UAE Leave Encashment 2026: Why It Is Paid on Basic Salary
→ Open the UAE Leave Encashment Calculator
Unused annual leave in the UAE is not just forfeited when you leave a job — it must be encashed, paid out in cash.
How much leave do you earn?
Once you pass 1 year of service you earn 30 calendar days of paid annual leave per year. Between 6 months and 1 year of service, you earn 2 days per month.
The basic-salary rule
Here is the detail that catches people out: leave you actually take while employed is paid at your full wage (basic plus allowances). But leave you have not taken and get encashed on leaving is paid at your basic salary only — a materially smaller number if your allowances are large.
Worked example
AED 6,000 basic salary, 12 unused leave days at end of service: (6,000 ÷ 30) × 12 = AED 2,400.
Carry-over
You can carry over up to half your unused leave to the following year, or agree with your employer to be paid cash for the carried-forward portion instead.
Frequently asked questions
Is UAE leave encashment on basic or gross salary?
Basic salary only — even though leave taken while still employed is paid at your full wage (basic plus allowances).
How many annual leave days do I earn in the UAE?
30 calendar days per year once you pass 1 year of service; 2 calendar days per month if you have 6 months to 1 year of service.
Can I carry my leave over to next year?
Up to half of your unused leave can carry over, or you can agree with your employer to be paid cash for the carried-forward portion.
When is leave encashed?
Typically at the end of your employment for any unused balance — see our UAE Final Settlement Calculator for the full end-of-service picture.