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UAE Labour Law - Annual Leave


What are an employee’s annual leave entitlements?
For every year of service, an employee is entitled to annual leave of not less than the following:

1. Two days leave for every month if his service is more than six months and less than one year.

2. A minimum of thirty days annually, if his service exceeds one year. At the end of his service the employee is entitled to annual leave for the fraction of the last year he spent in service.
Annual leave is usually calculated on the basis of a calendar month rather than by working days. If an employee however fails to report back to work after the expiry of his leave period, his remuneration will automatically be forfeited for the days he is absent.

What would be payable to the employee during his annual leave?
An employee is paid his basic wage plus the housing allowance, if applicable, and any other allowances which he receives in the normal working month exclusive of any bonuses received.

Who determines when the annual leave commences and its duration?
The employer has the right to determine when an employee is allowed to take his annual leave and whether (if required) he is entitled to divide the leave into two parts.
If however, work circumstances require keeping the employee at work during the whole or part of his annual leave and the leave has not been carried over for the following year, the employer should pay the employee his wage in addition to a leave allowance for the days he worked equal to his basic wage.
In all cases, no employee should be required to work during his annual leave more than once during two consecutive years.
In other words, the employer may only defer the annual leave once in two consecutive years and at the same time pay the employee the annual leave wages.

When should annual leave wages be paid?

The employee should be paid his full wage before taking his annual leave, plus the wage of the leave days he has accrued.

Is the employee entitled to payment in lieu of leave if his services are terminated?
The employee is entitled to payment of his wages for the annual leave period not taken if his employment is terminated, or he resigns after serving the period of notice determined by law. Such payment is calculated on the basic wage received at the time the leave was due including any housing or accommodation allowance where applicable. Some employers also include transportation allowance in the calculation, although this is discretionary rather than compulsory.
Nevertheless, according to judgments delivered on the matter, an employee may only claim remuneration for the annual leave not taken for the last two years of employment at the rate of the wages paid during that time. Any leave days not taken prior to that period are therefore time barred and the employee is precluded from claiming remuneration against them (providing the employer relies on this time bar provision in the event of a claim).

I have been working in a company in the food industry for four years. I am eligible for my annual leave now. Last week, I applied for the leave, but my application was rejected by the office, saying that there are not enough staff at the moment. I would like to know if my company has the right to deny my annual leave.

Annual leave cannot be denied for two years
According to Article 78 of the federal labour law, if the work requires your stay in the country and prevents you from taking your leave, and if your leave is not carried forward to the next year, the employer has to pay you remuneration plus a leave allowance for the days you worked at a rate equal to your basic wages. Furthermore, this exception is not allowed more than once in two successive years.
Article 75 of the UAE Labour Law governs the annual leave of an employee. An employee is not entitled to an annual leave if his employment period is less than six months. However, if his employment period is more than six months but less than a year, he shall be entitled to an annual leave of not less than two days for each month.

However, if the employment period is more than a year, he is entitled to 30 days annual leave. Therefore, the duration of annual leave shall not be decreased as the right to annual leave is granted by the law. Article 75 states:

“The employee must be granted an annual leave during each year of service which may not be less than:

1. Two days per month with respect to any employee with more than six months and less than one year of service.

2. Thirty days per annum with respect to any employee whose period of service exceeds one year. In the event of termination of an employee’s service, he shall be entitled to an annual leave depending on the number of months completed in the last year of service.”

The employer has the right to specify the beginning of the annual leave and he can divide the leave into two parts, when necessary, in order to ensure smooth operation of the organisation/company. Article 76 states: “The employer, at his discretion, may determine the date for the commencement of annual leave and, when necessary, he may decide to divide the leave in two parts at the most, except in cases of juveniles, where vacation may not be divided in parts.”

In such an event, the leave may be forwarded to the next year, but it may not be suspended for more than two years and the employee will be entitled to sixty days annual leave in the next year if not paid in cash in lieu of the leave for his working days. Article 78 states: “The employee shall receive his basic pay in addition to housing allowance, if any, for the annual leave days. However, if the exigencies of work necessitate that the employee works during his annual leave in whole or in part, and the period of leave during which he has worked has not been carried forward to the next year, the employer ought to pay him his wage in addition to cash in lieu of the leave for his working days based on his basic pay.

“It shall be unlawful in any circumstances to employ a worker during his annual leave more than once in two successive years.”

I work as a school nurse here. Our employer said that during vacation, we will not receive any salary and that is for July and August. They will also not shoulder our accommodation charges. I am very worried because that is not what we agreed on or was written in the employment contract. They made us sign a waiver that we will have our two-month vacation without pay. Please advise.

