UAE Annual Leave Payout After Resignation: Is It Part of Your Final Salary?

Last updated: May 2026  |  Sources: UAE MOHRE, ICP, Federal Decree-Law No. 33 of 2021

If you are resigning or leaving your job in the UAE, your employer must pay you for any annual leave days you have not used. This is called UAE annual leave encashment on resignation, and it is a legal requirement — not optional. Many workers do not know they are owed this payment, and some employers try to avoid it.

This guide explains exactly how the payment is calculated, what the law says, and what to do if your employer refuses.

Legal Basis: UAE Annual Leave Encashment Under the Labour Law

Under Federal Decree-Law No. 33 of 2021 Regulating Labour Relations, Article 19, all private sector workers in the UAE are entitled to paid annual leave. When employment ends — whether by resignation, termination, or contract expiry — any unused leave days must be converted to a cash payment as part of the final settlement.

This applies regardless of why you are leaving. Even if you resign voluntarily, you are still entitled to UAE annual leave encashment on resignation for unused days.

How Many Annual Leave Days Are You Entitled To?

Under UAE Labour Law, your annual leave entitlement depends on your length of service:

If you worked for 1 year and 4 months but only took 10 days of leave, you are entitled to encashment for the remaining 20 days of that year, plus proportional leave for the additional 4 months.

Important: Your employment contract may give you more than 30 days of annual leave. If so, the higher number applies. The Labour Law sets the minimum — not the maximum.

How to Calculate UAE Annual Leave Encashment on Resignation

The Formula

Leave Encashment = (Basic Monthly Salary ÷ 30) × Unused Leave Days

This is based on your basic salary only. Housing allowance, transport allowance, and bonuses are not included in this calculation.

Worked Example

If You Worked Less Than a Full Year

For partial years, calculate your proportional leave first. If you worked 9 months and your yearly entitlement is 30 days:

• Accrued leave = 30 × (9 ÷ 12) = 22.5 days
• If you took 5 days, unused = 17.5 days
• Encashment = (Basic Salary ÷ 30) × 17.5

What Counts as “Basic Salary” for Leave Encashment?

Only the fixed monthly amount in your employment contract — your basic wage. Check your contract for the line that says “basic salary” or “basic wage.” Do not include:

• Housing or accommodation allowance
• Transportation or petrol allowance
• Food allowance
• Annual bonuses
• Overtime pay

If your employer argues they do not have to pay encashment because you resigned without notice, that argument is not valid under UAE law. Unused leave is owed regardless of how employment ends, as long as you completed the minimum service period.

Documents to Build the Leave-Encashment Claim

When Must Your Employer Pay Leave Encashment?

UAE law requires your employer to pay all final settlement — including leave encashment — within 14 days of the end of employment. If they delay without reason beyond 14 days, you can file a complaint with MOHRE.

Your leave encashment will be part of your total final settlement package, which also includes:

• End of service gratuity (if eligible — see our guide on UAE end of service gratuity)
• Any unpaid salary for the last working month
• Any overtime payments owed
• Notice period payment (if applicable)

What If Your Employer Refuses to Pay Leave Encashment?

1. Request in writing — Send a WhatsApp or email asking for your final settlement breakdown, specifically mentioning unused annual leave days. Keep the message.
2. File a MOHRE complaint — Call 800-60 or file online at mohre.gov.ae. Select “Wage Complaint” or “Final Settlement Dispute.” This service is free.
3. Provide evidence — Submit your employment contract, payslips showing your basic salary, and any leave records. If you do not have these documents, MOHRE will request them from the employer.
4. Attend mediation — MOHRE will schedule a session. If your employer does not attend, the case is referred to the court and you are very likely to win.

For additional protection if you are also owed your regular salary, read our guide on UAE unpaid salary claims — the MOHRE process is the same.

What Usually Happens Next

1. You confirm the unused leave figure in writing to HR before your last working day — WhatsApp or email is enough.
2. HR includes the leave encashment in the final settlement sheet, calculated on basic salary as Article 29 requires.
3. The total final settlement (salary + leave encashment + gratuity + notice pay) is transferred within 14 days of the last working day.
4. If the figure is short, you reply to HR in writing within 7 days quoting the formula. Most employers correct it after a written challenge.
5. If they still refuse, file a MOHRE complaint on 800-60. The conciliation session is usually scheduled within 2 weeks.
6. MOHRE issues a binding decision for claims under AED 50,000 and refers larger or contested cases to the labour court.

Can Your Employer Force You to Take Remaining Leave Before You Resign?

Yes, in some cases. UAE Labour Law allows employers to schedule when employees take annual leave with advance notice. If your employer asks you to use your remaining leave during your notice period, that is allowed under Article 19. However, they cannot simply “cancel” your unused leave — if it is not taken, it must be paid as encashment.

Special Cases: Annual Leave During Notice Period

If you resign with a notice period, the days you work during notice are counted normally. If your employer asks you to take your remaining annual leave during the notice period (instead of working), that is legal. The notice period is then considered fulfilled through the leave days. You would not receive additional encashment for those days.

If your employer cancels your notice period and tells you to leave immediately, you are entitled to notice period pay plus the full leave encashment.

Common Mistakes to Avoid

• Allowing ‘unused leave is forfeited’ clauses to stand — Such clauses are unenforceable under Article 29. Quote the article in writing and they almost always concede.
• Using total salary instead of basic for the formula — The legal minimum is basic-salary-based. Higher contractual rates apply only if the contract clearly says so.
• Forgetting partial-year accrual after 6 months of service — Two days per completed month between 6 and 12 months are payable on departure.
• Signing the visa cancellation form before the final settlement is in the bank — Once cancelled, leverage drops sharply and MOHRE cases take longer.
• Treating informal cash payment for leave days as final — Without a stamped or signed acknowledgment, the employer can later claim it never happened.
• Waiting past 30 days to file a MOHRE complaint — Memory degrades, witnesses move on, and conciliation strength weakens. Within 30 days is the strongest position.

Frequently Asked Questions

Do I get annual leave encashment if I resign before completing one year?

Yes, if you completed more than 6 months. You are entitled to 2 days per completed month of service. If you worked 9 months and took no leave, you receive encashment for 18 days at your basic daily rate.

My employer says they do not pay encashment for resignations. Is this legal?

No. Under Federal Decree-Law No. 33 of 2021, Article 19, unused annual leave must be paid on departure regardless of the reason for leaving. This cannot be waived by contract. File a complaint with MOHRE at 800-60 if your employer refuses.

My contract says I lose unused leave if I do not take it. Is this valid?

No. UAE Labour Law does not allow contract clauses that remove the right to leave encashment. Any clause that tries to forfeit your unused leave is legally unenforceable. Your right to payment is protected by law, not subject to employer policy.

I took extra leave last year — can my employer deduct this from my encashment?

Yes. If you took more days than you accrued (“advance leave”), your employer can deduct the excess from your final settlement. Check your leave balance records before your last day to understand how many days you have remaining.

How many leave days do I get in my first year?

In the first 6 months, you are not entitled to annual leave. From 6 months to 12 months, you earn 2 days per completed month. From 12 months onwards, you are entitled to 30 days per year.

My employer paid my leave salary at total salary, not basic. Is that right?

The UAE Labour Law minimum is based on basic salary. However, if your contract says leave is calculated on your full salary (basic + allowances), the higher amount applies. Review your contract — but you cannot receive less than the basic salary calculation.

This article is for general information only and is not legal advice. Rules can change. Always confirm with MOHRE or a qualified legal professional.