Leave Encashment Calculator

Estimate unused annual leave pay on termination — based on BASIC wage per UAE Labour Law

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Understanding Leave Encashment Under UAE Labour Law

Leave encashment is the cash payment an employee receives for unused annual leave when employment ends — by resignation, termination, or contract expiry. Under Article 29 of Federal Decree-Law No. 33 of 2021, this payment is calculated on the employee’s basic salary only, not the full monthly wage.

This is a common point of confusion. During active employment, annual leave is paid at the full wage (basic salary plus any fixed allowances stated in the contract). At termination, the unused balance is cashed out at basic salary only. Getting this distinction wrong is one of the most frequent sources of final settlement disputes referred to MOHRE.

Entitlement builds up in stages. No leave accrues during the first six months of service. After completing six months, leave accrues at 2 calendar days per month going forward, not retroactively. After one full year of continuous service, the entitlement becomes 30 calendar days per year. Use the calculator above to work out exactly what is owed, whether the unused balance is already known or needs to be calculated from a start date and last working day.

Calculate Leave Encashment in 3 Steps

1

Choose your mode

Use I know my unused days if the balance is already confirmed on a payslip or HR letter. Use Calculate my accrued days to work it out from service dates.

2

Enter salary and leave details

Type in the monthly basic salary (or use the gross salary helper), then add the unused leave days or the service dates.

3

Get the breakdown

See the daily rate, days encashed, and total payment, with the exact formula shown, ready to check against a final settlement.

See the Maths Behind Each Mode

Basic salary → Encashment

Basic monthly salary

AED 9,000

Unused leave days

Daily rate

AED 300

Encashment

AED 6,000

9,000 ÷ 30 × 20

Service dates → Balance → Encashment

Service period

1y 4m

Accrued entitlement

40 days

Leave already taken

15 days

Unused balance

25 days

(Basic ÷ 30) × 25

Entitlement

How leave accrues

30 calendar days/year after 1 year of service
2 days/month for 6–12 months of service
Under 6 months — no statutory entitlement

Basis

How it's paid

Encashment on exit = BASIC salary
Daily rate = basic ÷ 30
Pay = daily rate × unused days

Entitlement

Carry-forward cap

Requires employer agreement or company policy
Capped at max 50% (Cabinet Resolution No. 1/2022, Art. 19)
Unused balance is encashed on exit

Frequently Asked Questions

The questions Our payroll team gets asked most often.

Is leave encashment calculated on basic or gross salary?

Basic salary only. Under Article 29 of Federal Decree-Law No. 33 of 2021, unused annual leave paid out on termination uses the basic wage, excluding housing, transport, and other allowances, unless the employment contract states a more favourable formula.

How many annual leave days do I accrue in the UAE?

Nothing for the first six months of service. Between six months and one year, 2 calendar days accrue per month worked. After one full year of continuous service, the entitlement is 30 calendar days per year.

Can I be paid cash for unused leave while still employed?

Generally not permitted, except in limited cases where both employer and employee agree in writing, particularly for the carried-forward portion of leave, under Article 29(7) of Federal Decree-Law No. 33 of 2021. Encashment of the full unused balance becomes a statutory right only at termination.

How much unused leave can I carry forward to the next year?

Carry-forward requires the employer’s agreement and is subject to company policy. Where permitted, Article 19 of Cabinet Resolution No. 1 of 2022 caps it at no more than 50% of the annual leave entitlement. An employer also may not block leave from being used for more than two years unless the employee agrees to carry it forward or encash it.

What if I resign before completing one year of service?

If service is under six months, no annual leave has accrued and no encashment is due. Between six months and one year, the 2-days-per-month accrual still applies, and any unused balance is paid out at the daily basic rate on exit.

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This calculator and content give indicative figures based on Federal Decree-Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022. Partial-year pro-ration follows standard payroll practice rather than a literal statutory formula, and actual final settlement amounts can vary by contract terms and company policy. Employees in the DIFC or ADGM follow separate free zone leave rules. Contact BCL Globiz for a payroll review or final settlement calculation specific to your case.

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