Annual leave is one of the most misunderstood employment rights in the United Arab Emirates. Employees are often unsure how many days they are entitled to, how leave salary is calculated, whether they can encash unused days, and what happens during probation or in free zones. Employers and human resources teams, on the other hand, face significant legal risk if policies and payroll systems are not aligned with the current law.
Under the current regime, annual leave in the private sector is primarily governed by Federal Decree‑Law No. 33 of 2021 on the Regulation of Labour Relations, which entered into force on 2 February 2022, as amended by subsequent implementing and amending instruments, together with Cabinet Resolution No. 1 of 2022 concerning the Executive Regulations of this Decree‑Law. These instruments remain in force and form the principal legal framework for annual leave in the private sector, as reflected in the official guidance of the Ministry of Human Resources and Emiratisation (Ministry of Human Resources and Emiratisation) and the official United Arab Emirates Government portals.
This article provides a practical and legally accurate overview of United Arab Emirates labour law annual leave rules, including entitlement, calculation, encashment, carry forward, part‑time workers, free zone considerations, probation, public holidays and dispute resolution. It is designed for private individuals, employees, employers and human resources professionals operating in the United Arab Emirates.
Legal framework and scope of UAE labour law annual leave
For clarity, it is essential to identify which legislation applies before examining any detail of United Arab Emirates labour law annual leave.
- Core legislation
The primary statute for most private sector employment relationships is Federal Decree‑Law No. 33 of 2021 on the Regulation of Labour Relations. This Federal Decree‑Law expressly repealed Federal Law No. 8 of 1980 and its amendments. It is further supplemented and clarified by Cabinet Resolution No. 1 of 2022 concerning the Executive Regulations of Federal Decree‑Law No. 33 of 2021. As at December 2025, these instruments remain in force. Amendments since 2022 have focused mainly on enforcement, penalties, procedural aspects and certain leave types; they have not reduced the statutory minimum annual leave entitlement set out in Article 29 of Federal Decree‑Law No. 33 of 2021. - Geographical and institutional scope
The federal regime applies to:- Most private sector employers and employees in the United Arab Emirates (mainland); and
- Many non‑financial free zones that apply the federal labour law directly and use the systems of the Ministry of Human Resources and Emiratisation for work permits and disputes.
It does not apply to:
- Federal and local government employees, whose leave rights are governed by separate civil service and human resources legislation;
- Domestic workers, who are regulated by distinct legislation; and
- Financial free zones with their own employment laws, most notably the Dubai International Financial Centre and the Abu Dhabi Global Market.
For employers and employees in the financial free zones, it is necessary to refer to the relevant free zone employment legislation, which has its own annual leave structure and terminology. Nevertheless, the federal regime remains the reference point for most employment relationships in the United Arab Emirates.
Core annual leave entitlement and accrual rules
The starting point for United Arab Emirates labour law annual leave is Article 29 of Federal Decree‑Law No. 33 of 2021. This provision establishes a statutory minimum entitlement for full‑time private sector employees, expressed in calendar days rather than working days.
- Standard entitlement for full‑time employees
According to Article 29 of Federal Decree‑Law No. 33 of 2021 and the current guidance of the Ministry of Human Resources and Emiratisation, a full‑time private sector employee covered by the federal regime is entitled to:- 30 calendar days of paid annual leave for each completed year of service; and
- 2 calendar days of leave per month where the employee has completed at least 6 months but less than 1 year of continuous service.
These are minimum statutory entitlements. Employers are free to grant a more generous scheme, such as 35 calendar days per year, but they cannot lawfully reduce the entitlement below the statutory minimum.
- Employment of less than six months
During the first 6 months of employment, the law does not grant an immediate right to take paid annual leave. However, the employee is accruing service time that will count towards subsequent entitlement. In practice, some employers allow early leave during this period, either unpaid or as an advance against future accrual, but this is a matter of contract and policy, not a statutory obligation. - Calendar days and impact on scheduling
United Arab Emirates labour law annual leave is expressed in calendar days. This means that weekends and the employee’s usual weekly rest days are generally included within the count of annual leave days, unless the employment contract or the employer’s policy voluntarily adopts a more beneficial approach. Employers and human resources professionals must ensure their payroll and human resources systems correctly treat annual leave as calendar days when recording entitlements and deductions. - Accrual and fractions of the year
When employment terminates before completion of a full leave year, or where leave is calculated mid‑year, the law requires that annual leave be calculated on a pro rata basis for the fractions of the year in proportion to the period of service. Leave that is accrued but not yet taken is recognised even where service is less than a full year, provided the employee has reached the 6‑month threshold required for statutory paid annual leave.
