Resigning from a job in the UAE doesn’t automatically mean your unused annual leave just disappears. Private sector employees can often be entitled to payment for any annual leave they’ve legally earned but haven’t taken by the time their employment ends.
This can even include leave built up during your final, incomplete year on the job. The amount comes down to how long you worked and your basic salary, not your full monthly pay including allowances.
These rules sit under the UAE’s private sector labour legislation, specifically Federal Decree-Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022.
How Much Annual Leave Are UAE Employees Entitled To?
Under Article 29 of Federal Decree-Law No. 33 of 2021, private sector employees are generally entitled to 30 days of paid annual leave for every completed year of service.
If you’ve worked more than six months but less than a year, you’re entitled to two days of leave for every month worked, subject to the law.
And if your employment ends before you finish another full year, the leave entitlement for that final stretch gets calculated proportionately. So you can still walk away with accrued leave that needs to be factored into your final settlement.
What Happens to Unused Leave When You Resign?
If you resign after building up annual leave you haven’t used, that accrued entitlement can form part of your final settlement.
The same rule applies if your employment ends through termination rather than resignation. Your final settlement is supposed to account for any legally accrued annual leave still sitting unused when the employment relationship wraps up.
What this really means is that leaving a company partway through a leave year doesn’t mean losing the leave you earned during those months. The entitlement for that incomplete year still gets calculated based on the time you actually worked.
Is Unused Annual Leave Paid Based on Full Salary?
Here’s something worth knowing: the payout for unused annual leave isn’t necessarily based on your total salary.
Article 19(2) of Cabinet Resolution No. 1 of 2022 states that this payment is calculated using the employee’s basic salary. Allowances and other parts of your total salary package aren’t automatically rolled into the calculation.
So when checking your final settlement, look at the basic salary listed in your employment records rather than just multiplying your full monthly package by your unused leave days.
What Happens to Leave Earned in Your Final Months?
Employees can keep earning annual leave right up until their final months on the job. This matters especially if you’re resigning before completing another full year with your employer.
Say, for example, you’ve already completed a previous year of service and then work a few more months before resigning. You could have a further proportionate leave entitlement building up during that extra stretch.
The exact figure depends on your period of employment and the applicable leave rules. Whatever you’ve legally accrued but not used then gets factored into your final dues.
Can UAE Employees Carry Forward Unused Annual Leave?
UAE private sector employees can carry forward part of their unused annual leave into the following year.
Under Article 19(1) of Cabinet Resolution No. 1 of 2022, you’re allowed to carry forward up to half of your annual leave entitlement to the next year.
You can also agree with your employer to take cash compensation instead of carrying the leave forward, depending on the applicable legal provisions and whatever arrangement you both agree to.
Can You Get Cash Instead of Taking Annual Leave?
There are situations where an employee and employer can agree on cash compensation for unused leave while the employment relationship is still ongoing.
That payment gets calculated based on the wage applicable at the time the leave becomes due, subject to the rules under the UAE Labour Law and relevant regulations.
It’s worth keeping in mind, though, that cash compensation agreed during employment is different from payment for legally accrued unused leave once employment actually ends. The final settlement follows whatever rules apply at the time the job ends.
Can an Employer Stop You From Taking Annual Leave?
Employers do carry certain responsibilities when it comes to annual leave. The rules don’t allow accrued leave to just pile up indefinitely without following the proper legal process.
Based on the supplied UAE Labour Law guidance, an employer can’t stop an employee from taking accrued annual leave for more than two consecutive years, unless the employee chooses to carry it forward or take cash compensation in line with the applicable regulations.
So it’s a good idea to keep track of your annual leave balance as you go, rather than waiting until the end of your employment to find out several years of leave have piled up unused.
Also Read: How to Reach Etihad Rail Stations Without a Car
What Should Employees Check Before Resigning?
If you’re planning to leave your UAE job, it’s worth going through your employment records and confirming exactly how much annual leave you have left.
Hold onto copies of your employment contract, salary records, approved leave applications and any company communication showing your unused days. These can really help if a disagreement comes up over your final settlement.
It’s also worth double checking how your employer has calculated the unused leave payment, particularly whether it reflects the correct basic salary and the right proportion of leave accrued during your final period of employment.
UAE Annual Leave: Key Rules at a Glance
Private sector employees generally get 30 days of paid annual leave for each completed year of service. Those who’ve worked more than six months but less than a year get two days per month under the applicable rules.
Once employment ends, legally accrued and unused annual leave can be included in your final settlement, calculated based on your basic salary, including a proportionate amount for your final incomplete period of employment.
You can also carry forward up to half of your annual leave entitlement to the following year, and cash compensation arrangements can be made with your employer in line with the applicable regulations.