Questions & Answers
Calculation of unused annual leave upon termination
The employee was being terminated due to the non-availability of projects (Project-based) but under unlimited contract.
He has 32 days as an unused leave. Article 5 of the Labour Law mentioned that accrued annual leave shall be paid on the basic wage, while Article 79 mentioned that it shall be paid on the wage basis.
Please give clarification on this to avoid disputes. Shall we pay him basic only or plus allowance?
Thank you for answering!
Dear Questioner,
Thanks for writing to me!
After reading the short description, I understand that your case is an arbitrary termination. You are eligible to claim 3 months' salary as compensation against arbitrary termination.
Regarding unused leaves, if the employment contract has been terminated, following the notice period, the calculation of the unused annual leave is different.
Art. 79 UAE Labor Law explains that unused annual leave will be calculated based on the employee’s salary at the end of his period of service. This includes also the allowances for transport, housing, etc.
Therefore, the calculation of unused annual leave after termination will be on full salary including allowances.
Art.79 UAE Labor Law:
The worker shall be entitled to receive any sums for accrued annual leave days should he be dismissed or should he leave work after the duly determined notice period. Such payment shall be calculated on the basis of the wages paid to the worker at the time of such leave.
I hope the above explanation could throw some light.
Please feel free to write to me if you need any further clarification on the above.
Regards,
