• Home
• /
• UAE
• /
• Legal

Encashing paid leaves as per new UAE labour law: All you need to know

KT reader asks if there is a limit on the number of leaves he can avail of at a stretch

Question: I work in a Dubai-based firm. I have several pending paid leaves. Can you explain the process of 'encashing' these leaves? How is it calculated and is there an upper limit? Also, can you please tell me what is the maximum number of leaves that I can avail of in one go?

Response: Pursuant to your queries, it is assumed that you are employed in a mainland firm based in Dubai. Therefore, the provisions of Federal Decree Law No. 33 of 2021 On the Regulation of Employment Relations (the 'Employment Law') and those of Cabinet Resolution No.1 of 2022 Concerning the Executive Regulations of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations (the 'Cabinet Resolution No. 1 of 2022') are applicable.

In the UAE, an employee is entitled to 30 calendar days of annual leaves in a year. This is in accordance with Article 29(1)(a) of the Employment Law.

An employee may be entitled to 'cash in lieu' for unused annual leaves. The calculation of this is based on the basic monthly salary of the employee. If the employee does not intend to avail of the annual leave, he or she may mutually agree with the employer for payment of cash instead. This is in accordance with Article 19(1) of the Cabinet Resolution No. 1 of 2022, which states: "Subject to the provisions of paragraphs (8) and (9), Article 29 of the Employment Law, an employee may carry over not more than half of his annual leave to the next year or agree with his employer to be paid in lieu thereof based on his wage received at the time of leave entitlement."

Further, an employee is allowed to carry forward half of his or her annual leave to the succeeding year.

An employer cannot employ an employee continuously for two years without granting an annual leave. This is in accordance with the Article 29(8) of the Employment Law, which states: "The Employer may not prevent the employee from using his accrued annual leave for more than (2) two years, unless the employee wants to carry it over or be paid in lieu of leave according to the Establishment bylaws and as specified by the Executive Regulations of this Decree-Law."

Based on the aforementioned provisions of law, an employee by mutual consent with the employer may be entitled to cash in lieu of unused annual leaves. Further, if an employee has not availed of annual leaves for a few or several years, the cash in lieu entitlements will be based on his or her basic salary as on the date when the respective annual leave is due.

ALSO READ:

• New UAE labour law explained: What happens after an unlimited work contract is terminated?

• New UAE labour law explained: What employees need to know before quitting a job

The Employment Law is silent on the maximum number of annual leaves an employee may avail of at a stretch. As per the aforementioned provisions of laws, an employee is entitled to 30 calendar days of annual leaves in a year. Where an employer is granting annual leave once in two years, the annual leave in such circumstances should be 60 calendar days at a stretch. However, the employee should mutually agree with the employer about the maximum number of leaves that can be availed of in one go.

For more clarifications, you may contact the Ministry of Human Resources and Emiratisation.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.