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UAE: Can employees encash entire annual leave by working full year?

According to the country's employment law, an employee is eligible for 30 days of annual leave upon completing one year of service

Published: Sun 28 May 2023, 8:19 AM

Updated: Sun 18 Jun 2023, 7:30 AM

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Question: Can I encash all my annual leaves by working the entire year? If yes, how is this calculated?

Answer: Pursuant to your query, it is assumed that you are a full-time employee of a mainland company in the UAE. Therefore, the provisions of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations and Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relations are applicable.

In the UAE, an employee is eligible for 30 days of annual leave upon completing one year of employment. This is in accordance with Article 29 (1) of the Employment Law, which states, “Without prejudice to the rights accruing to the employee prior to the entry into force of this Decree-Law, the employee shall be entitled to a paid annual leave of not less than: a. 30 (thirty) days a year for each year of service.”

An employer should permit an employee to avail of annual leave at least once in two years unless the employee wishes to carry forward the annual leave or be paid in lieu of leave. This is in accordance with 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.”

Further, an employee may only carry forward 15 days of his or her annual leave to the following year or may agree with an employer to receive cash in lieu. This is in accordance with Article 19 (1) of the Cabinet Resolution No. 1 of 2022, which states, “Subject to the provisions of Clauses 8 and 9 of Article 29 of the Decree Law that the employee 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 salary he receives at the time of his entitlement of the leave."

Based on the aforementioned provisions of law, you may mutually agree with your employer to receive cash in lieu of annual leave not availed by you. If your employer agrees to pay you cash in lieu for the annual leave not availed by you, then your employer should pay you based on your entire monthly salary.

An employee is entitled to cash in lieu for the number of days of annual leave which he or she has not availed throughout the employment period with an employer, and such calculations are made on the basic salary of an employee. This is in accordance with Article 29(9) of the Employment Law, which states, “An employee shall be entitled to be paid for his days of leave if he leaves work before the use thereof, irrespective of the length thereof, for the period for which he did not use his leave. The employee shall be entitled to the leave pay for the fractions of the year in proportion to the period for service, and the same is calculated on the basis of the basic salary."

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.

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