Leave salary calculation in the UAE – Need to Know

The leave salary calculation in UAE of vacation pay is governing by certain regulations and principles. Leave salary calculation in the UAE, is based on the regular salary and regular wage items. It is important to consult the applicable collective bargaining agreement to verify if there are any specific salary or fringe benefits.

In this article we talk about what is leave salary in UAE, leave salary calculation in UAE, how to calculate leave salary in UAE, leave salary calculation formula in UAE

What is Leave Salary in UAE?

Leave salary calculation in UAE is governate by Federal Law No. 8 of 1980 and its subsequent amendments. This law sets standards for labor issues such as contract termination, job security, working hours and vacations.

According to UAE labor law, during vacation, employees must receive their normal salary. In addition, there are ministerial decrees that seek to improve the situation of workers and clarify the conditions for termination of employment and the rules for working with a new employer.

Importance of leave salary calculation in UAE

Leave salary calculation in UAE is of great importance to both employees and employers. This is so that the following purposes are fulfill: 

1. Rest and Recuperation:

Holidays allow workers to disconnect from work and rest physically and mentally.

Time off during vacation is essential for recovery, which in turn improves productivity and overall well-being.

2. Motivation and Job Satisfaction:

Offering vacation pay motivates employees to work with dedication and efficiency.

Workers feel valued and appreciated when they receive adequate compensation during their time off.

3. Equity and Fairness:

Correct calculation of vacation pay ensures equity among employees.

All workers should receive fair and consistent compensation during their time off.

4. Legal Compliance and Employee Protection:

Labor regulations in the UAE set out the rights and duties of employees and employers.

Complying with these regulations ensures that workers is protect and receive their benefits correctly.

5. Corporate Image and Talent Retention:

Companies that comply with labor standards and offer adequate vacation pay build a good reputation.

This attracts talent and contributes to long-term employee retention.

Besides, leave salary calculation in UAE is not only a legal entitlement, but also an essential part of the employment relationship that benefits both employees and organizations. It is fundamental to maintaining a healthy work-life balance.

Types of leave in the UAE Labour Law

Leave salary calculation Dubai is a fundamental right for workers, and their duration and pay are protect by law.

Annual Leave:

• According to Article 38 of the Workers’ Statute, every worker is entitled to a period of paid annual leave.
• The duration of the vacation cannot be less than 30 calendar days per year.
• If the employee has work less than one year, he/she is entitled to the part proportional to the time working, as established in the Collective Bargaining Agreement or the individual contract.

Vacations in Part-Time Contracts:

• Part-time employees are entitled to the same vacation days as full-time employees.
• However, the salary during vacation for part-time workers will be proportional to their working hours.

Fixing Vacation Dates:

• Vacations must be agreeing between the worker and the employer; they cannot be fix unilaterally by either party.
• The employee must know the date of his vacations at least 2 months in advance, unless the Collective Bargaining Agreement establishes a longer period.
• It is advisable to grant vacations in writing to avoid problems and to guarantee that the rest period is being enjoy it.

Sick Leave

In the United Arab Emirates (UAE), the handling of sick leave varies among certain circumstances. Sick leave is handled as follows:

Definition:

• Sick leave in the UAE refers to situations where an employee is unable to work due to illness or injury.
• Unlike Spain, in the UAE, no distinction is made between common and occupational illnesses. Any illness or injury can give rise to sick leave.

Rights and Benefits:

• Workers in the UAE is entitle to pay sick leave.
• The length of leave varies according to the employee’s seniority and company policy.
• Generally, employees can receive up to 15 days of paid leave per year.
• The employer must pay full salary during sick leave.

Calculation of the Financial Benefit:

• During sick leave, the employee receives his or her normal salary.
• There is no specific income replacement rate as in Spain.
• The exact amount depends on the employee’s base salary and company policy.

Documentation:

• The employee must provide a medical certificate stating the nature of the illness or injury.
• This certificate is require to justify the absence and request sick leave.

Procedure:

• When an employee becomes ill, he/she must inform his/her employer as soon as possible.
• The employer may request a doctor’s visit or an additional medical report.
• Important Considerations:
• Specific policies may vary by company and industry.

It is important to consult your employment contract and internal company policies to understand the specific details.

Annual Leave

In the United Arab Emirates (UAE), the management of annual leave is governate by Federal Law No. 8 of 1980. Employees are generally entitled to annual leave after completion of each year of service.

• If service is more than six months and less than one year: Two days leave for each month.
• If service is more than one year: 30 days per year.

In addition, employees are entitled to 15 days of paid sick leave. If the employment contract stipulates a longer duration of leave, the contractually agreed shall prevail.

