UAE Annual Leave Rules: What Happens To Unused Days When You Resign Or Leave Your Job?

Employees leaving their jobs in the UAE may be entitled to compensation for annual leave they have earned but not taken. Whether an employee resigns or is dismissed, the final settlement must account for legally accrued, unused annual leave, including entitlement accumulated during the final, incomplete year of service.

 

However, the amount payable is generally calculated on the basis of basic salary rather than the employee’s full salary package. The applicable rules also govern how much leave can be carried forward and when an employee may opt for cash compensation instead of taking time off.

 

Understanding these provisions can help employees determine their entitlements and ensure that unused leave is properly accounted for when their employment ends.

 

Annual Leave Entitlement Under UAE Labour Law

 

Article 29 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations sets out the annual leave entitlements of private-sector employees in the UAE.

 

Employees are entitled to 30 days of paid annual leave for every completed year of service. Those who have completed more than six months but less than one year of service are entitled to two days of leave for each month worked.

 

Where employment ends before an employee completes another year of service, the employee is entitled to annual leave calculated proportionately for the period worked, subject to the applicable legal provisions.

 

These entitlements form the basis for determining whether an employee has outstanding leave when their employment contract comes to an end.

 

Can Employees Claim Payment For Unused Leave After Resignation?

 

Yes. Employees are generally entitled to receive payment for accrued annual leave that remains unused when their employment ends, whether they resign or their employer terminates their employment.

 

The entitlement is not limited to leave accumulated during completed years of service. It also covers eligible leave accrued during the final, incomplete year, calculated in proportion to the period worked.

 

Article 19(2) of Cabinet Resolution No. 1 of 2022, which implements the Labour Law, provides for the calculation of payment for unused annual leave on the basis of the employee’s basic salary.

 

Consequently, the final settlement should reflect the employee’s eligible outstanding leave balance and the applicable rate of payment. Employees should check their leave records, payslips and final settlement calculations to ensure that the amount due has been correctly assessed.

 

Rules On Carrying Forward Unused Annual Leave

 

Employees do not necessarily have to use their entire annual leave entitlement within the year in which it accrues. Article 19(1) of Cabinet Resolution No. 1 of 2022 allows employees to carry forward up to half of their annual leave entitlement to the following year.

 

Alternatively, an employee may agree with the employer to receive a cash payment in place of the leave, calculated according to the wage applicable when the leave becomes due, subject to the governing legal provisions.

 

The ability to carry forward leave or receive payment while continuing in employment is subject to the relevant rules and, where required, an agreement between the employee and employer.

 

The regulations also restrict employers from preventing employees from taking accrued annual leave for more than two consecutive years, unless the employee chooses to carry the leave forward or receive cash compensation in accordance with the applicable rules.

 

What Employees Should Check Before Their Final Settlement

 

Employees preparing to leave a job should verify the amount of annual leave accrued, the number of days already taken and any balance carried forward from previous years. They should also confirm how the employer has calculated the payment for unused leave and whether the calculation reflects the applicable basic salary.

 

Keeping copies of leave records and employment-related documents can help resolve discrepancies during the final settlement process.

 

UAE Labour Law provides a framework for protecting employees’ annual leave entitlements when employment ends. Knowing how leave accrues, when it may be carried forward and how unused days are compensated can help employees understand what they are entitled to receive when they resign or leave their jobs.