UAE salary calculation: unpaid leave, part months and advances
Payroll mistakes usually come from the same few situations: an employee takes unpaid leave, joins or leaves mid-month, or repays an advance. This guide shows the common method with worked examples.
The daily rate
A common method is to treat every month as 30 days. The daily rate is the employee's monthly salary divided by 30. Check your contract and your policy, because some companies use the actual days in the month or basic salary only.
Example 1: unpaid leave
Monthly salary AED 4,500 (basic, housing and transport together). The employee takes 2 days of unpaid leave.
| Step | Working | Result |
|---|---|---|
| Daily rate | 4,500 ÷ 30 | AED 150 |
| Deduction | 2 × 150 | AED 300 |
| Salary for the month | 4,500 − 300 | AED 4,200 |
Example 2: joining in the middle of a month
Monthly salary AED 3,000. The employee joins on 11 April, so works 20 days of the 30-day month (11 to 30 April).
| Step | Working | Result |
|---|---|---|
| Daily rate | 3,000 ÷ 30 | AED 100 |
| Salary for the month | 20 × 100 | AED 2,000 |
Example 3: an advance paid back in instalments
An employee received an advance of AED 1,000 and agreed to repay AED 500 a month. Take AED 500 from this month's pay and AED 500 from next month's. Keep a balance so both of you can see what remains. If the monthly salary is AED 4,500 and there is no other deduction, the pay for the month is AED 4,000.
Paying leave salary
When an employee takes annual leave and the company pays leave salary in advance, record it against the leave. It should be paid once, and it should show on the payslip for the month in which it is paid. If the payment is cancelled, the leave should go back to unpaid so nothing is lost or paid twice.
Before you finalise the month
- Check joiners and leavers against the dates in their records.
- Check unpaid leave against the leave register.
- Check advance balances after each instalment.
- Read the total and the number of employees before you approve.
UAE Payroll & WPS applies the 30-day method, takes unpaid leave from your leave records, recovers advances automatically, and links leave salary to the Leave screen.
Frequently asked questions
Is the daily rate based on basic salary or total salary?
That depends on the contract and company policy. Many companies use the total monthly salary for deductions and pay calculation; leave salary and gratuity have their own rules. Check the contract and current labour law guidance.
What if the month has 31 days?
Under the 30-day method, a full month is still one month of salary. Part months are worked out as days worked multiplied by the daily rate.
Can the company deduct an advance from salary?
An agreed advance can be recovered in instalments, but deductions from wages are regulated. Keep a written agreement and check the limits with MOHRE or an adviser.
Where can I calculate leave salary quickly?
Use the free UAE leave salary calculator on this site, or let payroll software link leave salary to the leave record.
This guide is general information, not legal advice. Rules and bank requirements change; confirm with MOHRE, your bank or a qualified adviser.