Labour And Immigration

The Abu Dhabi Labour Court of First Instance has ordered a company to pay Dh199,298 to a former employee after finding that he was not paid several employment-related entitlements following the end of his three-year service.

The employee had sued the company, seeking payment of outstanding salaries, disputed deductions, annual leave allowance, notice pay, end-of-service gratuity and other dues.

According to the case details, the employee claimed Dh74,250 in unpaid salaries accumulated over several months, along with Dh34,350 in unauthorised financial deductions.

He also sought Dh27,205 as an annual leave allowance, Dh13,500 in lieu of the notice period, Dh33,116 as end-of-service gratuity and Dh4,000 towards a return air ticket.

The employee additionally requested legal interest at 12 per cent from the date of judgment until the amount was paid in full, as well as court fees, expenses and legal costs.

After examining the claims and evidence submitted in the case, the court ordered the company to pay a total of Dh199,298 in employment dues.

The ruling highlights the potential financial consequences for employers when contractual and statutory employment entitlements remain unpaid after the termination of an employment relationship.

The US legal sector continued its streak of job gains, reaching another historic high in July even as the broader US economy unexpectedly shed jobs, according to new figures released on Friday by the US Department of Labour.

The total number of jobs in the legal sector, including lawyers, paralegals, judges and legal assistants, stood at 1,245,200 in July, an increase of 1,000 jobs from June and up 8.1% compared with five years earlier, according to figures released by the department's Bureau of Labour Statistics (BLS).

BLS data shows that the US legal sector has almost invariably added jobs each month since the onset of the Covid-19 pandemic in 2020. March 2026 was the only month in the past 24 months to record a decline in legal sector employment, although the figures for June and July could be revised downwards in future reports.

In another positive signal for at least one segment of the legal industry, prominent corporate law firm Milbank said this week that it would offer incoming first-year associates the option to start their jobs a few weeks early, citing strong client demand.

The New York-founded firm, which also raised associate salaries this summer, said it was experiencing "exceptionally strong client demand" and would give lawyers the option to begin on August 24 rather than in mid-September.

UAE annual leave pay is a topic that often creates confusion among employees who are unsure whether they should receive their complete monthly salary while taking their approved holiday.

Many employees believe that annual leave payments are limited to their basic salary or basic salary plus housing allowance. However, under the UAE Labour Law, annual leave pay is calculated differently, and eligible employees are entitled to receive their full wage during their leave period.

What is Annual Leave Pay Under UAE Labour Law?

Annual leave pay refers to the salary an employee receives while taking their legally entitled paid leave from work.

Under Federal Decree-Law No. 33 of 2021 regulating labour relations in the UAE, employees are entitled to receive their full wage while on annual leave. The law defines wage as more than just the basic salary and includes the regular components of an employee’s remuneration.

This means that an employee’s annual leave salary should generally include the basic wage along with applicable allowances and benefits that form part of their normal monthly compensation.

For employees who have completed one year of service, UAE Labour Law provides entitlement to 30 calendar days of annual leave every year. During this period, employers must continue paying the employee’s full salary package as required by law.

Does Annual Leave Salary Include Housing, Transport and Other Allowances?

Yes. When an employee takes annual leave, the payment should include the regular allowances that they normally receive as part of their employment package.

These may include housing allowance, transport allowance, communication allowance and other fixed benefits provided under the employment contract or company salary structure.

A common misunderstanding is that employers can reduce annual leave pay to only the basic salary or basic salary with housing allowance. However, excluding regular allowances that are normally paid every month may not comply with the UAE Labour Law requirements.

The purpose of annual leave pay is to ensure that employees do not suffer a financial reduction simply because they are exercising their statutory right to take time off from work.

Can an Employer Pay Only Basic Salary During Annual Leave?

No. During an employee’s actual annual leave period, the employer is required to pay the employee’s full wage as defined under UAE Labour Law.

If an employee regularly receives allowances as part of their monthly salary package, those payments should continue during annual leave.

For example, if an employee receives a basic salary along with fixed housing, transport and other contractual allowances every month, the annual leave payment should reflect the same salary structure.

Any practice of reducing annual leave pay by removing regular allowances may result in a dispute between the employer and employee.

Is Annual Leave Pay Different From Unused Leave Encashment?

Yes. UAE Labour Law makes a clear distinction between salary paid during annual leave and compensation for unused annual leave after employment ends.

While an employee is taking annual leave during employment, they are entitled to receive their full wage, including applicable regular allowances.

However, when an employee leaves a company and has unused annual leave days, the cash compensation for those unused days is generally calculated based on the basic salary, unless the employment contract provides better benefits.

This difference is important because the calculation method for leave taken during employment and leave converted into cash at the end of service are not the same.

What Can Employees Do If Annual Leave Pay is Reduced?

Employees who believe their annual leave payments do not comply with UAE Labour Law can first discuss the issue with their employer or human resources department.

They can refer to the provisions of Federal Decree-Law No. 33 of 2021 and seek clarification regarding how their annual leave salary has been calculated.

