Resigning in the UAE? Here’s How Your Unused Annual Leave Is Paid in Your Final Settlement
By Thasmiya
Planning to resign from your job in the UAE? Before signing your final settlement documents, there is one important entitlement you should check: **your unused annual leave balance**.
Under [UAE Labour Law](https://www.whatmatters.ae/post/uae-labour-law-explained-leave-gratuity-resignation-rules), eligible private-sector employees are entitled to receive payment for annual leave they have earned but not used when their employment ends.
This applies whether an [employee resigns or their employment is terminated](https://www.whatmatters.ae/post/lost-job-uae-30-day-checklist-iloe-visa), provided the leave has been legally accrued.
However, the amount may be different from what some employees expect.
**Unused annual leave is generally calculated using an employee’s basic salary, not their total monthly salary, including allowances.**
Here’s what UAE employees need to know about annual leave payments, final settlement calculations and their rights when leaving a job.
## **What Happens to Unused Annual Leave When You Resign in the UAE?**
Employees who resign from their jobs in the UAE do not automatically lose their unused annual leave.
Article 29 of Federal Decree-Law No. 33 of 2021, which regulates employment relationships in the UAE private sector, protects employees’ entitlement to accrued annual leave.
If an employee leaves their job before using their eligible leave balance, the employer must compensate them for the remaining days.
This includes annual leave accumulated during the final portion of the employee’s service.
For example, an employee who resigns in October may have earned additional leave between January and their final working day.
Those accrued days must be considered when calculating the final settlement.
The entitlement is not limited to employees who have been dismissed.
Employees who voluntarily resign are also covered. Before leaving your job, it is also important to understand the employment rules that apply to your position. Read our guide to [UAE work permits and employment requirements](https://www.whatmatters.ae/post/uae-work-permit-guide-2026-rules-costs-types) for more information.
## **How Much Annual Leave Are UAE Employees Entitled To?**
Annual leave entitlement depends on how long an employee has worked for the company.
Under Article 29 of the UAE Labour Law, the minimum entitlements for full-time employees are:
**Length of Employment**
**Annual Leave Entitlement**
Less than six months
No standard statutory annual leave entitlement under the six-month rule
More than six months but less than one year
Two days per month
One year or more
30 days per year
Final incomplete year
Proportionate entitlement for the period worked
Employees who complete one year of service are entitled to at least 30 days of paid annual leave annually.
Part-time employees have separate entitlement calculations based on their actual working hours and contractual arrangements.
Employers may provide more generous annual leave benefits through employment contracts or company policies.
## **Is Unused Annual Leave Paid on Basic Salary or Full Salary?**
This is one of the most important distinctions employees should understand.
**When employment ends, unused annual leave is calculated based on the employee’s basic wage.**
Article 19(2) of Cabinet Resolution No. 1 of 2022 establishes this requirement.
The calculation generally excludes additional allowances such as housing and transportation.
For example, an employee may receive a total monthly salary of AED 8,000, but their basic salary could be AED 5,000.
In this situation, the statutory unused leave payout is calculated using the AED 5,000 basic salary.
However, an employment contract or company policy may provide more favourable terms.
### **Why Does This Matter?**
Employees sometimes calculate their expected final settlement using their full monthly salary.
This can result in an estimate that is higher than the amount required under the statutory calculation.
Understanding the difference helps employees review their final settlement more accurately.
## **How to Calculate Unused Annual Leave Payment in the UAE**
The basic calculation for a standard monthly-paid employee is straightforward. Understanding your final settlement can also help when planning your finances after leaving a job. Our guide to the [cost of living in Dubai in 2026](https://www.whatmatters.ae/post/cost-living-dubai-2026-much-do-really-need) covers the main expenses to consider when budgeting.
### **Step 1: Identify Your Basic Monthly Salary**
Check your employment contract or salary breakdown.
Use the basic salary amount rather than the total salary, unless more favourable contractual terms apply.
### **Step 2: Calculate Your Daily Basic Salary**
A commonly used calculation is:
**Monthly Basic Salary ÷ 30 = Daily Basic Salary**
### **Step 3: Identify Your Eligible Unused Leave Days**
Review your accrued annual leave balance, including any eligible leave earned during your final months.
