Annual leave in the UAE is a paid statutory entitlement of 30 calendar days a year, available after one year of service. Employees who complete six months to one year of service accrue 2 days per month. Annual leave is fully paid, based on the employee's full wage, and is protected under Article 29 of Federal Decree-Law No. 33 of 2021.
Quick Summary
- Annual leave in the UAE is a statutory paid entitlement of 30 calendar days per year, protected under Article 29 of Federal Decree-Law No. 33 of 2021.
- Eligibility: Employees who have completed one year of continuous service in the UAE private sector.
- Accrual before 1 year: 2 days per month after completing 6 months of service.
- Paid? Yes, fully paid at the employee's full wage including basic salary and fixed allowances.
- Carry forward: Allowed within employer policy limits, with most companies setting a cap on carry-forward days.
- Encashment: Unused leave is paid out at resignation, termination, or retirement.
- Part-time employees receive annual leave on a pro-rata basis.
- Public holidays falling within annual leave are generally not deducted from the leave balance.
- Employers can decline specific leave dates for business reasons but cannot deny the entitlement altogether.
- Key fact: Employees on probation do not accrue statutory annual leave during the first six months of service.
Annual Leave at a Glance
| Factor | Details |
|---|---|
| Entitlement | 30 calendar days a year after 1 year of service |
| Accrual before 1 year | 2 days per month after 6 months of service |
| Pay | Full wage |
| Approval | Required from employer |
| Carry forward | Allowed within employer policy limits |
| Encashment | Paid for unused leave at resignation, termination, or retirement |
| UAE Labour Law | Article 29, Federal Decree-Law No. 33 of 2021 |
What Is Annual Leave?
Annual leave is paid time off that every private sector employee in the UAE earns for rest, travel, or personal reasons. It is a statutory right, meaning employers must provide it regardless of company policy preferences, though many employers offer more generous terms.
Who Is Eligible for Annual Leave?
Every full-time employee working under a limited or unlimited contract in the UAE private sector qualifies for annual leave. Part-time employees are eligible on a pro-rata basis based on their working hours. Employees under six months of service are not entitled to statutory annual leave, though they may take leave at the employer's discretion.
Annual Leave Entitlement
Full-Time Employees
Full-time employees earn 30 calendar days of paid annual leave per year after completing one year of continuous service.
Part-Time Employees
Part-time employees receive annual leave proportional to their contracted working hours compared to a full-time role.
Probation Period
Employees on probation, typically the first six months, do not accrue statutory annual leave, though some employers grant limited leave at their discretion during this period.
Private Sector
The 30-day entitlement applies uniformly across UAE private sector companies and free zones, excluding DIFC and ADGM, which follow their own separate employment regulations.
How Annual Leave Is Calculated
Formula
After 1 year of service: 30 days per year, or 2.5 days per month. Between 6 months and 1 year: 2 days per completed month.
Examples
An employee who completes 8 months of service has accrued 4 days of leave (2 months past the 6-month mark x 2 days). An employee who completes 18 months of service has the full 30-day annual entitlement for year one, plus 6 months worth of accrual (15 days) into year two.
Leave Salary Calculation
Leave salary is based on the employee's full wage, which typically includes basic salary and fixed allowances. Daily rate = Monthly wage ÷ 30. Leave pay = Daily rate x number of leave days.
Carry Forward Rules
UAE Labour Law allows unused annual leave to be carried forward to the next year, subject to employer policy. Many companies cap the number of days that can be carried forward, and some require unused leave beyond the cap to be encashed instead.
Annual Leave Encashment
If an employee has unused annual leave at the time of resignation, termination, or retirement, the employer must pay it out as leave encashment, calculated using the daily wage rate multiplied by the number of unused days.
Annual Leave During
Notice Period
Leave continues to accrue during a working notice period. Employees can also request to use remaining annual leave during notice, subject to employer agreement.
Resignation
Unused annual leave is paid out as part of the final settlement.
Termination
The same encashment rule applies whether the employee resigns or is terminated, as long as leave was accrued and unused.
Public Holidays
Public holidays falling within an approved annual leave period are generally not deducted from the leave balance.
Sick Leave
Annual leave and sick leave are calculated and paid separately. Falling sick during annual leave, with a valid medical certificate, may allow those days to be reclassified as sick leave in some companies.
Can an Employer
Reject Leave?
An employer can decline the specific dates requested based on business needs but cannot deny the entitlement altogether.
Force Employees to Take Leave?
Employers can require employees to take leave at certain times, particularly to manage business slowdowns, as long as this is reasonable and communicated in advance.
Cancel Approved Leave?
Employers can cancel approved leave only in exceptional business circumstances, and should compensate or reschedule the employee's leave fairly.
Annual Leave Policy Best Practices (For Employers)
Employers should maintain a written leave policy, use a reliable system to track accrual and balances, communicate carry-forward limits clearly, and process leave requests within a reasonable timeframe to avoid disputes.
Annual Leave Examples (HR Scenarios)
An employee with 25 days of unused leave resigns after 3 years of service. HR calculates the daily wage rate and pays out the full 25 days as part of the final settlement. In another case, an employee requests 10 days of leave for a family trip. HR checks the accrued balance, confirms coverage during the absence, and approves the leave two weeks in advance.
Common Mistakes to Avoid
Common errors include miscalculating leave accrual for employees who join mid-year, forgetting to apply carry-forward limits consistently, and failing to include allowances correctly in the leave salary calculation.
Frequently Asked Questions
How many annual leave days are allowed in the UAE?
30 calendar days a year after completing one year of service.
Can annual leave be carried forward?
Yes, subject to employer policy, which often sets a cap on the number of days that can be carried into the next year.
How is leave salary calculated?
Daily wage rate (monthly salary ÷ 30) multiplied by the number of leave days.
What happens to unused leave?
It can be carried forward within policy limits, or paid out as encashment if the employee leaves the company.
Can annual leave be denied?
The specific dates can be declined for business reasons, but the entitlement itself cannot be denied.
Can annual leave be taken during probation?
Statutory annual leave does not accrue during probation, though some employers allow limited leave at their discretion.
Is annual leave paid?
Yes, annual leave is paid at the employee's full wage.
Can public holidays fall within annual leave?
Yes, and these days are typically not deducted from the annual leave balance.
Can annual leave be encashed?
Yes, unused leave is paid out at resignation, termination, or retirement.
What happens to annual leave after resignation?
Any unused accrued leave is calculated and included in the final settlement payment.
Author(s)
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