Annual Leave in UAE

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HLB HAMT - Accounting Firm in UAE

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    Ministry of Human Resources and Emiratization (MOHRE) has announced the introduction of Federal Decree Law No. 33 of 2021 that will regulate labor relations and employment practice in UAE Article 29 of the new UAE Labor law dated February 02, 2022 states the following regarding Annual leave policy;

    “The employee must be granted an annual leave during each year of service which may not be less than:

    • Two days per month in respect of any employee with more than six months and less than one year of service.
    • Thirty days per annum in respect of any employee whose period of service exceeds one year.”

    Here our payroll experts in UAE, explain in detail the Annual leave policy in UAE.

    Frequently Asked Questions

    1. Is annual leave in the UAE based on calendar days?

      Yes, annual leave is calculated based on calendar days and includes any public holidays and weekends that fall within, or any day taken due to illness if they fall within this period.

    2. Are companies allowed to provide annual leave in working days?

      Yes, Companies are allowed to provide annual leave in working days with the condition that benefit given to employees are either equal or more than the 30 calendar days. The standard leave days provided by companies using working days is 22 working days per year (Companies who are providing Two weekly holidays to their staff).

    3. Can the employer determine when the employee leave will be taken?
      Yes, employers are entitled to determine when an employee can take their leaves according to the work requirements as per Article 29. The Employer must notify the worker of the specified dates for his/ her leave within a sufficient time of not less than a month.
    4. Can an employer prevent an employee from taking annual leave?

      The Employer may not prevent the worker from benefiting from his / her annual leave accrued for more than two years, unless the worker wishes to carry it forward or receive cash allowance for the leaves accrued.

    5. How is leave encashment calculated?

      Employee is eligible for leave encashment for unutilized leave which will be calculated against his/ her last drawn Basic Salary.

    6. How are UAE national/public holidays that fall within an employee’s annual leave treated?

      Any holidays stipulated by law or by mutual agreement, that fall within an annual leave are treated as being part of the leave thereof.

    7. Can part-time employees take annual leaves?

      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.

    8. Can an employee take annual leave during probationary period?

      Employee is not authorized to take annual leave during probation. The employer may agree to grant the worker a leave from his/ her annual leave balance during the probationary period. It has to be a mutual agreement between the employer and employee.

    9. Can an employee claim compensation for unutilized leaves at termination of contract?

      An employee leaving his employment, whether via termination or resignation is entitled for compensation through payroll of any outstanding leaves and it shall be calculated against the employees last drawn basic salary. In the case of employees whose service period is between six months to one year, the entitlement for compensation for unutilized leave days is calculated at an accrual of two days per month.

      See below sample calculation of leave balance during final settlement

    10. Can an employee carry forward leaves to the next year?

      The employee may, with the consent of the employer, and in accordance with company’s regulations, carry over his/ her annual leave balance or days thereof to the following next year. Employer is not authorized to carry forward annual leave for a period of two years unless the employee wishes to carry forward it or receive cash benefit against it.

    11. What happens when an employee does not resume to work after end of annual leave?

      According to article 89, ‘Subject to the provisions of this Law, any worker who fails to resume work immediately after the expiry of his/ her leave shall automatically forfeit his/ her wage for the period of his/ her absence, with effect from the day immediately following that on which the leave expires.’

    12. Can an employer terminate an employee who is on leave?

      No, employers cannot terminate the services of employees who are on annual leave as the law in article 90 states ‘Without prejudice to the instances in which an employer is entitled to dismiss a worker without notice or without the gratuity provided for in this Law, an employer shall not dismiss a worker or serve a notice of dismissal on him while the worker is on a leave provided for under this Section.’

      But if the employee is absent without a valid reason for more than 20 intermittent days or 7 consecutive days, Employer has the right to terminate the employee from service.

    13. Can an employee work for another employer during their annual leave?

      No, a worker cannot work for another employer while on annual or sick leave provided in article 88. If the employer establishes that he/ she has done so, the employer may terminate the worker’s services without notice and deny him the pay in respect of the leave period.

    14. Is it possible to convert vacation leave into sick leave if required?

      Vacation leave cannot be converted to sick leave if an employee becomes ill while on annual leave unless otherwise agreed by an employer.

    Payroll Service in UAE

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    For a comprehensive understanding of leave policies in GCC countries, Please refer to our articles.


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