EOSB and Unused Annual Leave — Your Full Entitlement Explained
EOSB and Leave Are Separate Legal Rights
One of the most common misunderstandings among employees in the UAE and Saudi Arabia is that EOSB (End of Service Benefits) includes unused leave payout. It does not.
EOSB and unused annual leave are two entirely separate legal entitlements. When your employment ends — whether by resignation, termination, or contract expiry — your employer owes you both:
- EOSB gratuity — a lump-sum payment calculated based on your years of service and salary
- Unused annual leave payout — a cash payment for any accrued leave days you did not take
They are governed by different articles of the labour law, calculated using different formulas, and must be paid in full. An employer cannot offset one against the other, and paying your EOSB does not discharge their obligation to pay your unused leave (or vice versa).
UAE: 30 Days Annual Leave Per Year (Article 29)
Under UAE Federal Decree Law No. 33 of 2021, Article 29, every employee is entitled to:
- 30 calendar days of paid annual leave per year (after completing 1 year of service)
- 2 days per month if you have completed more than 6 months but less than 1 year of service
Key points about UAE annual leave:
- Leave accrues on a calendar-year basis and is based on basic salary only (not total package)
- The employer must allow you to take leave within the year it accrues — they cannot indefinitely defer it
- If you are terminated or resign, you are entitled to cash payment for any accrued but unused leave days
- Per Article 29(6), the cash-in-lieu calculation is based on the basic salary rate at the time of departure
This is the same basic salary used for EOSB calculation — but the formula is different. EOSB uses 21 or 30 days per year of service; leave payout simply pays out the exact unused days.
KSA: 21 or 30 Days Annual Leave Per Year (Article 109)
Under the Saudi Labour Law, Article 109, employees are entitled to:
- 21 days of paid annual leave per year for the first 5 years of service
- 30 days of paid annual leave per year after completing 5 years of service
Key points about KSA annual leave:
- The leave payout is calculated on full salary including fixed allowances (housing, transport, etc.) — not basic salary alone
- This is the same salary base used for KSA ESB calculation (Article 84)
- An employee cannot waive their leave entitlement — even with written agreement, such a waiver is void
- Per Article 111, the employer must pay the employee for unused leave days if the contract ends for any reason
Unlike EOSB where resignation triggers tier reductions (1/3 or 2/3 of the benefit), unused leave payout has no reduction. You are owed the full value regardless of how your employment ends.
How Unused Leave Is Calculated — UAE vs KSA
The formula for unused leave payout is straightforward in both countries, but the salary base differs:
UAE Formula
Unused leave payout = Unused days × (Basic monthly salary ÷ 30)
Only basic salary is used. Allowances (housing, transport, commission, overtime) are excluded.
KSA Formula
Unused leave payout = Unused days × (Total monthly salary ÷ 30)
Total salary including fixed allowances is used. This includes basic salary plus housing allowance, transport allowance, and any other fixed monthly payments specified in the contract.
Key Difference
| Factor | UAE | KSA |
|---|---|---|
| Salary base for leave payout | Basic salary only | Basic + fixed allowances |
| Max annual leave | 30 days/year | 21 days (first 5 yrs) / 30 days (after 5 yrs) |
| Minimum service for leave | 6 months (2 days/month) | From first year |
| Reduction on resignation? | No | No |
Worked Examples — Combined EOSB + Leave Payout
UAE Example
Employee details: AED 10,000 basic salary per month, 3 years of service, 15 unused leave days, terminated by employer.
Step 1 — EOSB:
- 3 years at 21 days/year = 63 days
- Daily rate = AED 10,000 ÷ 30 = AED 333.33
- EOSB = 63 × AED 333.33 = AED 21,000
Step 2 — Unused leave payout:
- 15 unused days × (AED 10,000 ÷ 30) = 15 × AED 333.33 = AED 5,000
Combined total = AED 21,000 + AED 5,000 = AED 26,000
The leave payout adds 24% to the total settlement in this example.
KSA Example
Employee details: SAR 10,000 basic + SAR 2,500 housing allowance = SAR 12,500 total monthly salary, 6 years of service, 10 unused leave days, terminated by employer.
Step 1 — ESB:
- Years 1–5: 5 × 0.5 × SAR 12,500 = SAR 31,250
- Year 6: 1 × 1 × SAR 12,500 = SAR 12,500
- ESB = SAR 43,750 (terminated = full entitlement, no reduction)
Step 2 — Unused leave payout:
- Daily rate = SAR 12,500 ÷ 30 = SAR 416.67
- 10 unused days × SAR 416.67 = SAR 4,167
Combined total = SAR 43,750 + SAR 4,167 = SAR 47,917
Note: the KSA calculation uses the full salary (including housing allowance) for both ESB and leave payout.
Can Your Employer Force You to Take Leave During the Notice Period?
