Khaleej Times, Sunday, Mar 05, 2023 | Sha'ban 13, 1444
How to encash unused annual leaves in UAE: Calculations, when it becomes due; all your questions answered
Emirates:
Question: I have several annual leaves pending. I have been told to clear them
as they will apparently 'lapse'. What are the general rules around encashing
them? Is there a limit to how many leaves I can encash?
Response: Pursuant to your queries, it is assumed that you are employed by a
mainland employer based in the UAE for more than one year of continuous service.
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 on the Implementation of Federal Decree Law No. 33 of 2021
Regarding the Regulation of Employment Relations ('Cabinet Resolution No. 1 of
2022') are applicable.
In the UAE, an employee is entitled to 30 days of annual leave for each year of
service with the employer. This is in accordance with Article 29(1)(a) 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 days a year for each year
of service.”
Further, an employee may only carry forward 15 days of his or her annual leave
to the following year. This is in accordance with Article 19 of Cabinet
Resolution No. 1 of 2022, which states: “Subject to the provisions of clauses
(8) and (9) of Article 29 of the Employment Law:
1. 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 to
leave.
2 If the employee's service ends, he shall be paid a cash allowance for the
balance of his legally due annual leave, according to the basic salary."
The annual leave of an employee becomes due on completion of each year of
service. Therefore, any cash allowance may be paid by an employer on completion
of each year of service or as agreed between both parties. Based on the
aforementioned provisions of law, you may carry forward only 15 days of your
current year’s annual leave to the following year, or may request your employer
to pay you cash allowance for the same. The calculation of cash allowance in
lieu of annual leave is based on your basic salary.
At the end of the service with the current employer, you may claim cash
allowance for the annual leave which [is] not availed by you during your service
period. This is in accordance with Article 29(9) of the Employment Law, which
states: “An employer shall be entitled to be paid for his days of leave if he
leaves the 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 of
service, and the same is calculated on the basis of the basic wage."
It may be noted that the employer may have the discretion of scheduling the
annual leave of an employee as mentioned in Article 29(4) of the Employment Law.