UAE Payroll: Leave Salary, End-of-Service Gratuity & Wage Protection
How leave salary and end-of-service gratuity are calculated, and why basic salary must be separated from allowances.
Annual Leave Salary
An employee is entitled to paid annual leave based on service length. The general rule is 30 days per year of service, and two days per month if service exceeds six months but is under a year. Unused leave is paid out under the applicable rules, part-years are pro-rated, and basic salary is used where the law requires.
End-of-Service Gratuity
A full-time foreign worker who completes one or more continuous years is entitled to end-of-service gratuity on the last basic salary: 21 days per year for the first five years, and 30 days per year thereafter. Part-years are pro-rated after the first year, unpaid-absence days are excluded, and the total gratuity does not exceed two years' wage. UAE nationals are covered by pension and social-security laws and may be treated differently.
Salary & Wage Protection
Wages must be paid on the date and in the manner agreed in the employment contract, and establishments are subject to the Wage Protection System where it applies. Separate basic salary from allowances in the employee file, because the basic salary feeds statutory calculations including end-of-service gratuity and some leave entitlements.
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