### **Step 4: Calculate Your Leave Payment**
**Daily Basic Salary × Eligible Unused Leave Days = Leave Encashment**
### **Example: Employee With AED 6,000 Basic Salary**
Suppose an employee has:
- Monthly basic salary: AED 6,000 - Unused annual leave: 12 days
The calculation would be:
AED 6,000 ÷ 30 = AED 200 per day
AED 200 × 12 days = AED 2,400
**Unused annual leave payment: AED 2,400**
This amount would form part of the employee’s final settlement.
Other entitlements, such as outstanding salary or applicable end-of-service gratuity, are calculated separately.
## **How Much Will You Receive for 5, 10 or 15 Unused Leave Days?**
The following table shows illustrative calculations based on different basic salaries.
**Basic Monthly Salary**
**5 Days**
**10 Days**
**15 Days**
AED 3,000
AED 500
AED 1,000
AED 1,500
AED 4,000
AED 666.67
AED 1,333.33
AED 2,000
AED 5,000
AED 833.33
AED 1,666.67
AED 2,500
AED 6,000
AED 1,000
AED 2,000
AED 3,000
AED 8,000
AED 1,333.33
AED 2,666.67
AED 4,000
AED 10,000
AED 1,666.67
AED 3,333.33
AED 5,000
These are examples using a 30-day monthly calculation.
The final amount depends on the employee’s legally recognised leave balance, contractual benefits and applicable employment rules.
## **Do You Get Paid for Leave Earned During Your Final Year?**
Yes.
Employees who leave before completing another full year of service are entitled to proportionate annual leave for the period worked.
For a full-time employee who has completed at least one year of service, the statutory entitlement of 30 days annually is commonly expressed as 2.5 days per month.
### **Example: Resigning After Eight Months of a New Leave Year**
Suppose an employee has completed several years with a company and resigns after working eight months of the current leave year.
Using a 30-day annual entitlement:
30 ÷ 12 = 2.5 days per month
2.5 × 8 months = 20 days
The employee would have accrued approximately 20 days during that period.
If they had already taken 12 days of leave, their remaining balance would be approximately eight days, before accounting for any other adjustments or carried-forward entitlement.
Those eligible unused days would be included in the final settlement.
The actual calculation should reflect the employee’s leave records and the applicable accrual method.
## **Can You Carry Forward Unused Annual Leave in the UAE?**
UAE Labour Law allows annual leave to be carried forward under certain conditions.
Article 19(1) of Cabinet Resolution No. 1 of 2022 generally permits employees to carry forward up to half of their annual leave entitlement to the following year.
For an employee entitled to 30 days annually, this would ordinarily mean up to 15 days.
However, carry-forward arrangements are subject to the applicable rules and employer agreement.
Employees may also agree with their employer to receive cash compensation instead of carrying forward leave.
Importantly, the rules governing payment for leave during employment differ from those governing unused leave when employment ends.
## **Can Your Employer Refuse to Pay Unused Annual Leave?**
Employers are required to compensate employees for legally accrued annual leave that remains unused when their employment ends.
An employer cannot simply disregard an employee’s statutory entitlement because the employee has resigned.
However, disputes may arise over the number of days accrued, leave already taken or whether particular days were validly carried forward.
Employees should maintain records of their approved leave, remaining balances and employment dates.
### **What If Your Employer Did Not Allow You to Take Leave?**
Article 29 also restricts employers from preventing employees from using accrued annual leave for more than two consecutive years, unless the employee chooses to carry it forward or receive cash compensation under the applicable rules.
If an employee believes their leave balance has been incorrectly reduced or excluded from their settlement, they can request a written explanation from the employer.
Unresolved disputes may be referred to the relevant labour authority.
## **Is Unused Annual Leave Payment Different From Gratuity?**
Yes.
Unused annual leave payment and end-of-service gratuity are separate entitlements.
### **Unused Annual Leave Payment**
This compensates employees for eligible paid leave days they earned but did not use.
The amount depends on the employee’s basic salary and unused leave balance.
### **End-of-Service Gratuity**
Gratuity is a separate benefit calculated according to the applicable labour law, length of service and eligibility conditions.
For qualifying expatriate private-sector employees under the standard gratuity system, the calculation generally uses basic salary and years of service.
Employees should check both amounts separately when reviewing their final settlement.
## **When Must Your Employer Pay Your Final Settlement?**
Under Article 53 of the UAE Labour Law, employers must pay employees their outstanding wages and other contractual or statutory entitlements within **14 days of the employment contract ending**.
