What is Compensatory Leave Under UAE Labour Law?
Compensatory leave is also called substitute leave or time off in lieu (TOIL). Under Federal Decree-Law No. 33 of 2021 (UAE Labour Law), every employee is entitled to at least one rest day per week — typically Friday or Sunday, though it can vary by company. If an operational need requires an employee to work on their designated rest day, the employer must provide compensation.
This compensation takes one of two forms:
Option A — Substitute Day Off
A replacement rest day granted within 30 days of the day worked. The employee gets an equivalent day off at a mutually agreed time.
Option B — 150% Pay
If no substitute day is given, the employer must pay the employee 150% of their normal daily wage — that is, their regular pay plus a 50% premium — for each rest day worked.
HRX360
Track compensatory leave automatically
Leave types, accruals and approvals run themselves in HRX360 — including custom types like comp-off, with a full balance ledger.
Compensatory Leave for Public Holidays
The rules are slightly different when an employee works on an official UAE public holiday. Under Article 28 of UAE Labour Law, employers must provide:
A substitute day off on a later date, plus an additional payment of 150% of the daily wage for the holiday worked — or
Additional pay equivalent to 150% of the daily wage if the employer cannot provide a substitute day
This applies to all employees regardless of role — including managers, supervisors, and senior staff.
How to Calculate Compensatory Leave Pay in UAE
The calculation is based on the employee's basic daily wage:
Calculation Formula
Can an Employer Refuse Compensatory Leave?
An employer cannot simply deny compensation. They may choose between offering a substitute day off or paying the 150% wage premium — but one of the two is legally mandatory. Refusing both is a violation of UAE Labour Law.
Employees who are denied compensatory leave or pay have the right to file a complaint with MOHRE (Ministry of Human Resources and Emiratisation) either online via the MOHRE app or by visiting a service centre.
Tracking Compensatory Leave with HRX360
Managing compensatory leave manually across a team is prone to errors — missed substitute days, incorrect pay calculations, and disputes. HRX360 automates the entire process:
HRX360 flags when an employee works on a designated rest day and prompts HR to assign a substitute day or add the 150% pay calculation to the next payroll run.
UAE public holidays are pre-loaded into the system each year. Any attendance recorded on a public holiday automatically triggers the compensatory entitlement workflow.
Employees can see their compensatory leave balance in the self-service portal, and managers can approve or schedule substitute days with one click.
Stay Compliant with UAE Leave Laws
HRX360 tracks all leave types — annual, sick, compensatory, and public holiday entitlements — in one UAE-compliant system. No spreadsheets, no missed calculations.
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