Salary must not be deducted during vacation
As a general principle of law, a binding contract cannot be changed unilaterally. Article 267 of the UAE Civil Code states: “A binding contract cannot be changed unilaterally except with mutual consent of the parties or by an order of the court or by law”. Therefore, your employer does not have any legal right to deduct your salary or shoulder your accommodation charges if it is provided in your employment contract. Since you have signed the amended waiver, thus, it is binding upon you unless you prove that you have been forced to sign this waiver (KT).

Leave Salary
Leave salary is meant to include the basic salary and housing allowance. This is in accordance with the provisions of Article 78 of the Labour Law which states:

“Every worker shall be entitled to his basic wage and the housing allowance, if applicable in respect of his days of annual leave where the circumstances of the work make it necessary for a worker to work during all or part of his annual leave and the days of leave on which he works are not carried forward to the following year, the employer shall pay him his remuneration, plus a leave allowance in respect of the days worked at a rate equal to his basic wage.

“It shall be unlawful in any circumstances to employ a worker during his annual leave more than once in two successive years.”

Leave salaries are accrued and payable even if an employee leaves his employment or is dismissed by the employer, and such leave salary shall be payable in accordance with the employee’s salary as of the date when his leave was due. This is in accordance with Article 79 of the Labour Law which states:

“A worker who is dismissed or who leaves his job after the period of notice prescribed by law shall be paid for any accrued annual leave days. Such payment shall be calculated on the basis of the worker’s wage as on the date when the leave became due.”

Unused leave should be compensated
Q: One of my employees resigned before completing one year at our company. He recently travelled to his country without resigning and wanted to avail 14 of his 24 days' annual leaves (the number for employees with less than one year's service).

A month later, his mother died, and he considered himself on emergency leave. After 67 days away, he finally submitted his resignation from his home country.

Do I need to pay him legally? I believe there is no gratuity or leave balance since he has already availed his leave. He has not served his notice period, too. Is he eligible for emergency leave before completing one year?

A: Pursuant to your questions, you should pay the said employee for the 14 days of annual leave and for the balance of annual leave not availed by the employee in accordance with Article 79 of the Federal Law No. 8 of 1980 regulating Employment Relations in UAE (the "Labour Law") which states: "Where a worker is dismissed or leaves his job after the period of notice prescribed by law, he shall be entitled to remuneration in respect of any days of annual leaves not taken. Such remuneration shall be calculated on the basis of the remuneration that he earned on the date on which the leave became due." Further, Article 75 of the Labour Law reads: "Every worker shall, within each year of service, be granted a period of annual leave of not less than:

(a) two a month, where the worker's period of service is more than six months but less than one year;

(b) 30 days a year, where the worker's period of service is more than one year. Where a worker's service is terminated, he shall be entitled to annual leave in respect of fractions of the last year."

The Labour Law is silent about emergency leave and therefore the employee may not be eligible for emergency leave before or after completion of one year of employment. However, depending on the policy of the employer, the employer may treat the emergency leave availed by the employee as an extension of his annual leave.

In this particular instance, due to the demise of the mother of the employee the employer may at discretion grant emergency leave to an employee on humanitarian grounds. The employee is not eligible for severance pay as he has not completed one year of employment.

We assume that the said employee's work permit and visa are cancelled. In this scenario you may not be in a position to claim any compensation from the employee. In case his work permit is not cancelled, you may be able to claim compensation from the employee on the grounds that he has not served the 'notice period' in accordance to Article 119 of the Labour Law which states: "Where an employer or a worker fails to give the party notice of the termination of the contract or reduces the period of notice, the party obliged to give notice shall pay the other party compensation, called "compensation in lieu of notice", even where no prejudice has been sustained by the other party as a result of such failure or reduction.

The said compensation shall be equal to the worker's remuneration in respect of the entire period of notice or the time by which it was reduced. Compensation in lieu of notice shall be calculated on the basis of the remuneration last received, in the case of worker remunerated on a monthly, weekly, daily or hourly basis or in the case of a worker remunerated at piece rates, on the basis of the average daily remuneration referred to in article 57 of this Law." (KT)


NOTE: Hamriyah Free Zone, Sharjah, matters pertaining to employment is governed by the provisions of Federal Law No. 8 of 1980, relating to Regulation of Labour Relations (the “Labour Law”).

Ministry of Labour, Qusai, Dubai 
Timing: Saturday to Thursday 7:30am to 7:00pm
Call Centre: 800 665
Website: www.mol.gov.ae
 

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