How to Make the Leave Salary Calculation in the UAE

leave salary calculation in UAE

Getting your leave salary calculation in UAE right is important to have good relationships with your employees. Furthermore, in the UAE, every worker has the right to receive fair paid leave. However, it may not be a very clear process, so it is important to know the details about it.

In this article, you will learn how to handle these types of salary calculations so that you can make fair payments. Additionally, you will see what the terms are for leave salary calculation in UAE MOHRE.

Leave Salary Calculation in the UAE Process & Challenges

leave salary calculation in UAE

According to the labor legislation of the UAE, an employee who works in a company has the right to have a salary for annual leave. The worker earns this right when he/she completes one year of service in the organization where they works. Likewise, employers must provide vacations each year as well as paid time off as a benefit.

The leave salary calculation in UAE is valuable to employees in general. Also, with this payment, they can invest in anything they want or simply spend it on their vacations. Therefore, an employer must know how to make these calculations accurately but in compliance with the labor legislation.

What is the UAE’s formula for calculating annual leave pay?

Your employees will be entitled to their annual leave based on the time they have served the company. Next, we will see the license time according to the service provided:

  • An employee who has 6 months of service will have the right to enjoy 2 days of leave per month.
  • If the employee has more than one year service, he or she may enjoy 30 days of vacation per year.

Additionally, the leave time will depend on the type of contract, whether it is limited or unlimited or by agreement between employee-employer. On the other hand, within the leave salary calculation in UAE of vacation including weekends, leave, holidays, and annual leave.

Moreover, the employee cannot receive any leave if he or she is on probation unless approved by management.

Beginning of the annual vacation period

The employer decides when to start the vacation and if it is possible to share it in two parts. In this case, it will depend on the demands of the job. Therefore, as an employer, you may refuse to give the total annual leave at once. Similarly, you can postpone the vacation once in 2 consecutive years and the payments for it.

Likewise, it is important that as a business owner, you know well how to calculate the leave salary calculation in UAE for your employees. Thus, the amount calculated by you must comply with the UAE labor laws so that you do not face any penalties.

In addition, payment must be based on the basic salary and the housing subsidy or other types of benefits established in the employment contract. On the other hand, if the employee is in a private company and terminates employment or resigns, he or she will be entitled to end-of-service benefits. The calculation is based on the contract made at the beginning of your service.

Additionally, if an employee worked all or part of the vacation, and you do not carry this time over to the next year, you must pay compensation. This payment includes vacation leave pay and regular pay for your days worked.

Will you be able to fire or terminate the contract of an employee during their vacation?

The answer is no, you will not be able to terminate the employment contract during the probation period in which he or she is on annual leave. If you make any notice or letter of dismissal during this period, it will be invalidated by labor law. Furthermore, if you insist on dismissing the employee on vacation leave, it will be treated by law as an arbitrary and illegal dismissal and you will receive sanctions.

However, if your worker does not return to his or her job after 7 consecutive days from the date he or she should have returned, the employer may dismiss him or her.

At what point will you have to pay the license salary?

Legislation specifies that the employer must make payment for holiday leave just before the start of the holiday. After calculating the leave salary, you must pay the full salary, also adding the compensation for the fair days. Likewise, any time the employee takes after the legal leave period will be unpaid.

Consequence of not paying the corresponding amount for licenses

You are responsible for paying for the vacations of your employees according to UAE labor legislation. Therefore, if you do not comply with this legal obligation, they may file a claim against you with the MOHRE.

Will your employee be able to work elsewhere during the annual leave period?

Again, the answer is a resounding no; under no circumstances will any employee be able to provide their services to another company if they are on their annual leave. Furthermore, if you discover it, you may terminate the contract immediately and without prior notice.

Leave salary calculation in UAE in case of resignation

Your employee will be able to receive their leave pay if the employment contract ends or if they leave after the legal notice period ends. In this case, you will get a salary estimate for your vacation that you did not take. Thus, it will have to be calculated based on the last salary received by the worker.

Types of leave in the UAE labor law

Leave salary calculations in Dubai vary depending on the type of leave you will give your worker. Below you will see how it is calculated for each license:

Parental leave

The employees of your company have the right to enjoy paid parental leave. This remuneration will be for 5 days after the birth of a child.

Maternity leave

Currently, the Labor Law incorporated new modifications in the leave salary calculation in UAE. In this case, the law increased the days from 45 to 60 days. Likewise, for the initial 45 days, you will receive the full salary for 15 days.

However, within the modifications to the law, it stands out that maternity leave will now apply in the case of stillborn babies and any illness derived from pregnancy.

Sick leave

Your employee will be entitled to this leave if he/she has completed the 3 months established for the trial period. Consequently, its employees may receive 90 days of sick leave and it is the employee who decides to take it at once or in installments per year. In this type of leave, you will pay full salary for the first 15 days, then half salary and if it exceeds 30 days you will not receive remuneration.