Annual leave pay calculation and encashment
For employers and employees alike, the financial aspects of annual leave are central. United Arab Emirates labour law annual leave rules distinguish between payment while the employee is on leave and payment in lieu of unused leave, particularly on termination. The Executive Regulations under Cabinet Resolution No. 1 of 2022 provide specific mechanisms and clarify how wages must be determined.
- Annual leave salary while leave is taken
When an employee takes annual leave during an ongoing employment relationship, the employee is entitled to full pay for the leave period. In practice, and in line with governmental and professional guidance, this means that:- The salary used is the employee’s most recent wage immediately before the leave period; and
- The calculation is based at least on the basic wage as defined in Federal Decree‑Law No. 33 of 2021. Many employers, by contract or internal policy, add fixed allowances such as housing or transport where those are clearly identified in the employment contract.
A widely used approach when calculating leave salary on a daily basis is:
- Daily leave salary = (basic monthly salary + fixed monthly allowances, if contractually included) ÷ 30; and
- Leave salary for a specific leave period = daily leave salary × number of annual leave days taken.
Employers should clearly define in contracts and policies whether fixed allowances are part of the leave salary calculation in order to reduce the risk of disputes.
- Annual leave encashment in the United Arab Emirates on termination
Annual leave encashment rules differ at termination. When an employee leaves employment, whether by resignation or dismissal, the employee has a statutory right to receive cash payment in lieu of any accrued but unused annual leave. Under Article 29 of Federal Decree‑Law No. 33 of 2021 and Article 19 of Cabinet Resolution No. 1 of 2022, this payment:- Must be calculated on the basis of the basic salary only, unless the employment contract or a more favourable policy provides otherwise; and
- Must cover all accrued days that the employee has not taken, including fractions of the leave year.
The standard legal formula for unused leave salary on termination is:
- Unused leave salary = (basic monthly salary ÷ 30) × number of unused annual leave days.
Employers must pay all final dues, including annual leave encashment, within the time limits set out by the current United Arab Emirates labour law and enforced by the Ministry of Human Resources and Emiratisation. Failure to do so may expose employers to penalties and labour claims.
- Annual leave encashment in the United Arab Emirates during employment
Annual leave is intended primarily as a period of rest, not as a recurring cash benefit. Therefore, the default rule is that leave should be taken in kind. However, Article 19 of Cabinet Resolution No. 1 of 2022, read with Article 29 of Federal Decree‑Law No. 33 of 2021, allows for:- Carrying forward up to half of the annual leave to the next year; or
- Agreeing with the employer to receive a cash allowance instead of the carried‑forward portion, based on the wage at the time leave becomes due.
This is conditional on agreement and company policy. There is no automatic right for the employee to demand encashment of unused leave year after year. Employers should set a clear annual leave encashment policy that addresses when, if at all, encashment during employment will be offered and under what conditions.
Carry forward unused annual leave and scheduling control
How to carry forward annual leave in the United Arab Emirates and how leave is scheduled are frequent sources of tension between business needs and personal plans. The current law and Executive Regulations place specific responsibilities on both parties.
- Carry forward annual leave in the United Arab Emirates
Under Article 29 of Federal Decree‑Law No. 33 of 2021 and Article 19 of Cabinet Resolution No. 1 of 2022:- An employee may carry forward not more than half of the annual leave to the following year; or
- Agree with the employer to receive a cash allowance instead of the carried‑forward portion, based on the wage at the time of entitlement.
Furthermore, the Labour Law provides that an employer may not prevent the employee from using accrued annual leave for more than 2 years, unless the employee voluntarily chooses to carry it over or encash it in accordance with the company policy and Executive Regulations. In practical terms:
- Systematic blocking of leave for operational reasons, without providing alternatives within a 2‑year period, can place the employer in breach of statutory obligations; and
- Where leave has accumulated over several years due largely to business requirements, the employer is strongly advised to regularise the situation, either by arranging extended leave or agreeing on encashment as permitted by law.
Employers should formalise a policy that caps carry forward, usually at a maximum of half of the annual entitlement, and sets a clear deadline by which carried leave must be used.
