What is accrued leave in UAE?

In the UAE, accrued leave refers to the annual leave that an employee has earned but has not yet used. It accumulates over time based on the employee’s length of service and is generally calculated on a monthly basis.

Annual leave entitlement:

• Employees who have completed one full year of service are entitled to 30 calendar days of paid annual leave.
• Employees who have worked for more than six months but less than a year are entitled to 2 days of leave per month.

Accrual calculation:

• Leave accrues proportionally each month. For instance, if an employee is entitled to 30 days of leave per year, they earn 2.5 days of leave per month.

Encashment of accrued leave:

• If an employee resigns or is terminated without utilizing their accrued leave, they are entitled to receive a cash payment for the unused leave, calculated based on their basic salary.

Carry forward policy:

• Some companies allow employees to carry forward unused leave to the following year, though this is subject to company policy.
• If leave is not carried forward or used within the company’s set timeframe, it may be forfeited.

Leave during probation

• Employees on probation do not have the right to take annual leave, though it accrues during this period and can be used once their probationary period ends.

Key differences: accrued leave vs annual leave

Accrued Leave and Annual Leave are often used interchangeably but serve different purposes:

• Accrued Leave accumulates over time and is typically used to cover overtime, while Annual Leave is intended for vacation time.
• The primary distinction is that accrued leave is paid out as a lump sum at the end of the year, while annual leave is paid out as it is taken throughout the year.
• Annual Leave is automatically provided at the beginning of the year for immediate use, whereas accrued leave builds up over time and can be used later.

How to calculate annual leave accrual :

Annual leave accrual is based on the number of months worked in a year. In the UAE:

• Employees who have completed one year of service are entitled to 30 calendar days of paid annual leave.
• Employees who have worked for more than six months but less than a year accrue leave at a rate of 2 days per month.

Formula for annual leave accrual :

(Total Annual Leave Entitlement ÷ 12) × Number of Months Worked.

For example

An employee entitled to 30 days of annual leave will accrue 2.5 days per month (30 ÷ 12). If an employee has worked for 6 months, they will have accrued 15 days (2.5 × 6).

If an employee resigns or is terminated before using their leave, any unused accrued leave must be compensated based on their basic salary.

Frequently Asked Questions

How long is accrued leave in the UAE as per the labor law?

In the UAE, annual leave accrual is determined by the number of months an employee has worked. According to UAE Labour Law, employees are entitled to 30 calendar days of paid annual leave after completing one year of continuous service. If an employee has worked for more than six months but less than a year, they accrue leave at a rate of 2 days per month.

Do You Accrue Annual Leave During the Notice Period?

Yes, annual leave continues to accrue during the notice period in the UAE, unless otherwise stated in the employment contract or company policy. Since the employee is still officially working and earning a salary during the notice period, they remain entitled to accrue leave as they would in normal circumstances.

Do You Accrue Annual Leave While on Unpaid Leave?

No, annual leave does not accrue during unpaid leave in the UAE. Since accrual is based on active service with a salary, any period of unpaid leave is excluded from the calculation.

How Much Leave Do You Accrue Per Month?

In the UAE, annual leave accrues based on the employee’s total entitlement. For example, employees entitled to 30 days of leave per year accrue 2.5 days per month, while those entitled to 24 days accrue 2 days per month. Employees with over six months of service but less than one year accrue 2 days per month, and employees on unpaid leave do not accrue annual leave.

Can Accrued Leave Be Encashed if Not Taken Within a Specific Period?

Under UAE Labour Law (Federal Decree-Law No. 33 of 2021), employees are entitled to 30 days of paid annual leave after completing one year of service. The law encourages employees to take their leave within the year it is accrued, prioritizing actual rest over encashment.