UAE Labour Regulations Clarify Unused Annual Leave Entitlements Upon Resignation

Private-sector employees in the UAE are entitled to payment for legally accrued, unused annual leave upon resignation or contract termination, according to an explainer published by Gulf News. This legal entitlement includes leave accumulated during the employee's final months or incomplete year of service.

Under Article 29 of Federal Decree-Law No. 33 of 2021, private-sector workers are entitled to 30 days of paid annual leave for each completed year of service, or two days per month if they have completed more than six months but less than one year of service. If employment concludes before leave entitlements are utilised, employees are owed proportionate leave for the final portion of the year worked.

Article 19(2) of Cabinet Resolution No. 1 of 2022 specifies that leave payouts in end-of-service final settlements are calculated strictly on the basis of the employee's basic salary rather than total salary.

Under Article 19(1) of Cabinet Resolution No. 1 of 2022, workers may carry forward up to half of their annual leave entitlement to the following year, or agree with their employer to receive a cash payout calculated according to the applicable wage when leave becomes due. Furthermore, employers are barred from preventing staff from taking accrued annual leave for more than two consecutive years unless the employee chooses to carry it forward or accept cash compensation in line with regulations.