Maternity Leave

Maternity leave is regulated by Federal Law No. 8 of 1980 and its amendments. Here is a summary of how it is handled:

1. Length of leave: female employees are entitled to 45 days of fully pay maternity leave, with an additional 15 days of pay half leave.
2. In case of difficult childbirth: There may be an additional 15 days of fully pay leave.
3. Commencement of leave: Working mothers may begin their maternity leave up to 30 days before the expected date of delivery.
4. If the child is sick or has a disability: The mother may take an additional 30 days of fully paid leave and another 30 days of unpaid leave, upon presentation of a medical certificate from a recognized authority.
5. Extension in 2019: An amendment made it possible to extend maternity leave to up to 90 days, considering unpaid or combined leave, including sick leave or annual leave.
6. Eligibility criteria: To be eligible for maternity leave, female employees must have completed a continuous period of service of not less than one year with their company.
7. It is important that employees review their individual contracts and consult with the labor authority for detailed information specific to their situation.

Paternity Leave

Paternity leave in the United Arab Emirates (UAE) is quite limited compare to maternity leave. According to available information:

Public employees are offered three days of paternity leave. While private employees, traditionally, are not granted formal paternity leave in the private sector.

 However, it is important to mention that policies may change and there may be differences depending on the particular emirate or company. For the latest information that can be use in your situation.

Disability Leave

The procedure for granting disability leave in the United Arab Emirates (UAE) may vary by emirate and specific company, but generally includes the following steps:

• Notification and Documentation: The employee must notify his or her employer of his or her condition and provide the necessary medical documentation certifying his or her disability.
• Medical Evaluation: An additional medical evaluation by a professional designated by the employer or health authority may be require to confirm the disability and the need for leave.
• Discharge Approval: Once the documentation has been reviewed and verify, the employer will proceed to approve the disability discharge.
• Benefits and Compensation: The benefits and compensation to which the employee is entitle during the leave will be determinate in accordance with the law and the employment contract.
• Reinstatement Plan: If possible, a plan will be developed for the employee’s eventual return to work, which may include reasonable job accommodations.

It is important for both employers and employees to be aware of local laws and regulations, as well as internal company policies, to properly manage disability leave.

Compassionate Leave

In the United Arab Emirates, compassionate leave is provided for in the labor law for the private sector. According to the updated law, workers are entitled to compassionate leave that can range from three to five days, depending on the degree of relationship to the deceased.

Here I detail the general procedure for granting compassionate leave:

• Notification: The employee must inform the employer of the situation requiring compassionate leave as soon as possible.
• Documentation: Appropriate documentation, such as a death certificate, must be provide to support the leave request.
• Approval: The employer will review the request and submitted documentation to approve the leave.
• Duration: The duration of the leave will be in accordance with the employee’s relationship to the deceased and company policies, within the legal framework of three to five days.
• Return to work: At the end of the compassionate leave, the employee will return to his/her regular duties.

It is important to review the employment contract and internal company policies, as they may provide additional details or specific conditions related to compassionate leave.

Study Leave

The procedure for obtaining a study permit in the United Arab Emirates (UAE) generally involves the following steps:

1. Admission to an Educational Institution: The student must be admitted to a recognize educational institution in the UAE.
2. Student Visa Application: Once admitted, the student must apply for a student visa. The university or educational institution often acts as the sponsor for the visa.
3. Documentation Required: The student visa application may require documents such as a valid passport, letter of acceptance from the institution, proof of sufficient funds for the stay, and other relevant documents.
4. Medical Examination: Students must also undergo a medical examination as part of the visa application process.
5. Visa Approval: Student visa approval is subject to review by UAE immigration authorities and may include security checks.
6. Visa Renewal: Student visas generally need to be renew every year, depending on the duration of the study program.

It is important that students contact the educational institution in the UAE for specific information on the student visa application process and exact requirements. In addition, they must ensure that they comply with all UAE immigration and visa regulations during their stay in the country.

Compensatory Leave

In the United Arab Emirates, compensatory leave is granted to employees who have worked overtime or on public holidays, providing them with time off in lieu of additional pay. The procedure for granting compensatory leave may vary by company and emirate-specific regulations, but generally follows these steps:

• Accumulation of Hours: The employee must have accumulated overtime or have worked during holidays or breaks.
• Application: The employee applies for compensatory leave through his or her human resources department or direct supervisor.
• Approval: The request must be approved by the employer or the appropriate department.
• Recording: Compensatory leave hours are recording and it is agreed when the employee can take them.
• Use of Leave: The employee uses compensatory leave on an agreed date without affecting the operation of the business.