Employees may also approach the Ministry of Human Resources and Emiratisation (MoHRE) for guidance or to raise a formal complaint if they believe their statutory rights have not been respected.

Frequently Asked Questions

Do UAE employees receive full salary during annual leave?
Yes. Under UAE Labour Law, employees are entitled to receive their full wage during annual leave, including applicable regular allowances and contractual benefits.

Is annual leave salary calculated only on basic salary in the UAE?
No. Annual leave salary is not limited to basic salary. It generally includes the employee’s full wage structure, including regular allowances received as part of their employment package.

How many annual leave days are UAE employees entitled to?
Employees who complete one year of service are generally entitled to 30 calendar days of paid annual leave under UAE Labour Law.

Is unused annual leave paid based on full salary after resignation?
No. Leave encashment at the end of employment is generally calculated based on the basic salary, unless the employment contract provides more favourable terms.

Can employees complain about incorrect annual leave pay in the UAE?
Yes. Employees can raise concerns with their employer and may approach the Ministry of Human Resources and Emiratisation for assistance if they believe their legal entitlement has been denied.

Understanding UAE annual leave pay rules helps employees protect their rights and enables employers to remain compliant with the country’s labour regulations. The law ensures that taking annual leave does not result in an unfair reduction in an employee’s regular income.

An Abu Dhabi court has dismissed a Dh100,000 compensation claim filed by a UAE Golden Visa holder against his former employer, ruling that the employee failed to prove the company had agreed to issue him a new employment contract after he obtained his long-term residency.

The employee had argued that he entered into a two-year employment contract with the company on July 11, 2024. After securing a UAE Golden Visa in August 2025, his existing employment contract, residency visa and work permit were cancelled as part of the residency conversion process. He claimed both parties had agreed that a new employment contract and work permit would be issued once the Golden Visa formalities were completed.

However, when he later applied for benefits under the UAE's Involuntary Loss of Employment (ILOE) insurance scheme, he was informed that his employment had officially ended on August 11, 2025, and that no replacement employment contract had been registered. As more than one month had elapsed since the recorded termination date, his insurance claim was rejected under the scheme's eligibility rules.

The employee contended that the company had unlawfully terminated his employment, causing him to lose access to ILOE insurance benefits and miss a job opportunity in Saudi Arabia that would have paid a monthly salary of Dh45,975.

He alleged that the employer had failed to honour the original two-year employment agreement and had terminated his services without a valid reason, leaving him unemployed. On that basis, he sought Dh100,000 in compensation for the financial losses he claimed to have suffered.

The employer denied any wrongdoing, maintaining that the termination complied with UAE labour laws. The company told the court that the employee had received written notice and completed the required notice period before his employment ended.

It also argued that the employee had produced no evidence to substantiate either his alleged financial losses or his claim that he had lost a job opportunity in Saudi Arabia.

Court's Findings

In its judgment, the Abu Dhabi Family, Civil and Administrative Claims Court dismissed the claim, holding that the employee had failed to establish that the employer committed any wrongful act.

The court noted that although the employee alleged the company had agreed to issue a new employment contract following the grant of his Golden Visa, he produced no evidence to prove such an agreement or demonstrate that the employer was legally obliged to do so.

The judge also observed that, according to the employee's own account, the cancellation of his previous employment contract and work permit had been carried out by mutual agreement to facilitate the Golden Visa process. As a result, the court found that the cancellation itself could not be regarded as evidence of misconduct by the employer.

The court further held that the employee failed to provide sufficient evidence to support his claims of financial loss, including the alleged missed employment opportunity in Saudi Arabia. It also found no proof that the employer was responsible for the rejection of his ILOE insurance claim.

Accordingly, the court dismissed the Dh100,000 compensation claim and ordered the employee to bear the court costs.

The Sharjah Misdemeanor Court has dismissed a theft case against an Asian worker accused of stealing 100 grams of gold jewellery from the shop where he was employed after the owner withdrew his complaint and a settlement was reached between both parties.

The case began when the owner of a goldsmith and jewellery shop noticed a shortage of gold items from his inventory. Suspecting wrongdoing, he reviewed the shop’s surveillance camera footage, which allegedly showed one of his employees taking around 100 grammes of gold jewellery.

The shop owner subsequently reported the matter to the authorities and submitted the surveillance recordings as evidence. The employee was arrested and referred for investigation.

During court proceedings, the defendant was confronted with the allegations and admitted to committing the offence. The court granted time for both parties to explore the possibility of reaching a settlement.

At the next hearing, the employer appeared before the court and confirmed that he had withdrawn the complaint and pardoned the defendant.

Taking into account the victim’s withdrawal of the complaint and the settlement reached between the two parties, the Sharjah Misdemeanor Court ordered the dismissal of the case.

The UAE has established a clear legal framework governing the enforceability of non-compete clauses in employment contracts, balancing employers' legitimate business interests with employees' right to pursue future employment. While employers are permitted to include post-employment restrictions in certain circumstances, these provisions are not automatically enforceable, particularly where an employee has been dismissed without a valid reason or in breach of the law.