- Employer’s right to determine leave dates and notice
According to Article 29 of Federal Decree‑Law No. 33 of 2021 and the guidance of the Ministry of Human Resources and Emiratisation, the employer retains the right to set the dates of annual leave based on the needs of the business, provided that:- The employee is given at least 1 month advance written notice of the leave period; and
- The employer reasonably considers the employee’s circumstances when planning leave, especially for longer periods of leave or peak travel times.
Employers may also divide annual leave into several periods, again respecting advance notice and the underlying purpose of providing effective rest.
Employees, on their part, must generally request leave in accordance with the internal human resources procedure and give sufficient notice as required by company policy. However, internal policy cannot override the statutory minimum requirements or nullify the entitlement to take leave within a reasonable period.
- Recall from annual leave and reimbursement
In urgent and exceptional situations, the employer may recall the employee from annual leave. If this occurs, good practice consistent with general principles of the Labour Law requires the employer to:-
- Allow the employee to use the remaining leave days at a later agreed date; and
- Compensate the employee for any actual and reasonable expenses incurred as a direct result of the recall, such as ticket change fees or hotel cancellation penalties, where these are properly evidenced.
Comprehensive documentation and clear communication are essential to minimise disputes and to demonstrate that the employer has acted fairly and reasonably.
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Annual leave for part‑time employees in the United Arab Emirates and other work models
The current United Arab Emirates labour law recognises multiple work models, including full‑time, part‑time, temporary and flexible work. Annual leave entitlements for part‑time employees are clarified by the Executive Regulations, particularly Article 18 of Cabinet Resolution No. 1 of 2022.
- Statutory entitlement for part‑time employees
Part‑time employees are expressly entitled to annual leave. However, their entitlement is calculated in proportion to the actual working hours performed for the employer, and a minimum entitlement of five working days per annum applies under the Executive Regulations. The Executive Regulations provide that:- Annual leave for part‑time workers is calculated by comparing the total actual working hours of the part‑time employee during the year with the working hours applicable to a comparable full‑time employee, and converting this into an equivalent proportion of the statutory annual leave entitlement; and
- In calculating leave entitlements, a fraction of a leave day is treated as a full day.
In practice, a straightforward way to apply this is as follows:
- Determine the proportion of hours worked by the part‑time employee compared with a full‑time schedule in the same establishment; and
- Multiply that proportion by the standard 30‑calendar‑day entitlement, to obtain a pro‑rated annual leave entitlement in calendar days.
Part‑time employees are entitled to the same quality of leave (paid leave, protection against unreasonable denial and the right to encash unused leave on termination) on a proportional basis.
- Illustrative example
Consider a full‑time role that works 5 days per week at 8 hours per day and receives 30 calendar days of annual leave. A part‑time employee in the same role works 50 percent of the full‑time weekly hours. In such a case, the part‑time employee would typically be entitled to approximately 15 calendar days of annual leave per year, subject to the precise application of the Executive Regulations and any more generous terms in the employment contract. - Other work models
For temporary and flexible work arrangements, the law generally applies by reference to the number of hours worked and the duration of the contract. Where employment is short term, leave is often realised in the form of pro‑rated payment on termination rather than long periods of absence. Nonetheless, the basic principles on accrual, calculation and encashment of unused annual leave still apply, adjusted to reflect the nature and duration of the contractual arrangement. - Contractual clarity
Employers should ensure that every part‑time, temporary or flexible work contract clearly explains:-
- The method used to calculate annual leave entitlement, for example, by reference to the percentage of full‑time hours;
- The way in which leave is requested and approved; and
- The treatment of leave on early termination, including encashment of accrued but unused leave.
Well‑drafted clauses reduce the risk of disputes and help ensure compliance with Article 18 of the Executive Regulations.
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Free zone employees, notice and probation annual leave in the United Arab Emirates
Employees often ask whether the same rules apply in free zones and during probation. The answer depends on whether the free zone is under the federal labour regime and how the contract is structured. The concept of probation and annual leave in the United Arab Emirates is also frequently misunderstood.
