Does Unpaid Leave Reduce Your Gratuity in the UAE?

Yes, it does. Days of unpaid absence are deducted from your service period before your gratuity is calculated.
Most guides stop at that sentence. What almost nobody tells you is how much — and that’s the part you actually need, because unpaid leave gratuity UAE deductions are small per day and surprisingly large over a few months.
Here’s the exact cost at every salary level, plus a consequence that costs far more than the deduction itself.

The Cost Per Unpaid Day

Article 51 bases gratuity on your continuous period of service, and unpaid absence doesn’t count towards it. So each unpaid day removes one day of accrual.

During your first five years you accrue 21 days of basic wage per year, which works out at 0.7 of a month’s basic per year of service. Divide that across 365 days and you get the daily cost.

The rate roughly doubles once you’re past year five, because you’re accruing 30 days a year instead of 21.

What That Adds Up To

Figures assume the leave was taken during your first five years of service.

A month here or there is a modest amount. An extended period of unpaid leave — an unpaid sabbatical, a long absence for family reasons, or a stretch between projects — is where it becomes material.

The Consequence That Costs More Than the Deduction

This is the part that gets missed entirely.

Unpaid leave doesn’t just remove days of accrual. It pushes your five-year milestone further away.

Your accrual rate jumps from 21 days a year to 30 days a year once you complete five years of service — not five years on the calendar. If you’ve taken sixty unpaid days, you reach that milestone two months later than you otherwise would.

Worked example. You’re on AED 10,000 basic. You joined on 1 January 2021 and you’re planning to leave on 1 January 2026 — exactly five calendar years.

The AED 1,151 difference is the deduction itself. But you’ve also not crossed into the 30-day band, which means every year from that point would still be accruing at the lower rate if you stayed.

If you’re near five years and you’ve taken unpaid leave, add those days back before you pick your exit date.

What Counts as Unpaid Leave and What Doesn’t

Not every absence reduces your service. This is where people over-worry.

Taking your full annual leave entitlement does not reduce your gratuity. This is a genuine worry people have, and it’s unfounded. Paid leave is active service.

Pilgrimage Leave

UAE Labour Law grants employees unpaid leave for pilgrimage, taken once during their employment.

Because it’s unpaid, those days would ordinarily be excluded from the service period under Article 51 — which means a thirty-day pilgrimage leave carries the same gratuity cost as any other thirty unpaid days.

Practice varies between employers, and some treat it as continuous service. Ask HR how they account for it rather than assuming either way. It’s worth a single question before you apply.

How to Check What Your Employer Deducted

Ask for the itemised final settlement statement. It should show:

• Your service start and end dates
• The total unpaid days deducted
• The net service period used in the calculation
• The days applied in each accrual band

If the unpaid-day figure looks higher than you remember, ask which specific periods they’re counting. Employers occasionally include days that were actually approved paid leave, or count a partial month as a full one.

Your own records matter here: leave applications, approval emails, and payslips showing which months had deductions.

A Practical Note Before You Apply for Unpaid Leave

None of this is an argument against taking unpaid leave when you need it. The amounts are modest, and the reasons people take it are usually not negotiable.

But two things are worth doing first:

Work out the cost. Thirty days on AED 10,000 basic is AED 575. That’s useful to know, and it’s rarely enough to change a decision.

Check where you are relative to five years. If you’re at four years and nine months, a two-month unpaid absence delays your rate increase. Taking the same leave after you cross five years costs you the deduction but nothing else.

What Doesn’t Change

Unpaid leave affects your service period. It doesn’t affect anything else about your entitlement.

• Your basic salary for the calculation is still your last one
• Resigning still doesn’t reduce your gratuity — that changed in February 2022
• Contract renewals still don’t reset your service
• You’re still owed payment within 14 days of your contract ending, under Article 53

Run Your Own Numbers

Enter your joining date, last working day, basic salary and total unpaid leave days in the UAE Gratuity Calculator. Run it once with the unpaid days and once without — the difference is what that leave actually cost you.

[Calculate My Gratuity]

FAQs

Does unpaid leave reduce gratuity in the UAE?

Yes. Unpaid days are deducted from your continuous service period before the calculation runs.

How much does one unpaid day cost?

It depends on your basic salary. On AED 5,000 basic it’s about AED 9.59 during your first five years; on AED 10,000 it’s about AED 19.18.

Does paid annual leave reduce my gratuity?

No. Paid leave is active service. Taking your full entitlement costs you nothing.

Does sick leave reduce it?

Paid sick leave doesn’t. Any unpaid portion of extended sick leave does.

Does maternity leave reduce it?

The paid portion doesn’t.

Does pilgrimage leave reduce it?

It’s granted unpaid, so it would ordinarily be excluded. Practice varies between employers, so ask HR directly.

Does unpaid leave delay my five-year milestone?

Yes, and this often costs more than the deduction itself. Sixty unpaid days means you reach the 30-day accrual band two months later.

How do I check what my employer deducted?

Ask for the itemised settlement showing service dates, total unpaid days and the net service period used.

Last updated: August 2026 · Based on: Federal Decree-Law No. 33 of 2021, Articles 51 and 53
Written by Farhan — About