3.UAE annual leave: Is transport allowance included in leave pay?

Mon, Sep 14, 2026 | Rabi al-Thani 3, 1448 | Fajr 04:47|DXB 34.2°C

Question: I have been offered a new job and was initially told that I would receive a specific monthly salary. However, the formal offer letter now shows that amount split into a basic salary and several allowances, including a significant transport allowance. Before I accept the offer, I want to understand whether this salary structure could affect what I am paid when I go on annual leave.

For example, would the employer be allowed to deduct or withhold the transport allowance for the days I am on leave because I am not travelling to work? Should I be concerned about accepting an offer where a significant portion of the promised salary is made up of allowances?

Answer: Pursuant to your queries, it is assumed that the offer letter you have received is from a Dubai based mainland company, hence the provisions of the UAE employment law are applicable.

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In the United Arab Emirates, an employee is entitled for 30 (thirty) days of annual leave for each completing year of service with the employer. This is in accordance with Article 29(1)(a) of the Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations (the ‘Employment Law’), which states, "Without prejudice to the rights accruing to the employee prior to the entry into force of this Decree-Law, the employee shall be entitled to a paid annual leave of not less than

a. 30(thirty) days a year for each year of service.”

Further, an employee is entitled to the wage during the period of his annual leave. This is in accordance with the Article 29 (6) of the Employment Law,

“The employee shall be entitled to the wage for the period of his annual leave”

     Under Article 1 of the Employment Law, the term “Wage” is defined as follows:

“The Basic Wage plus allowances, whether in cash or in kind, prescribed for the Employee under the Employment Contract or this Decree-Law. These may include: any benefits in kind provided by the Employer to the Employee or their equivalent in cash, if they are prescribed as part of the Wage in the Employment Contract or the Establishment bylaws, or allowances given to the Employee in return for any effort exerted, or hazards encountered in the course of performance of his Work, or for any other reasons, or cost of living allowance, a percentage of sales or a percentage or profits paid in return for anything marketed, produced or collected by the Employee.”

In accordance with the aforementioned provision of the Employment Law, an employee is entitled to receive the wage for the period of annual leave. Since the law defines “wage” to include the basic wage and allowances prescribed under the employment contract, an allowance forming part of the contractual wage may be included in the annual leave pay. Therefore, the transport allowance may not be excluded from the employee’s annual leave pay, provided that it is prescribed as part of the wage under the employment contract. 

·       Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations. 

Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm are on www.amalawyers.com. Readers may e-mail their questions to news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai. 

Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.

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