Unpaid leave and sabbaticals in the United Arab Emirates
Reviewed by Mellow Editorial Team, HR & payroll content team
Unpaid leave in the UAE is permitted but not automatically granted — it requires mutual agreement between employer and employee, and the terms should be set out in writing before the leave begins. Sabbaticals follow the same principle: there is no statutory right to a sabbatical, so everything depends on your employment contract or a separate written agreement.
What the law says about unpaid leave
Federal Decree-Law No. 33/2021 (the UAE Labour Law) does not create a freestanding entitlement to unpaid leave for private-sector employees. The law specifies paid leave entitlements — including 30 calendar days of annual leave after one year of service — but unpaid leave exists only where the employer agrees to it or where a specific provision applies.
Two situations where unpaid leave does appear explicitly in the law:
- Hajj leave. An employee who has completed at least two years of service is entitled to unpaid leave once during their employment to perform Hajj. The duration is not specified in the law but is typically agreed at company level, often around 30 days.
- Study leave. Employers may grant unpaid study leave. Some free zone authorities and large organisations have their own policies, but there is no universal statutory entitlement in the private sector.
Outside these cases, unpaid leave is a matter of negotiation. The employer can approve or refuse it.
How unpaid leave affects pay and benefits
When an employee takes approved unpaid leave, the employer stops paying the basic wage and any allowances for the duration. That is the core practical point.
Several downstream effects are worth tracking carefully:
End-of-service gratuity. Under Federal Decree-Law No. 33/2021, gratuity accrues based on basic wage. The Ministry of Human Resources and Emiratisation (MOHRE) position is that periods of unpaid leave do not count toward continuous service for gratuity calculation purposes. You should pause the service clock for the exact number of unpaid days taken. For gratuity purposes: 21 days' basic wage per year for the first five years, 30 days' per year thereafter, capped at two years' total pay.
Pension for UAE and GCC nationals. Nationals enrolled in the General Pension and Social Security Authority (GPSSA) scheme have their contributions based on months of active contributory service. A period of unpaid leave typically breaks the contribution record for that period — confirm the treatment directly with GPSSA, as rules on credited service during leave periods can vary.
Annual leave accrual. Most employers suspend annual leave accrual during unpaid leave. Your HR policy should state this explicitly so there is no dispute on return.
Visa and residency. Unpaid leave does not cancel an employment visa. The employment relationship continues. However, if leave extends beyond the visa validity or if the employee travels and stays outside the UAE for an extended period, residency implications arise separately under immigration rules.
Sabbaticals: practical considerations
A sabbatical is simply an extended period of unpaid leave, usually granted for personal development, study, or rest. Because there is no statutory framework for sabbaticals, the agreement you put in writing governs everything.
A robust sabbatical agreement should cover:
- Exact start and end dates
- Confirmation that the employment contract remains active
- Whether benefits (health insurance, housing allowance) continue or are suspended
- How the period affects gratuity and leave accrual
- The return-to-work process, including the role the employee returns to
- What happens if the employee does not return
Many UAE employers include a clause requiring the employee to repay certain costs if they resign within a defined period after returning from a sabbatical.
Running payroll during unpaid leave
When an employee is on agreed unpaid leave, they should still appear in your Wage Protection System (WPS) payroll file — but with a zero or reduced salary for the relevant period, correctly coded. MOHRE monitors WPS submissions, and unexplained zero-salary entries can trigger queries. Document the approved leave in writing before the pay period closes.
If the unpaid leave spans a full calendar month, you still need to submit through WPS to maintain compliance. Keep the signed leave agreement on file alongside the payroll records.
Returning from unpaid leave
Agree the return date in writing before leave starts. On the employee's return, update your payroll system with the corrected service start date (adjusted for unpaid days), recalculate any affected benefits, and confirm the revised gratuity calculation basis. If the employee's visa renewal falls during or shortly after the leave period, coordinate with your PRO to avoid gaps.
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