Unlike annual or sick leave, unpaid leave is not a broad statutory entitlement in the UAE. It usually arises by agreement between employer and employee, and it has knock-on effects worth understanding before it's granted.
When unpaid leave happens
- By mutual agreement, when an employee needs time off beyond their paid entitlements.
- As the unpaid portion of extended sick leave (the days beyond full and half pay).
- For specific circumstances set out in the contract or company policy.
How it affects service and gratuity
This is the key point many people miss: periods of unpaid leave are generally not counted as part of the service period used to calculate end-of-service gratuity. Extended unpaid leave can therefore reduce the gratuity an employee ultimately receives.
Getting it right
Because unpaid leave is discretionary and affects entitlements, it should always be agreed in writing, with clear start and end dates, and recorded accurately. Vague arrangements lead to disputes at the end of service.
Track it accurately
TimeChart's leave management records unpaid leave separately and reflects it correctly in service calculations, so your gratuity and payroll figures stay accurate.
Avoid end-of-service surprises. See how TimeChart tracks every leave type.
Schedule a free demoPlease note: This article is general information, not legal advice. UAE labour rules are updated periodically — always confirm the current details with the Ministry of Human Resources & Emiratisation (mohre.gov.ae) or a qualified professional.