My employees' leave keeps accruing every year — how do I account for it properly?

Under Article 29 of the Federal Labour Relations Law, an employee is entitled to 30 days of paid annual leave once they complete a full year of service, and before that — for a service period between six months and one year — they're entitled to two days' leave for each month worked. The law is clear that the employee is entitled to full wage for the leave period, and the employer may agree to let the employee take part of their leave balance even during the probation period.

From an accounting standpoint, this entitlement shouldn't only be booked when the employee actually takes leave or leaves the company; the correct approach is to accrue it monthly as a leave liability throughout the year, based on the days actually earned up to the reporting date minus what's been taken. This gives you a realistic figure on the balance sheet instead of being surprised by a large leave balance that has to be paid out in cash all at once when a long-serving employee resigns. RASEEKH calculates this accrual monthly as part of your books close, so the number is ready whenever you need it.