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Leave encashment calculation as per UAE labour law in Dubai

leave encashment calculation as per uae labour law

Leave encashment is a common practice in the UAE for employees who have accrued unused annual leave days.

This article will shed light on the leave encashment calculation as per UAE labour law, ensuring you understand your rights and entitlements.

Office of Al Mulla. Whatsapp: Click here. Location: Dubai. Phone: 00971501961291.

Leave encashment calculation as per UAE labour law.

According to the UAE Labour Law, specifically Article 29(1)(a) of the Employment Law, employees are entitled to 30 days of annual leave for each year of service with their employer. This means that for every year you work, you earn 30 days of paid annual leave.

Limitations on Carry Forward.

While you can accumulate annual leave, the UAE labour law sets a limit. Employees can carry forward only 15 days of their annual leave to the following year, per Article 19 of Cabinet Resolution No. 1 of 2022. This limitation ensures that employees do not indefinitely stockpile their leave days.

Cash Allowance Option.

The UAE labour law also allows employees to receive a cash allowance instead of unused annual leave days.

If you choose this option, the calculation is based on your basic salary at the time of your entitlement to leave, per the same Cabinet Resolution mentioned earlier. This allows employees to benefit from their leave entitlement without physically taking time off.

End of Service Entitlement.

When an employee’s service with their current employer ends, they have the right to claim a cash allowance for any annual leave days they haven’t availed during their employment, as stated in Article 29(9) of the Employment Law. The calculation for this cash allowance is also based on the basic wage.

Leave Pay Fraction.

Employees who leave their jobs before utilizing their annual leave are entitled to leave pay for the fractions of the year in proportion to their service period. This calculation ensures that employees are fairly compensated for their accrued leave days.

FAQs about leave encashment calculation as per UAE labour law.

According to UAE labour law, employees can carry forward a maximum of 15 days of their annual leave to the following year.
You can claim a cash allowance for unused annual leave in the UAE when your employment with your current employer ends, as per Article 29(9) of the Employment Law.


Understanding leave encashment calculation per UAE labour law is crucial for employers and employees. It ensures that leave entitlements are managed efficiently and that employees are compensated fairly for unused days.

Remember that the UAE labour law protects your rights, and it’s essential to be aware of these regulations.

For expert guidance on labour cases in the UAE, Al Mulla Lawyer & Legal Consultant is your best choice. With extensive experience in labour law, they can provide invaluable assistance and advice, ensuring your rights are upheld in employment-related matters.

Contact the office of Al Mulla via Whatsapp. Click here. Or visit us at our law firms: Dubai. You can also call us on phone: 00971501961291.

Learn about UAE Labour Law Leave Pay in Dubai and read about UAE Labour Law Annual Leave Air Ticket Obligations in 2023.

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