Annual Leave in UAE -New Labour Law Rules and Entitlement (Updated 2023)

UAE Annual Leave Entitlement and Rules: Your Complete Guide

Most of us look forward to the annual leave in UAE. This is the time for us to relax and come back energized. However, not many of us are able to understand what are the laws governing annual leave in UAE as per UAE Labour Law. If you are an employee or employer, it is better to understand the laws surrounding Annual Leave.

The new labour law – Federal Decree-Law No. 33 of 2021 on the regulation of labour relations – has updated the regulations for the private sector in the UAE on the computation of Annual Leave.

The new UAE Labour Law – Federal Decree-Law No. 33 of 2021 – has come into effect from February 2, 2022, replacing the current Federal Law No. 8 of 1980 and its amendments.

Employees are allowed to take annual leave if they have worked for six months or more. The UAE Labor Law states that employees are entitled to a fully paid annual leave of 30 days if they have completed one year of service. If they have completed six months but not yet a full year, they are entitled to 2 days of leave per month. If an employee leaves their job before using all their annual leave, they will receive leave for the portion of the last year they worked.

Article 29 of the new Federal Decree-Law No. 33 of 2021

As per the Article 29 of the New Labour Law on Annual Leave:

1. Without prejudice to the worker’s acquired rights for the period preceding the date of enforcement of the provisions of this Decree-Law, the worker shall be entitled to an annual leave with full wage, of not less than: a. Thirty days for each year of extended service; b. Two days for each month if his service term is more than six months and less than a year; c. A leave for parts of the last year he spent at work if his service is ended before using his annual leave balance.
2. The part-time worker shall be entitled to an annual leave according to the actual working hours the worker spends working for the employer and its period shall be defined in the employment contract, in accordance with what is stipulated in the Implementing Regulation hereof.
3. The employer may agree to grant the worker a leave from his annual leave balance during the probationary period, while the worker shall reserve his right to be compensated for the remainder of his annual leave balance in case he does not pass the probationary period.
4. The worker shall obtain his leave in its entitlement year and the employer may specify the dates of these leaves according to work requirements and in agreement with the worker, or grant them alternately among the establishment’s workers, in order to secure its work progress. e employer shall notify the worker of the specified date for his leave within a sufficient time of not less than a month.
5. The worker may, with the approval of his employer and in accordance with the applicable regulations at the establishment, carry forward his annual leave balance or days thereof to the following year.
6. The worker shall be entitled to the wage for the period of his annual leave.
7. The holidays prescribed by law or by agreement are included in the calculation of the annual leave period if they fall within the annual leave of the worker and they form a part thereof, unless the employment contract or the regulations in force at the establishment provide for anything that is more useful for the worker.
8. The employer may not prevent the worker from benefiting from his annual leave accrued for more than two years, unless the worker wishes to carry it forward or receive a cash allowance for it, in accordance with the regulations in force at the establishment and the Implementing Regulation hereof.
9. The worker shall be entitled to a wage for the accrued leave days if he quits the work before using them, regardless of the leave duration, with respect to the period for which he did not obtain his leave. He shall also be entitled to receive leave wage for parts of the year in proportion to the period he spent in work and it shall be calculated according to the basic wage.
10. The Implementing Regulation hereof defines the rules and conditions for regulating leaves and their compensation.

Leave salary calculation in the UAE in 2023

If you’ve completed 12 months of service with a company and take 30 days of annual leave, your salary during this leave will be your full monthly salary. This includes your basic salary plus any allowances you usually receive.

Rights of an employee if they are not paid during their leave

If your employer doesn’t pay your full salary during annual leave when you’ve completed 12 months of service, you have the right to file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE). They will help resolve the issue, and if needed, the matter may go to the labor court to ensure you receive the correct compensation according to the law.

Rules for Using Annual Leaves in UAE:

• You must use your leaves in the year you’re entitled to them. Your employer may set the dates for your leave, but they must inform you at least one month in advance.
• With your employer’s consent, you can carry over unused annual leave to the next year, and you’ll be paid for the days you worked during the leave based on your basic salary.
• Employers cannot prevent you from using your accrued leave for more than two years. If your employment ends, any unused leaves will be calculated based on your basic salary only.
• The duration of your annual leave will include official holidays and sick leaves if they occur during your leave period, unless your contract or company’s regulations state otherwise.

If you face any issues with your annual leave or salary, you can file a complaint through the MOHRE website or call their helpline at 600590000. They are there to help you resolve any disputes with your employer.

Leave Encashment in UAE

Article 29(8) of the UAE Labor Law states that an employer cannot prevent an employee from using their accumulated annual leave for more than two years, unless the employee chooses to carry it over or receive compensation instead, as specified by the Establishment bylaws and Executive Regulations.

As per the Article 29 of the New Labour Law on Annual Leave clause 8 and 9:

• The employer may not prevent the worker from benefiting from his annual leave accrued for more than two years, unless the worker wishes to carry it forward or receive a cash allowance for it, in accordance with the regulations in force at the establishment and the Implementing Regulation hereof.
• The worker shall be entitled to a wage for the accrued leave days if he quits the work before using them, regardless of the leave duration, with respect to the period for which he did not obtain his leave. He shall also be entitled to receive leave wage for parts of the year in proportion to the period he spent in work and it shall be calculated according to the basic wage.

As per the Article (19) of Cabinet Resolution No 1 of 2022 – carrying forward annual leaves or Receiving cash allowance thereof:

• The worker may carry forward not more than half of the annual leave to the following year, or he may agree with the employer to receive a cash allowance thereof, according to the wage he receives at the time of his entitlement to the leave.
• If the worker’s service ends, he shall be paid a cash allowance for the balance of his legally due annual leave, according to the basic wage.

Understanding the rules and entitlements surrounding annual leave in the UAE is crucial for both employees and employers. The UAE Labor Law, specifically Article 29 of the new Federal Decree-Law No. 33 of 2021, outlines the provisions for annual leave. Employees have the right to 30 calendar days of annual leave each year in the UAE. They can carry over a maximum of half of their annual leave to the following year or receive compensation in lieu of it, subject to the regulations set by the employer and the provisions of the UAE Labor Law.

Remember to always consult the UAE Labor Law and refer to the specific regulations in force at your establishment for accurate and up-to-date information regarding annual leave entitlement and rules.

Frequently Asked Questions FAQS on Annual Leave in UAE