Is leave salary calculation based on basic salary or full salary?

Dear questioner,

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Article 78 and 79 of UAE labor law speaks about the annual leave salary calculation during the tenure of employment and calculation of accumulated annual leaves during the termination or resignation of the employee respectively.

Article 78: As amended by Federal Law no. 12 dated 29/10/1986 [only relevant parts of the article quoted hereunder]

The worker shall receive a basic wage and a housing allowance, if any, for the days of the annual leave.

Article 79: 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 based on the wages paid to the worker at the time of such leave.

Article 78 states that the calculation shall be BASIC WAGE whereas Article 79 states that the calculation is based on WAGES. WAGE and BASIC WAGE are defined in Article I.

WAGE: Any consideration, in cash or in-kind, given to a worker, in return for his service under an employment contract, whether on a yearly, monthly, weekly, daily, hourly, piecemeal, output or commission basis.

The wage shall include the cost of living allowance. It shall also include any grant given to a worker as a reward for his honesty or efficiency, provided such amounts are stipulated in the employment contract or in the firm’s internal regulations or are being so customarily granted that the firm workers regard them as part of their wage and not as donations.

BASIC WAGE: The wage specified in a valid employment contract, exclusive of any allowances whatsoever.

In short, when the employee is leaving the employer either resignation or termination, the accumulated annual leave may be encased and the calculation of the same is based on the last wages he received from the employer.

Regards,

Rajasree Ravivarma