This includes applicable unused annual leave payments. Employees considering a career change can also read our guide to [UAE job seeker visa options for 2026](https://www.whatmatters.ae/post/uae-job-seeker-visa-2026-60-90-120) to understand the available routes for looking for work in the country.
Employees should receive a clear breakdown showing how the final settlement was calculated.
The settlement may include:
- Outstanding salary. - Payment for eligible unused annual leave. - Applicable end-of-service gratuity. - Other contractual entitlements. - Any lawful deductions or adjustments.
The final amount depends on the employee’s individual circumstances.
## **What Should You Check Before Signing Your Final Settlement?**
Before accepting a final settlement, employees should review the figures carefully.
Start by confirming the basic salary used in the calculation.
Next, compare the employer’s recorded leave balance with your own records.
Check whether the calculation includes eligible leave accrued during the final year of employment.
Employees should also verify that previously approved leave has been deducted correctly.
If the figures appear incorrect, request a written breakdown before acknowledging that all dues have been received.
Keeping copies of employment contracts, payslips and leave records can help resolve disagreements.
## **What If Your Employer Does Not Pay Your Unused Leave?**
Employees who believe they have not received their legal entitlements can seek assistance from the Ministry of Human Resources and Emiratisation.
MOHRE provides services for employment-related complaints and labour disputes within its jurisdiction.
Employees may need to provide supporting documents, including their employment contract, salary records and leave balance.
Workers employed in certain financial free zones, government entities or other specially regulated sectors may be subject to different employment laws and complaint procedures.
For this reason, employees should first identify which employment framework applies to their contract.
## **Frequently Asked Questions**
### **Do I get paid for unused annual leave if I resign in the UAE?**
Yes. Eligible private-sector employees are entitled to payment for legally accrued annual leave they have not used when their employment ends.
### **Is unused annual leave calculated on basic salary?**
Yes. The statutory payment on termination is calculated using basic salary, although more favourable contractual terms may apply.
### **How many annual leave days do UAE employees receive?**
Full-time employees who complete one year of service are entitled to at least 30 days of paid annual leave annually.
### **What happens if I resign before completing one year?**
Employees who have completed more than six months but less than one year generally accrue two days of annual leave per month.
### **Can my company refuse to pay unused annual leave?**
An employer must compensate employees for their legally accrued unused annual leave. Disputes over the recognised balance may require review.
### **Can I carry forward my annual leave?**
Generally, up to half of the annual entitlement may be carried forward under the applicable regulations and employer agreement.
### **How long does an employer have to pay the final settlement?**
The statutory deadline is generally 14 days after the employment contract ends.
### **Is annual leave encashment included in gratuity?**
No. Unused annual leave payment and end-of-service gratuity are separate entitlements.
### **Can I complain if my leave payment is missing?**
Yes. Employees covered by MOHRE’s jurisdiction can raise employment-related complaints through its official channels.
## **Why This Matters**
Resigning from a job involves more than completing a notice period and returning company property.
Employees also need to understand the financial entitlements they have earned during their employment.
Unused annual leave can represent a meaningful amount, particularly for employees who have accumulated several days of leave.
Knowing how the payment is calculated can help employees identify errors and ensure their final settlement reflects their legal entitlements.
**The key takeaway: If you resign from a UAE private-sector job, your eligible unused annual leave should be paid as part of your final settlement, generally calculated using your basic salary.**
Before signing your settlement documents, check your leave balance, review the calculation and confirm that all outstanding payments have been included.
*This article explains the general UAE private-sector employment framework as of October 22, 2026. Different rules may apply to government employees, domestic workers and certain free-zone employees, including those in DIFC and ADGM.*
## Related Reads - [Dubai Shopping Festival 2026–27: Dates, Concerts, Deals and Everything to Expect](/post/dubai-shopping-festival-202627-dates-concerts-deals) - [Fake Fine and Salik SMS Scams in the UAE: How to Check a Fine Is Real and Where to Report It](/post/fake-fine-salik-sms-scams-uae-check-fine) - [Dubai Gold Prices Drop Below AED 500 as Lower Rates Attract Festive Shoppers](/post/dubai-gold-prices-drop-below-aed-500-lower) - [How to Get Your Digital Emirates ID in the UAE: Download and Access It on Your Phone](/post/get-digital-emirates-id-uae-download-access-ph) - [More stories like this](/category/news)