UAE Leave Encashment: Complete 2026 Guide
How unused annual leave is turned into cash when you leave a UAE job — the entitlement, the basic-salary rule that surprises everyone, and carry-over limits.
→ Open the UAE Leave Encashment Calculator
When you leave a UAE job with annual leave still in the bank, your employer must pay it out. This is leave encashment, and the rules sit in Article 29 of Federal Decree-Law 33/2021 and Article 19 of Cabinet Resolution 1/2022.
How much annual leave you earn
| Length of service | Annual leave entitlement |
|---|---|
| 6 months to 1 year | 2 calendar days per month |
| After 1 full year | 30 calendar days per year |
Leave accrues as you work, so at the end of service you may have a balance of days you never took.
The basic-salary rule that catches everyone
Here is the point that surprises most employees: leave taken during employment is paid at your full wage (basic + allowances), but leave encashed at the end of service is paid on basic salary only. The encashment formula is:
Encashment = (Basic monthly salary ÷ 30) × unused leave days
So two employees with the same total package but different basic/allowance splits will receive different encashment amounts. A higher basic component means a bigger leave payout.
Carry-over rules
You cannot always roll unlimited leave forward. Up to half of your unused annual leave may be carried into the next year, or cashed by agreement with your employer. Company policy and your contract can be more generous, but not less than the statutory floor.
Worked example
Basic salary AED 6,000, with 20 unused leave days at exit. Daily wage = 6,000 ÷ 30 = AED 200. Encashment = 200 × 20 = AED 4,000. Note that if your total salary were AED 10,000 (AED 6,000 basic + AED 4,000 allowances), the encashment still uses the 6,000 basic — not the 10,000.
Where it fits in your settlement
Leave encashment is one line in your final settlement, alongside gratuity and any notice pay. All of it must be paid within 14 days of your contract ending.
Why the basic-only rule exists
The logic is that allowances such as housing and transport reimburse costs you incur while working. When you are on leave you still incur those costs, so leave taken during employment is paid at your full wage. But encashment of leave you never took is treated as a pure cash conversion of accrued days, which the law ties to basic salary. Whether or not you find that logic convincing, it is the rule, and it explains why your encashment line can look smaller than your monthly take-home.
Because the balance is measured in days, keep your own record of leave taken versus accrued through the year. Disputes usually come down to a disagreement over the day count, not the formula — and the burden of proof is easier to meet if you have your approved leave requests saved.
Key takeaways
- Annual leave is 30 days/year after 1 year (2 days/month between 6 and 12 months).
- End-of-service encashment uses basic salary only: (basic ÷ 30) × unused days.
- Leave taken while employed is paid at full wage — encashment is not.
- Up to half of unused leave may be carried forward or cashed by agreement.
- Encashment is one line of the final settlement, paid within 14 days.
Frequently asked questions
Is UAE leave encashment paid on basic or gross salary?
Basic salary only — even though leave taken while still employed is paid at your full wage of basic plus allowances.
How many annual leave days do I earn in the UAE?
30 calendar days per year after one year of service, and 2 calendar days per month if you have between 6 months and 1 year of service.
Can I carry unused leave into next year?
Up to half of your unused annual leave may be carried forward, or cashed by agreement with your employer.
How is the leave encashment amount worked out?
Divide your basic monthly salary by 30 for a daily wage, then multiply by the number of unused leave days.
Related calculators & guides
More UAE employment calculators
Calcnate keeps a full set of law-accurate UAE tools so you can check every part of an exit or contract in one place. Each is built on Federal Decree-Law 33/2021 and the same figures explained above:
- UAE Gratuity Calculator — your end-of-service lump sum on the 21/30-day bands.
- UAE Final Settlement Calculator — gratuity, leave, notice and pending pay combined.
- UAE Notice Period Calculator — notice length and pay in lieu.
- UAE Leave Encashment Calculator — cash value of unused annual leave.
- UAE Probation Period Calculator — the six-month rules and notice.
- UAE Maternity Leave Calculator — the 45+15 day pay split.
- UAE Unemployment Insurance (ILOE) Calculator — your involuntary-loss payout.
Browse everything on the UAE hub.