UAE Annual Leave Pay & Entitlements: Complete Expat Guide 2026
As summer temperatures peak across Dubai, my office chat channels inevitably flood with questions about annual leave calculations, flight ticket allowances, and encashment rights. It is that time of year when almost every expat is planning a getaway or heading home to visit family.
However, navigating the UAE Labour Law when it comes to paid leave can feel confusing if you are unfamiliar with how basic salary versus total salary is calculated. Here is my complete breakdown of UAE annual leave pay entitlements in 2026 so you can plan your time off with total peace of mind.
Understanding Your Legal Annual Leave Entitlement under UAE Labour Law
Under UAE Federal Decree-Law No. 33 of 2021 (governing employment relations in the private sector), every employee is legally entitled to paid annual leave once they complete six months of continuous service. During your first year of employment, leave accrues at two days per month if you have completed six months but less than one year.
Once you cross your one-year work anniversary, your entitlement jumps to 30 calendar days of paid annual leave for each year of service. This 30-day period includes public holidays or weekends falling within the vacation block unless your employment contract specifies otherwise.
Always check whether your employment contract counts annual leave in calendar days or working days—it makes a big difference when booking long summer trips.
How UAE Annual Leave Pay Is Calculated: Basic vs. Total Salary
A common point of confusion for UAE employees is whether leave pay is based solely on basic salary or total remuneration. According to UAE Labour Law, employees on annual leave are entitled to receive their full wage, which includes their basic salary plus housing and transport allowances.
However, variable allowances such as sales commissions, performance bonuses, or overtime payments are generally excluded from leave pay calculations unless explicitly guaranteed in your contract.
First 6 to 12 months: 2 paid days per month of service
After 1 year of service: 30 calendar days of full paid annual leave
Pay breakdown: Full wage (Basic Salary + Housing Allowance + Transport Allowance)
Payment timing: Employers must disburse annual leave pay before the leave commences
Unused Annual Leave: Encashment and Carry-Over Rules
If you do not utilize your full annual leave allowance within a given year, UAE law allows options for carry-over or cash encashment, subject to mutual agreement between you and your employer. An employer cannot force an employee to forfeit accrued leave without fair compensation.
Employees can carry forward up to half of their unused annual leave to the following year or agree with their employer to receive a cash payout calculated using their basic salary. Upon contract termination or resignation, all unused leave balance must be encashed based on the basic salary rate.
Request written confirmation from HR before carrying over unused days to ensure your leave balance carries forward seamlessly into the next calendar year.
Public Holidays, Sick Leave, and Probation Period Rules
Navigating annual leave during your probation period requires careful planning. Employers are not legally required to grant paid annual leave during probation, though accrued days can be taken once probation is successfully cleared.
If official UAE public holidays fall during your approved annual leave period, those days are counted as part of your 30 calendar days unless your company policy explicitly excludes public holidays from calendar-day leave tallies.
Employer Rights and Setting Leave Schedules
While annual leave is an employee right, the timing of leave is subject to employer approval based on operational requirements. Employers have the legal authority to determine when employees take leave to maintain business continuity, but they must give reasonable notice.
Crucially, employers must ensure employees take their annual leave at least once every two years. Preventing an employee from taking leave for more than two consecutive years violates UAE labor regulations.
Submit your summer leave requests early in the year—employers in Dubai often limit how many team members can take time off simultaneously.
FAQ
How is annual leave pay calculated in the UAE?
Annual leave pay in the UAE is calculated based on your full wage, which includes basic salary plus fixed allowances like housing and transport.
Can I encash my unused annual leave in the UAE?
Yes, unused annual leave can be encashed upon agreement with your employer, calculated based on your basic salary rate, or paid out upon employment termination.
Do weekends count as part of annual leave in Dubai?
Yes, under standard UAE Labour Law, annual leave is calculated as 30 calendar days per year, which includes weekends and public holidays falling within the leave period.
Can an employer deny annual leave in the UAE?
An employer can adjust the timing of annual leave based on business needs, but they cannot deprive an employee of taking annual leave at least once every two years.
Useful Links
MOHRE Official Portal · UAE Government Portal Labour Rules · TAMM Abu Dhabi Official Services · Dubai Courts Official Portal · MOHRE UAE Instagram · DIFC Employee Workplace Savings (DEWS)
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