A non-compete clause is commonly included in employment contracts where the nature of an employee's role gives them access to sensitive business information, confidential data, trade secrets or valuable client relationships. Such clauses are intended to prevent employees from using that knowledge to compete directly with their former employer after leaving the organisation.

However, UAE law imposes strict conditions on the validity of these restrictions. Under Article 10 of the UAE Labour Law, a non-compete clause is enforceable only where it is necessary to protect the employer's legitimate business interests. The restriction must also be reasonable in its scope, including the duration of the restriction, the geographical area covered and the type of work or business activities prohibited. The law further provides that the restriction cannot exceed two years from the date the employment relationship ends.

Importantly, the Labour Law also protects employees from unfair enforcement of non-compete obligations. It expressly states that an employer cannot rely on a non-compete clause if the employment contract has been terminated by the employer in violation of the provisions of the Labour Law. In such circumstances, the employer loses the legal right to enforce the post-employment restriction against the employee.

This protection has been further strengthened under Article 851 of the UAE Civil Transactions Law No. (25) of 2025. The provision makes it clear that an employer may not invoke a non-compete agreement if it rescinds the employment contract or refuses to renew it without any act on the part of the employee that justifies such action. Likewise, an employer cannot enforce the restriction if it has itself committed an act that legally entitled the employee to terminate the employment contract.

Taken together, these legal provisions reinforce the principle that employers cannot benefit from restrictive covenants where they are responsible for bringing the employment relationship to an end without lawful justification. Employees who are dismissed for reasons unrelated to their performance or conduct, or who resign because of the employer's breach of legal obligations, may therefore not be bound by a non-compete clause, even if it is expressly included in their employment contract.

The UAE's approach reflects an effort to strike a fair balance between protecting businesses from unfair competition and ensuring that employees are not prevented from earning a livelihood because of an unjustified or unlawful termination. While non-compete clauses remain an important tool for safeguarding confidential information and commercial interests, their enforceability ultimately depends on compliance with the conditions laid down by UAE law and the circumstances in which the employment relationship comes to an end.

An employer in the UAE cannot extend or reimpose an employee's probation period once it has expired and the employee has continued working without interruption. Under the UAE Labour Law, a probation period can only be imposed once by the same employer, and once it ends successfully, the employment relationship automatically continues under the full terms of the employment contract.

This issue often arises when companies undergo restructuring or changes in ownership or management. However, such internal changes do not affect the legal status of an employee who has already completed probation. The employment contract is between the employee and the company as the legal entity, not its directors, managers or shareholders.

Employees in the UAE who need to extend their annual leave because of an emergency may assume that having sufficient leave balance guarantees approval. However, the UAE's employment legislation makes it clear that while employees have statutory annual leave entitlements, extending an approved period of leave remains subject to the employer's consent and operational requirements.

A non-compete clause in an employment contract is designed to protect an employer’s legitimate business interests by preventing employees from using confidential information, trade secrets or client knowledge to compete after leaving the company. However, under UAE employment law, such restrictions are not automatically enforceable in every situation.

If an employer terminates an employee’s contract without a valid reason or in violation of labour regulations, the employer may not be able to rely on a non-compete clause to restrict the employee’s future employment opportunities.

Under Article 10 of the UAE Labour Law, employers may include a non-competition clause in an employment contract when the nature of an employee’s role allows them access to the employer’s clients, confidential information or trade secrets. The purpose of the clause is to prevent unfair competition and protect genuine business interests.

However, the law places clear limits on the enforceability of such restrictions. A non-compete clause must be reasonable and proportionate, with limitations relating to its duration, geographical scope and the type of work covered. The restriction cannot exceed two years from the date of termination of the employment relationship and must remain within what is necessary to safeguard the employer’s legitimate interests.

Importantly, Article 10 also states that a non-compete clause will not be enforceable if the employer terminates the employment contract in violation of the provisions of the Labour Law.

This means that an employer cannot terminate an employee without justification and then continue to enforce restrictions that prevent the employee from finding new employment or working in the same sector.

The principle is further reinforced by Article 851 of the UAE Civil Transactions Law No. (25) of 2025. The provision states that an employer cannot invoke a non-compete agreement if the employer has cancelled the employment contract or refused to renew it without any action by the employee that justifies such termination or refusal.

Similarly, an employer cannot rely on a non-compete clause if the employer has committed an act that legally allows the employee to terminate the employment contract.

The provisions create a balance between protecting businesses from misuse of confidential information and ensuring that employees are not unfairly prevented from pursuing their careers. While employers retain the right to protect sensitive commercial interests, non-compete restrictions must be applied fairly and in accordance with the law.

Therefore, where an employee is terminated for reasons unrelated to misconduct, breach of duty or any other legally recognised ground, the employer may not be entitled to enforce a post-employment non-compete restriction. The validity of each clause will depend on the circumstances surrounding the termination and whether the employer has complied with UAE labour regulations.