Unpaid leave does reduce your gratuity in the UAE. The end-of-service rules say days of unpaid absence are not included when your service is calculated, so every unpaid day is subtracted before the 21-day or 30-day formula is applied. The effect is usually small, but it can be decisive if it drops you under the one-year minimum.
You can see the exact effect on your own figures in our UAE gratuity calculator, which has a field for unpaid leave or absence days.
The rule: unpaid days do not count as service
Gratuity under Article 51 of Federal Decree-Law No. 33 of 2021 is built from two things: your last basic wage and the length of your continuous service. The official UAE government portal states plainly that days of unpaid absence are not included in service calculations (u.ae, end-of-service benefits).
So the calculation runs in this order:
- Count your service from your start date to your last working day.
- Subtract the days you were absent without pay.
- Apply the formula to what is left: 21 days of basic wage for each of the first five years, then 30 days for each year after that, with a ceiling of two years’ wage.
The law itself does not set a divisor for the day’s wage. Our calculator follows the method applied by the Ministry of Human Resources and Emiratisation (MOHRE): basic wage ÷ 30.
What counts as unpaid
These periods are normally excluded from service:
- Unpaid leave you asked for and your employer approved, such as extended leave for family reasons.
- Unpaid sick leave. Sick leave in the UAE is paid in full for the first part, at half pay for the next part, and unpaid after that. Only the unpaid stretch is excluded.
- Unauthorised absence for which your salary was not paid.
Keep a copy of any leave approval or payslip that shows unpaid days. When the final settlement is prepared, the number of unpaid days your employer deducts should match its own records.
What does not reduce your service
| Type of time off | Paid? | Counts towards gratuity? |
|---|---|---|
| Annual leave | Yes | Yes |
| Public holidays | Yes | Yes |
| Sick leave at full or half pay | Yes | Yes |
| Other paid leave (maternity, bereavement, study, where paid) | Yes | Yes |
| Sick leave beyond the paid period | No | No |
| Approved unpaid leave | No | No |
| Unauthorised unpaid absence | No | No |
The dividing line is simple: if you were paid for the day, it is service.
Worked example: 4 years with 45 unpaid days
An employee on a basic wage of AED 8,000 works from 1 April 2022 to 31 March 2026 and the contract ends. During that time they took 45 days of unpaid leave.
| Without unpaid leave | With 45 unpaid days | |
|---|---|---|
| Service counted | 4 years | 3 years, 10 months, 14 days |
| Day’s basic wage (8,000 ÷ 30) | AED 266.67 | AED 266.67 |
| Rate | 21 days per year | 21 days per year |
| Gratuity | AED 22,415.34 | AED 21,724.93 |
The 45 unpaid days cost AED 690.41. That is 45/365 of a year, multiplied by 21 days’ basic wage.
Example across the five-year mark
Unpaid days matter more when they push you back across the point where the rate rises. Take the same AED 8,000 basic wage, with service from 1 February 2021 to 31 March 2026:
- With no unpaid days, service is 5 years and 2 months. The first five years earn AED 28,000 and the extra two months at the 30-day rate add AED 1,315.07, for AED 29,315.07.
- With 60 unpaid days, counted service falls to just under 5 years. Everything is paid at the 21-day rate: AED 28,000.
The 60 days cost AED 1,315.07, because the days they removed were the ones earning the higher rate.
Does the one-year minimum move?
Yes, and this is where unpaid leave causes the biggest surprises. Gratuity in the UAE is only payable once you have completed one year of continuous service, and unpaid days are removed before that test is applied.
An employee on AED 8,000 basic who works from 1 March 2025 to 31 March 2026 has 13 months of service. Without unpaid leave they are owed AED 6,075.62. With 40 unpaid days, counted service drops to 11 months and 19 days, below the minimum, and the gratuity is zero.
If you are close to your first anniversary and have taken unpaid leave, count your days carefully before agreeing a last working day.
Free zones (DIFC, ADGM) are different
The rules above come from the federal labour law, which covers the mainland and most free zones. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have their own employment laws and their own end-of-service arrangements. If you work in either, check those rules.
The same caution applies if your employer has moved you to the voluntary savings scheme that replaces the lump-sum gratuity. Our article on what changed in Gulf end-of-service rules explains that scheme.
A few practical points
- Gratuity uses basic wage only. Allowances do not count in the UAE. See basic or total salary for how the six Gulf countries differ.
- Unused annual leave is a separate payment. It is paid on top of gratuity; our UAE leave salary calculator works it out.
- Payment is due within 14 days of the contract ending, according to the u.ae portal.
- For the wider rules on notice, leave and termination, read our UAE labour law guide.
How to check your employer’s figure
When your final settlement arrives, the gratuity line is often a single number with no working. You can rebuild it in four steps:
- Find your service dates. Your start date is on your labour contract or offer letter, and your last working day is in your resignation acceptance or termination letter. Service counts both the first and the last day.
- Count the unpaid days. Add up approved unpaid leave, unpaid sick days and any absence deducted from your salary. Payslips are the best record: a month with a salary deduction for absence shows the days.
- Take your last basic wage. Use the basic figure on your contract or latest payslip, not the total including housing and transport.
- Run the numbers. Enter all three in the calculator and compare the result line by line with your settlement.
If your figure is higher, ask the employer which dates and how many unpaid days it used. Most disputes come down to a different start date, unpaid days counted twice, or a day’s wage worked out on a different divisor. If the difference cannot be resolved, MOHRE handles complaints about end-of-service dues for mainland employees.
Unpaid leave and your other end-of-service items
Unpaid days affect more than gratuity. Annual leave is earned for each year of service, so a long unpaid period can also reduce the leave you build up, depending on your contract and company policy. Your final month’s salary is paid only for the days you worked or were on paid leave. For a complete list of what your final settlement should contain, use our final settlement checklist.
Calculate yours
Enter your basic wage, start date, last working day and the number of unpaid days in the UAE gratuity calculator. It removes the unpaid days, checks the one-year minimum, applies the 21-day and 30-day rates and the two-year cap, and shows every line of the calculation. Results are estimates, not legal advice; if the figure in your settlement differs, ask your employer for its working or raise it with MOHRE.
Frequently asked questions
Does unpaid leave affect gratuity in the UAE?
Yes. Days of unpaid absence are not counted as service for end-of-service gratuity, so your service length, and therefore your gratuity, is reduced by the number of unpaid days.
Does paid annual leave reduce my gratuity?
No. Annual leave and other paid leave count as service. Only days for which you were not paid are excluded.
Can unpaid leave make me lose gratuity completely?
It can if it takes your counted service below one year. Gratuity in the UAE is only due after at least one year of continuous service, so 40 unpaid days in a 13-month job can wipe out the entitlement.
How much does one unpaid day cost me?
In your first five years, roughly 21/365 of a day's basic wage per unpaid day; after five years, roughly 30/365. On a basic wage of AED 8,000, 45 unpaid days in the first five years cost about AED 690.
Do these rules apply in DIFC or ADGM?
No. The DIFC and ADGM free zones have their own employment laws and end-of-service arrangements, so check those rules separately.