The leave salary calculation in UAE MOHRE can be done easily by following the following steps:

  1. Divide the salary of the worker by 30 to convert it to a daily salary.
  2. Now multiply the daily salary by the number of days.
  3. The result you obtain will be sick leave.

Compassionate leave

This leave is for those employees who lost a spouse, parent, child, grandchildren, grandparents, or sibling. In this case, the license will be 3 to 5 gods.

Compensatory leave

You will pay compensation for this leave if your employee works on holiday. Therefore, you will receive the salary payment plus a bonus of 50% or 150% as the case may be. Additionally, remember that even if you understand the calculations well, you should have an error-free financial record.

Study leave

This license is for employees who have more than 2 years of service in the company. In this case, they will enjoy a leave of absence for 10 days, for which labor law does not impose remuneration. Therefore, it is you who will decide whether or not to pay the employee’s leave.

Hajj leave

This leave may be granted only once during the period of service of the employee in the company. This leave is unpaid and the employee will have 30 days of leave to participate in the Hajj.

Disability leave

In this case, a worker will have the right to receive 30 days of paid leave and 30 unpaid leave if she has a child who has a disability.

What is the UAE formula for calculating annual leave pay?

According to labour law, there are rules for the leave salary calculation in UAE which you will learn about below:

  • You must pay full salary upon start of the leave.
  • Likewise, when it comes to vacation leave, you will have to pay it at the beginning of that period.
  • To calculate annual leave, use the full basic salary, adding housing allowance or any regular allowance per month.

Also, there are rules applied regarding salary calculation referring to the administrative aspect, as you will see below:

  • A worker can decide when he/she wants to start their leave but will have to give 10 days of notice.
  • You can decide the start date of the vacation of an employee or if they will have to split it.
  • You must give advance notice to the employee 1 month in advance.
  • Your employee can transfer their vacations as long as it is in agreement with you.
  • An employer may not prevent the employee from taking annual leave if he/she has accumulated for more than 2 years.
  • An employee who terminates a contract and has any accrued leave will receive a payment equal to the basic salary without any allowance.
  • During vacations, you will not be able to terminate the contract with the worker.
  • On national holidays, they will be taken as part of the same vacation.
  • Also, if your employee falls ill during their vacation, they will not receive sick leave but you must support the employee if they notify you.
  • If the employee takes more days than those established for vacation, the employer is not required to pay for those days.
  • If your employee is serving your company on their annual leave, you will need to do the leave salary calculation in UAE. This is in addition to payment for work performed.

Calculation of vacation salary in the UAE in case of resignation

leave salary calculation in UAE

If an employee resigns, he or she may receive a bonus established by the Labor Law and, in this case, it will depend on the type of contract, as you will see below:

Leave salary calculation in UAE for Unlimited Contract

The calculation for the payment of this bonus mode is a bit complicated. An employee with less than one year of service will not receive benefits if you are the one who terminated the contract. Likewise, employees who have between 1 and 5 years of service, they will receive 21 days of the basic salary. Also, workers who served for more than 5 consecutive years will receive 30 days of basic salary.

If it was your employee who resigned, you will be able to rewrite 2/3 of the 21 days of basic salary. And if you have more than 5 years of work with the company, you will receive 21 days of full basic stipend.

Calculate the leave salary for a limited contract

In the case of limited contracts, if the worker provides his services to the company for less than 1 year, he will not receive any bonus. Likewise, if you have served the company for 1 or 5 years, you will receive 21 days of salary for each year you worked. Finally, the calculation of the leave salary for employees with more than 5 years of work will have a bonus equal to 30 days of salary per year of service.

Methods to Simplify Leave Salary Procedures in the UAE

To do the leave salary calculation Dubai, in a simpler way, you must know the details of your employees well. Therefore, you must know precisely every permission granted to your employees during their services. In this case, the human resources department of your company must know who is on leave, who will be on leave, as well as the rights that each worker has.

In addition, when you process the data manually it is more difficult, as well as check attendance daily. For this reason, you must apply current technologies that do all these calculations automatically. In this way, you can make your workload smoother in terms of managing the data of your employees.

Likewise, the work of leave salary calculations in UAE will be more accurate and efficient, thereby reducing potential human errors. Currently, some programs and platforms can help you with the different tasks related to your workforce data. Equally, if it is overwhelming for you, you can delegate this task to someone.

In conclusion, the leave salary calculation in UAE is very important, so the employer must strive to do it correctly. If it is a difficult task for you, you could use technology or simply hire someone for this activity. Similarly, you must have as much knowledge as possible on this topic to supervise anyone doing this task.

If you want help, you can contact us and we will promptly respond to your concerns since we have the best-qualified personnel for this.

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