How to Manage Unpaid Leave in the UAE: SIF, MOHRE & Compliance Explained
Managing unpaid leave in the UAE requires more than just internal approvals — it involves proper documentation, compliance with labour regulations, and accurate payroll reporting through the Wage Protection System (WPS).
Here’s a practical breakdown of how to handle unpaid leave correctly and avoid compliance risks.
- Recording Unpaid Leave in the SIF File
When processing payroll, unpaid leave must be clearly reflected in the Salary Information File (SIF).
- Column in the SIF file designated for leave days
- Employers should input the number of unpaid leave days for each employee
- This ensures that salary calculations align with actual days worked
Accurate reporting here is critical — incorrect or missing data can lead to payroll discrepancies or rejected salary files.
- MOHRE Requirement: Temporary Supplementary Annex
To legally place an employee on unpaid leave, employers must obtain formal consent.
This is done through the “Temporary Supplementary Annex” available via the MOHRE portal.
Process:
- Employer downloads the annex from the MOHRE dashboard
- Employee reviews and signs the document
- Employer uploads the signed annex back to the MOHRE portal
Important Notes:
- Unpaid leave can continue for any duration, as long as both parties agree
- Documentation must always be in place to remain compliant
- This protects both employer and employee in case of disputes
- What if the Employee is Outside the UAE?
If the employee is out of the country, the process can still move forward.
- The employee can digitally sign the annex
- Alternatively, email confirmation/approval is acceptable
- The employer must retain proof and upload the documentation to MOHRE
This flexibility ensures business continuity while maintaining compliance.
- Compliance Rules That Cannot Be Ignored
While unpaid leave is allowed, employers must still meet minimum wage payment thresholds to avoid penalties.
Key Requirements:
- Employers must pay at least 90% of the full wages of total employees each month
- Each employee must receive at least 80% of individual contracted salary
Failure to meet these thresholds may result in:
- SIF file rejection
- WPS non-compliance flags
- MOHRE restrictions (including potential visa blocks)
- Best Practices for Managing Unpaid Leave
To stay compliant and avoid operational disruptions:
- Always document employee consent
- Ensure SIF reporting is accurate and consistent
- Monitor payroll to stay within compliance thresholds
- Maintain a clear audit trail of approvals and submissions
Final Thoughts
Unpaid leave can be a useful tool for managing workforce costs and flexibility — but only when handled correctly.
By aligning payroll reporting, documentation, and compliance requirements, organisations can avoid penalties while maintaining transparency and trust with employees.