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New UAE Labor Law: Turning Paid Leaves Into Cash [Know Everything]


A KT reader wonders if there is a limit to the number of leaves he can use at one time.

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New UAE Labor Law: Encashing paid leaves

new uae labor law turning paid leaves into cash

Question: I work at a company in Dubai. I’m on paid leave for a few weeks. Could you describe how you ‘encashed’ these leaves? Is there a maximum amount and how is it calculated? Also, could you please tell me the maximum number of leaves I can get in one sitting?

In response to your inquiries, it is presumed that you work for a mainland company established in Dubai. As a result, the provisions of Federal Decree Law No. 33 of 2021 on Employment Relations Regulation (the ‘Employment Law’) and Cabinet Resolution No. 1 of 2022 Concerning the Executive Regulations of Federal Decree-Law No. 33 of 2021 on Employment Relations Regulation (the ‘Cabinet Resolution No. 1 of 2022’) apply.

An employee in the UAE is entitled to 30 days of annual leave per year. This is in compliance with Employment Law Article 29(1)(a).

For unused yearly leaves, an employee may be entitled to ‘compensation in lieu.’

This is calculated using the employee’s basic monthly income as a starting point.

If the employee does not intend to take the yearly leave, he or she and the employer may agree to a financial payment instead.

This is in accordance with Article 19(1) of Cabinet Resolution No. 1 of 2022, which states: “Subject to 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 following year or agree with his employer to be paid in lieu thereof based on his wage received at the time of leave entitlement.”

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In addition, an employee may carry over half of his or her yearly leave to the following year.

An employer cannot continue to employ an employee for more than two years without providing annual 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 wishes to carry it over or be paid in lieu of leave, as specified by the Establishment bylaws and the Executive Regulations of this Decree-Law.”

According to the aforementioned rules of legislation, an employee may be entitled to compensation in lieu of unused annual leaves if both the employee and the company agree.

Furthermore, if an employee has not taken annual leave in a few or many years, his or her cash in lieu entitlements will be calculated based on his or her basic income on the day the annual leave is due.

The maximum number of annual leaves an employee may take at one time is not specified in the Employment Law.

An employee is entitled to 30 calendar days of yearly leave per year under the laws described above.

In cases where an employer only gives annual leave every two years, the annual leave should be taken in chunks of 60 calendar days.

However, the employee and the employer should agree on the maximum number of leaves that can be taken in one go.

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