UAE
Under UAE law, the employer can require you to take some or all of your unused leave during the notice period — but only with your agreement or as specified in the employment contract.
If the employer forces leave during notice without agreement:
- You can file a complaint with MoHRE
- In practice, many employers do require this — and many employees accept it to avoid conflict
- If you do take leave during notice, those days are deducted from your unused balance and you will not receive cash payout for them
KSA
Under Saudi law, the employer cannot force you to take annual leave during the notice period as a substitute for notice pay. Article 110 states that the employer sets the timing of leave, but Article 75 governs the notice period separately.
If your employer tries to force leave during notice in KSA:
- You can refuse and demand to work the notice period (or be paid notice-period pay)
- If you agree to take leave during notice, that is a voluntary arrangement
- Your unused leave balance should be calculated separately from the notice period
Notice Period Pay — The Third Component
In addition to EOSB and unused leave, you may also be owed notice period pay if your employer terminates you without giving the required notice:
UAE Notice Period
- Minimum 30 days notice required (can be up to 90 days per contract)
- If the employer terminates without notice, they must pay salary in lieu of notice
- Notice pay is calculated on the full salary (not just basic salary)
KSA Notice Period
- Minimum 60 days notice for monthly-paid employees; 30 days for others
- If the employer terminates without proper notice, they must pay the equivalent salary
- Notice pay is calculated on the full salary including allowances
Notice period pay is separate from both EOSB and leave. Your employer owes all three independently.
Total Final Settlement = EOSB + Leave + Notice
Your complete final settlement when employment ends consists of up to four components:
- EOSB / ESB gratuity — based on years of service and salary (per Article 51 UAE / Article 84 KSA)
- Unused annual leave payout — based on accrued but untaken days (per Article 29 UAE / Article 111 KSA)
- Notice period pay — if terminated without proper notice (per Article 43 UAE / Article 75 KSA)
- Outstanding salary — any unpaid wages up to the last working day
Full Settlement Example (UAE)
Employee: AED 15,000 basic, AED 20,000 total package, 5 years of service, 22 unused leave days, terminated without notice (30-day notice in contract).
- EOSB: 5 × 21 × (15,000 ÷ 30) = 105 × 500 = AED 52,500
- Unused leave: 22 × (15,000 ÷ 30) = 22 × 500 = AED 11,000
- Notice pay: 30 days × (20,000 ÷ 30) = AED 20,000 (based on full salary)
- Total settlement: AED 83,500
Many employees only claim EOSB and miss the leave and notice components. Always check all three.
Use our Settlement Checker to calculate your complete final settlement including all components.
Frequently Asked Questions
Is unused annual leave included in EOSB?
No. EOSB and unused annual leave are completely separate entitlements. EOSB is a gratuity based on your years of service. Unused leave payout is compensation for accrued leave days you did not take. Your employer owes you both, calculated independently.
How is unused leave payout calculated in the UAE?
In the UAE, unused leave is paid at your basic salary rate. The formula is: unused days × (basic monthly salary ÷ 30). For example, 15 unused days with AED 10,000 basic salary = 15 × 333.33 = AED 5,000. Allowances are not included in the UAE leave payout calculation.
How is unused leave payout calculated in Saudi Arabia (KSA)?
In KSA, unused leave is paid at your full salary rate including fixed allowances. The formula is: unused days × (total monthly salary ÷ 30). For example, 10 unused days with SAR 12,500 total salary = 10 × 416.67 = SAR 4,167.
Can my employer refuse to pay unused annual leave when I resign?
No. In both UAE and KSA, unused leave payout is mandatory when employment ends, regardless of whether you resign or are terminated. In the UAE, Article 29 guarantees this right. In KSA, Article 111 requires payment for unused leave upon contract termination for any reason.
How many days of annual leave am I entitled to in the UAE and KSA?
In the UAE, you are entitled to 30 calendar days per year after 1 year of service (2 days per month if 6–12 months). In KSA, you get 21 days per year for the first 5 years of service and 30 days per year after 5 years.
Does unused leave carry over from previous years in the UAE?
UAE law does not explicitly address leave carry-over, but employers must allow employees to use their annual leave. If your employer prevented you from taking leave, you are entitled to the full unused balance as cash upon termination. In practice, some companies cap carry-over at 1–2 years, but any accrued leave that was not taken due to employer refusal must be paid out.
Can my employer deduct EOSB from unused leave or vice versa?
No. EOSB and unused leave are independent legal entitlements. Your employer cannot set one off against the other. Each must be calculated separately and paid in full. If your employer tries to combine or offset them, you can file a complaint with MoHRE (UAE) or the Ministry of Human Resources (KSA).
What is included in my total final settlement when leaving a job?
Your total final settlement can include up to four components: (1) EOSB gratuity based on years of service, (2) unused annual leave payout, (3) notice period pay if terminated without proper notice, and (4) any outstanding salary owed. Always verify that your employer has calculated all four components.