Questions & Answers
Leave pay calculation under the UAE employment contract
Dear Madam.
My JAFZA Employment Contract is an unlimited free zone contract.
My services have been arbitrarily terminated on 09 Dec. 2018, and after having served the 90 days paid notice period, my tenure ended on 08 March 2019.
I am now in the process of finalizing my end of service benefits, and there is a clarification required in regards to the basis of computation of the benefits. Queries are as under.
Leave pay due to termination:
I have 25 days unutilized leave which I intend to encash. What is the basis of computing the value of this leave pay?
Would it be on the basis of:
a.) gross monthly salary (which includes the latest basic salary + housing allowance + transport allowances)
b.) or on the basis of latest basic salary + housing allowance
c.) or on the basis of just the latest basic salary?
Could you please clarify and provide me with the correct latest updated UAE Labor Law article ref. # 79 for the correct interpretation of the basis of calculation for the above leave pay.
Dear Questioner,
Thanks for writing to me.
Please note that the leave salary is calculated on the basis of basic salary plus HRA although, in practice, full salary is dispersed.
The calculation is based on the last salary drawn by the employee. This is as per Articles 75 and 78 of UAE labour law.
In your case, if you have completed more than 6 months, then two leaves will be accrued per month as annual leave.
I am not sure about your period of employment to confirm your leave period calculation.
Article 79 stipulates that the employee is entitled to receive this pay only after serving the notice period.
Hope the above explanation is satisfactory. Please feel free to contact me if you need any further information, assistance or guidance.
Thank you.
Regards,
Rajasree Ravivarma