It is important that employees review their employment contract and internal company policies to understand how compensatory leave is handled in their specific workplace.

Hajj Umrah Leave

To obtain a Hajj or Umrah leave in the United Arab Emirates (UAE), the procedure generally involves the following steps:

• Request for Leave: The employee must submit a formal request for Hajj or Umrah leave to his or her employer, indicating the dates of the Hajj.
• Documentation: Relevant documentation must be attach, such as confirmation of Hajj or Umrah booking and any other documents require by the employer.
• Employer Approval: The employer will review the application and documentation provided and decide whether to approve the leave.
• Notification of Approval: If approve, the employer will notify the employee and the details of the leave, such as the duration and whether it will be pay or unpay, will be agreed upon.
• Pilgrimage Visa: The employee must ensure that he/she has a valid visa to perform Hajj or Umrah, which is issue by Saudi Arabia.
• Planning for Absence: The company and the employee should plan how the absence will be handled to minimize the impact on the company’s operations.

It is important for both employers and employees to be aware of the company’s internal policies and UAE labor laws that may apply to religious leave.

How is leave salary calculated in UAE?

The leave salary calculation in UAE is based on the employee’s basic salary, excluding fringe benefits such as transportation and housing. Leave salary calculation in UAE as per new labour law It can be calculate as follows: 

• Basic Monthly Salary: The employee’s basic monthly salary is taken.
• Annual Calculation: This salary is multiply by 12 to obtain the basic annual salary.
• Division by Days of the Year: Then, the basic annual salary is divided by 365 to determine the basic daily salary.
• Vacation Salary: The basic daily salary is multiply by the number of vacation days to which the employee is entitle.

How leave salary calculation in UAE is done in case of resignation?

For the leave salary calculation in UAE after resignation, the calculation of untaken vacation pay is done on a pro-rata basis. Here are some guidelines on leave salary calculation in UAE in case of resignation and how to calculate it:

Days of Vacation Not Taken:

• Divide the gross monthly salary by 30 to get the daily salary.
• Multiply the days you have worked without taking vacation by 30.
• Finally, divide this result by 360.
• Gross Daily Amount:
• Consider the employee’s salary items that have the indicator “Also on Vacation” or “Only on Vacation” marked.
• Calculate the gross daily amount by multiplying the base salary by 12 (to obtain the annual salary) and then dividing by 255 working days.
• For example, if the base salary is €1,200, the daily gross amount would be approximately €56.47.
• Proportional Calculation:
• Multiply the daily gross amount by the days of vacation not taken.
• If the employee has taken some vacation days during the accrued period, subtract them from the total vacation days.

In summary, the amount of the proportional part of vacation that is calculate in the severance payment would be approximately 433.94 euros. Remember that these calculations are estimates and may vary depending on individual circumstances.

Leave salary calculation in the UAE in case of termination

The leave salary calculation in UAE in the event of dismissal is based on certain specific principles. Below, I will explain how this aspect is handled:

• Duration of Vacation:

By law, employees in the UAE are entitle to a minimum of 30 calendar days of vacation per year.

Company policies may grant more vacation days, which benefits the employee.

• Calculation of Daily Wage:

To calculate the daily salary, we first determine the gross annual salary and then divide by the number of working days in a year.

Example:

Gross annual salary: 24,000 € (distributed in 12 payments).

Working days in a year: 255 (considering weekends and holidays).

Daily salary = 24,000 € / 255 = 94.12 €/day2.

• Unused Vacation:

If an employee is dismissed or terminates his contract and has not taken all of his vacation days, these must be settled in the severance payment.

• We calculate the days of vacation not taken:

We use a rule of three:

If in 365 days 22 working days of vacation are generated, in 196 days (from January 1 to July 16) x working days are generate.

Where X = (196 x 22) / 365 = 11.81 working days of vacation.

If you have already taken one, you have 10.81 working days of vacation left.

We convert calendar days:

If 22 working days’ equals 30 calendar days, then 10.81 working days equals 14.74 calendar days.

Compensation for Vacation Not Taken.

We calculate the total amount of compensation.

Daily salary x Days generated and not taken.

In the example given:

Daily salary = 94.12 €/day.

The company must pay 14.74 days of vacation x 94.12 €/day = 1,389.16 € for vacation generated and not taken.

Remember that these calculations may vary depending on individual circumstances and the policies of each employer in the UAE.

Final Thoughts

It is important to understand the leave salary calculation in UAE, as they contribute to an informed and empowered workforce and promote fair and equitable labor practices.

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