guidelines for paid leave and employee rights.

Annual leave is a period which most employees wait for throughout the year. They utilize this time to unwind, relax, and spend quality time with their family and friends, as well as receive their share of pay they deserve.

For employees, the leave pay is of great significance. To achieve optimum results, employers must strategize the entire salary process and calculate the payments accurately. Nevertheless, many businesses face problems with it because, in the UAE, the laws regulating annual leave are explicit on how it should be handled. In case any organization does not do it properly, there might be consequences.

Leave Salary

For any employee who works in an organization, the leave salary, also referred to as annual leave, is a basic right as per the UAE labor law. Once an employee completes one year with an organization, he/she is entitled to the annual leave and the payment. Annual leave is granted by the employers to the employees as paid time off work and is an employee benefit.

Significance of the leave salary

The leave salary is highly valuable for all the workers and the staff. They can use this fund to spend it on their vacations, make an investment, or any other way they would like.

To avoid any inaccuracies, employers must know how to manage the leave salary for their employees as per the UAE labor law.

Duration of the leave

Under the UAE labor law, an employee is eligible for annual leave depending on his/her length of employment.

  • If the employee has completed six months, but less than one year, he/she should get two days of leave for each month.
  • If the service of the employee is for more than a year, he/she should get 30 days of annual leave.

This also depends on the nature of the contract (limited or unlimited) between the employer and the employee.

The annual leave also includes weekends, official holidays defined by law or by agreement, and all other leaves incurred by illness, if they fall during the annual leave period.

You are not eligible for any annual leave during the probationary period and it is completely at the management’s discretion.

Commencement of annual leave

The employer is allowed to decide the start of the annual leave and if appropriate, is authorized to split the leave into two parts. Based on job demands, the employer may also keep the employee from receiving part or all of the annual leave.

Additionally, the employer can delay the annual leave only once in two consecutive years, and pay the employee the entitled leave salary. Therefore, no employee is allowed to work more than once during their annual leave for two consecutive years.

Leave salary calculation

It is crucial for organizations to understand how to calculate the leave salary of their employees. The amount paid to the employees must be as per the UAE labor law so that the employer does not incur any liabilities.

The leave pay consists of the basic pay along with the housing allowance, and any other component that is stated in the contract, if applicable.

If a person is employed in a private sector company, and the employment is terminated, or the employee chooses to resign, he/she is eligible for end-of-service benefits. The final payment will be calculated keeping in mind the type of contract.

Under the circumstances where an employee worked throughout all or portion of his/her annual leave, and if these days are not carried forward to the next year, the employer must pay the employee his/her regular compensation plus the payment in favor of leave, for the days actually worked.

Can an employee be terminated during annual leave?

The employer does not have the right to terminate the employee during annual leave. Any notice or letter of termination during this period will be deemed invalid.

If an employer terminates any employee during official leave, it may be treated as an arbitrary termination, and the respective employee can take legal action against the employer.

However, if the employee does not get back to work within 7 consecutive days from the due date of return, the employer has full right to terminate the respective employee’s contract.

What happens if an employee’s services are terminated?

The employee is eligible for leave salary if the employment is terminated, or if the employee has quit after serving the required notice period. He/she must be paid for the annual leave not taken by him/her. The final payment must be calculated based on the last salary drawn by the employee.

When is the leave salary paid?

As specified in the UAE labor law, the employee must receive the leave pay prior to starting the annual leave. Based on the calculations, the employee must obtain the complete salary plus the compensation of the days they deserve.

Any leave taken by the employee beyond his/her permitted leave will be considered as unpaid leave.

What if the employer does not pay the leave salary?

Your employer is liable, under the UAE labor law, to pay you the compensation for the annual leave earned by you. In case the leave salary is not paid to you, you may file a lawsuit with MOHRE against your employer.

Can an employee work somewhere else during the annual leave?

No, an employee is not permitted to work for any other company during the annual leave period.

If an employer finds out that the employee is working with another firm during the leave period, the employer has full right to terminate the employee without any prior notice.

How can we help?

It is vital to have a team of specialists who can advise you and make the estimates for you as there are many questions and clarifications on what should be included in the leave salary calculation.

There are several clauses that you must consider while calculating the leave salary. It is, therefore, necessary to take help of experts in this matter, to avoid any shortcomings in the future. Our experienced team will ensure that all the necessary clauses and guidelines are followed as per the law. This will not only make your work easier but will also eliminate the risk of errors.

Our team has extensive experience in conflict resolution and handling matters related to corporate services. Connect with us for more details on leave pay and such matters.

The majority of us are looking forward to our annual vacation. For us, this is the time to enjoy and come back rejuvenated. However, not all of us understand the laws regulating annual leave as per the UAE labor law. Both for employer and employee, it is important to understand the regulations concerning the annual leave and leave salary in the UAE.

When it comes to the leave salary, it is extremely important for an employer to handle this critical matter properly so that they won’t have any conflicts with their employees. If an employer makes the leave salary payment promptly, it might work as one of the retention strategies and they may be able to retain quality employees, as timely payment is highly appreciated by the workforce.

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