Encashing paid leaves as per the new UAE labour law

The rights available to an employee working in the UAE are protected in the provisions of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations, or the Employment Law.  

According to Article 29 (1) (a) of the Employment Law, an employee is entitled to a 30-day leave every year. However, if these leaves are unused the employee may get entitled to ‘cash in lieu' for these unused leaves. The employee can mutually agree with the employer for a payment in cash instead of the leaves to which they are entitled. This payment is calculated based on the monthly salary of the employee.

Further, an employee is also allowed to carry forward half of their annual leave to the succeeding year.

Article 19(1) of the Cabinet Resolution No. 1 of 2022 makes a provision for the same, it states that:

Subject to the provisions of 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 next year or agree with his employer to be paid in lieu thereof based on his wage received at the time of leave entitlement.

 Article 29 (8) of the Employment Law, states that an employer cannot employ an employee without granting them their annual leaves:

The employer may not prevent the worker from benefiting from his annual leave accrued for more than two years, unless the worker wishes to carry it forward or receive a cash allowance for it, in accordance with the regulations in force at the establishment and the Implementing Regulation hereof.

Therefore, an employee by mutual consent with the employer may be entitled to cash in lieu of unused annual leaves which will be based on their basic salary on the date when the respective annual leave is due.

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