UAE Annual Leave Procedures and Systems

Annual leave is a legal right of employees in the UAE and a cornerstone of employment rights in the UAE. It reflects the support provided by the UAE labour system to employees working in the UAE.  It enhances productivity and employee well-being. Federal Decree-Law No. 33 of 2021 on Labour Law Relations, which came into effect in February 2022, defines how annual leaves are earned and how annual leaves are calculated. Both employers and employees need to know these important provisions to ensure employment legal compliance. If attorney assistance is needed, then we have a trusted team of lawyers and legal consultants to provide the legal knowledge and services.

Basis of Annual Leaves & Calculation

Under Article 29 of Federal Decree-Law No. 33 of 2021 (enforced in February 2022), all employees are entitled to one month of paid annual leave if they have completed six months of continuous service. It means after one year of continuous employment, the entitlement becomes 30 calendar days per year. This law ensures that employees receive reasonable time off to rest or to spend time with their families. recharge, and manage personal affairs. If the service is less than a year, then two days from every completed month will be counted. For example, if the service is 10 months, then 20 days will be awarded or given to the employee, along with paid leave. If the leaves are 25, then the pay will also be for 25 days. It’s an accrued calculation format. However, if an employee has worked for a period of a year, then per month leaves will be 2.5 days. Annual leave accrues over time. It means the employee earns the leave entitlement progressively. HR has to ensure the accuracy and transparency. For example, after six months, an employee accrues around 12 days of leave. By the end of a full year, the accrual reaches 30 days. Employers often use internal HR systems to track these balances, ensuring accuracy in payroll and scheduling. This helps avoid confusion and difficulties.

How to schedule

As per UAE Labour Law, employers have the authority to schedule employee annual leave. However, there will be a balance between the employer’s business management and the employee’s rest schedule. It does not mean the employer can put pressure on the employee, and the employee can impose their personal choice on the employer. The employer also has the right to divide the annual leave. The employee can not interfere in this decision. If any confusion arises, the MOHRE is the best place to have this knowledge. Labour and Employment lawyers are also a great source to have a good idea about its calculation.

Payment Details

As per UAE Law, annual leaves are always paid. If employers do not pay the salary or do not pay on time, then employees have the right to complain to MOHRE. They can also serve the legal warning letter through professional law firms. Professional law firms can also assist in litigation. UAE Labour Law states that the annual paid salary is a sum of basic salary and housing allowance. Commissions, Incentives and Bonus Schemes are subject to addition in the employment contract. Payment has to be made before the leaves begin. Employers must avoid giving any stress to employees.

Forfeiture

The law always allows both parties to reach a consensus on carrying forward unused leaves. But employers are recommended to ensure that leave is taken every year. It’s very important for the health of employees. If leaves are not taken, then they will be wasted, unless there is a consensus between, employer and employee about unused leaves. If an employee is going to be terminated or he is going to resign, then the employer still has to compensate him. This ensures employees are fairly compensated for their entitlements.

Leave During Probation

Employees in probationary periods are not allowed annual leave. Even sick leaves are not usually allowed. If the employee completes six months of work, then they may accrue the leave. Employers can grant to take unpaid leave to probationary employees at their decision.

Public Holidays

As per the UAE Labour Law, public holidays can’t be deducted from annual paid leave. The employer has no right to deduct the money or leave. If any situation like this happens, then the employee can contact MOHRE.

HR Documentation

Automated HR systems are used to manage leave. This HR system tracks accruals and integrates leave balances into payroll. But employers must record all the details in written format. If employers do not record manually or in written format, then it might go against the employer in MOHRE, if the HR system does not function properly

Rights and Responsibilities

Employees have the right to take leave without any pressure. Employers have the obligation to ensure annual leave in a year. Violations can lead to labour complaints.

Annual Leave in Free Zones

UAE free zones such as DIFC or ADGM may be subject to separate employment rules. Though principles are similar, but free zone regulations and calculation methods can be different. Employers and employees must check with freezone attorneys.