UAE Annual Leave: Everything You Need to Know About Your Rights & Entitlements

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Updated August 2023

Annual leave refers to a designated span of paid time off given to employees by their employer. In the UAE, regulations governing annual leave for workers are established by the Labor Relations Law, aiming to ensure the well-being of employees.

In the following article, Wego will provide everything you need to know about the UAE annual leave regulations.

UAE annual leave 2023

In March 2023, a new law came into effect in the UAE, permitting employees to retain their unused annual leave, either entirely or partially, following a discussion with their respective employers. Alternatively, they have the option to receive compensation in the form of money, as mutually agreed upon with the company.

Upon an employee’s departure from their job, any remaining annual leave days should be compensated with a cash payment, calculated based on the employee’s basic salary.

Furthermore, it’s essential to note that employers are prohibited from terminating an employee’s employment while the employee is on their annual leave. This regulation ensures that employees have the freedom to utilize their entitled leave without concerns regarding job security during their absence.

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UAE annual leave rules and labour law

According to the Labor Relations Law of the country, a provision for 30 days of annual leave is allocated to employees. This leave can be split into two periods, subject to a notice period of no less than one month and a mutual agreement. Moreover, the utilization of these leaves should occur within the entitlement year, and their scheduling can be harmonized with the employer’s plans. The employer is required to communicate the leave dates with a minimum of one month’s anticipation. Additionally, newly onboarded employees also have the privilege of vacation entitlement.

Details are as follows:

• employees are required to utilize their allocated annual leave within the year it is granted
• the employer has the authority, in mutual agreement with the employee, to determine the leave dates based on operational needs
• notification of the intended leave date by the employer must be provided to the employee at least one month in advance
• with the employer’s consent and adherence to company regulations, employees are permitted to carry over their remaining annual leave balance to the following year. If this occurs, the employee is entitled to receive compensation for the days worked during the annual leave, calculated based on the basic salary
• employers are prohibited from restricting employees from using their accumulated annual leave for a period exceeding two years
• upon the termination of employment, any accrued and untaken leave days will be compensated based solely on the basic salary
• the computation of the duration of annual leave encompasses legally specified official holidays, as well as sickness-induced leaves, if they fall within the annual leave period. This is applicable unless the employment contract or company regulations stipulate alternative provisions

UAE annual leave days and entitlements

The allocation of annual leave adheres to the guidelines stipulated in the Federal Decree-Law No. 33 of 2021, which governs Labor Relations in the Private Sector. This legislation is commonly recognized as the ‘UAE Labour Law,’ and it establishes the following provisions:

• employees are eligible for a fully compensated annual leave period of 30 days upon completion of one year of service
• for those who have completed six months of service but less than one year, they are entitled to a fully paid annual leave of 2 days per month

Please note that in instances where an employee’s service concludes before utilizing their entire annual leave allocation, the individual will be granted leave corresponding to the fraction of the final year of service.

UAE annual leave encashment and carry forward

The UAE has announced that employees holding unused annual leave will have the option to receive cash compensation or carry forward their accrued days. The Ministry of Human Resources and Emiratisation (MoHRE) in the UAE has disclosed that employees with untaken annual leave can choose between retaining their leave days for the future or opting for a cash allowance in lieu of the leave.