- Free zones following the federal regime
Many free zones, particularly non‑financial zones, rely on the federal labour law and the systems of the Ministry of Human Resources and Emiratisation. In those zones, annual leave entitlement, calculation, encashment, carry forward and notice requirements mirror the mainland rules:- 30 calendar days of annual leave for each completed year of service, with 2 calendar days per month where the employee has completed at least 6 months but less than 1 year of service;
- Pro‑rated entitlement for part‑time and non‑standard work models;
- Encashment of unused leave on termination based on the basic salary, unless a more generous contractual approach is adopted;
- Carry forward limited to half of the annual leave unless otherwise agreed in a manner consistent with the law; and
- Employer obligation to provide at least 1 month’s notice of leave dates when the employer determines the timing of leave.
Human resources professionals operating across mainland and such free zones may therefore apply one integrated policy, subject to zone‑specific administrative requirements.
- Financial free zones with independent labour laws
The Dubai International Financial Centre and the Abu Dhabi Global Market are examples of free zones with their own employment legislation and court systems. These regimes differ from the federal law in several respects, including:- Annual leave commonly expressed in working days rather than calendar days;
- Different minimum leave entitlements, for example, 20 working days per year in some cases; and
- Distinct treatment of public holidays, carry forward and encashment, including specific restrictions and notice provisions.
Employees and employers in such zones must consult the relevant zone’s employment law, regulations and guidance issued by that zone’s authority and courts. Federal Decree‑Law No. 33 of 2021 does not override these special regimes.
- Probation and annual leave in the United Arab Emirates
The current law permits probation periods up to a maximum of 6 months for employees under the federal regime. During probation:- The employee is accruing service time that will count towards annual leave and end‑of‑service benefits;
- Once the employee has completed 6 months of service, the employee becomes statutorily entitled to annual leave at the rate of 2 calendar days per month, even if the employment contract still describes the period as probation; and
- Employers may, as a matter of policy, allow annual leave to be taken during probation, including paid leave based on the pro‑rated statutory entitlement, or allow leave as an advance against future entitlement.
If employment ends during or immediately after probation, the employee is entitled to encash any accrued but untaken annual leave that arose after the 6‑month threshold, calculated in accordance with the principles described above. Employers must ensure that their human resources and payroll systems recognise accrual correctly from the 6th month onwards in order to avoid inadvertent non‑compliance.
- Notice period requirements for annual leave requests
While the Labour Law places the main obligation on employers to give at least 1 month’s notice when determining leave dates, internal company policies often require employees to submit their annual leave requests a certain number of days or weeks in advance, especially for long absences or peak business periods. Such policies are permissible provided they do not effectively deprive employees of their statutory right to take leave within a reasonable timeframe. Where possible, policies should align with the 1‑month notice structure set out in Article 29 of Federal Decree‑Law No. 33 of 2021 and the Executive Regulations.
Public holidays, overlap, disputes and legal remedies
Two recurring topics under United Arab Emirates labour law annual leave are the effect of public holidays on leave and the mechanisms available to resolve annual leave disputes.
- Public holiday overlap with annual leave
Official public holidays are granted separately from annual leave. The general principle under the Labour Law and official government guidance is that employees are entitled to public holidays with full pay. However, the interaction between public holidays and annual leave requires careful handling:- Where a public holiday falls on a day when an employee would otherwise be working but is on annual leave, many employers treat that day as a public holiday and do not deduct it from the annual leave balance, giving the employee an additional day of annual leave elsewhere; while
- Other employers, relying on the wording of their policies and contracts, treat the overlap day as part of the annual leave period. This approach is controversial and can be challenged if it has the effect of reducing statutory holiday entitlements or is inconsistent with written contractual terms.
The safest and most employee‑protective practice, and one that is consistent with the principle that public holidays are in addition to annual leave, is to ensure that public holidays are not double counted as annual leave days. Employers are strongly advised to clarify their practice expressly in the employment contract and human resources policies and to bring those to the attention of employees at the outset of employment.
- Working on public holidays
Where an employee is required to work on an official public holiday, the Labour Law requires that the employee receive either:-
- A compensatory day off; or
- Additional monetary compensation, usually at a premium rate compared to ordinary working days, in line with the applicable provisions of Federal Decree‑Law No. 33 of 2021 and the Executive Regulations.
These rules operate independently of annual leave but are frequently relevant when planning leave across busy trading periods and when assessing whether the employee has been properly compensated for work performed on official public holidays.
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- Common annual leave disputes
Typical disputes under United Arab Emirates labour law annual leave provisions include:- Non‑payment or underpayment of leave salary during periods of annual leave, for example by excluding basic wage elements that should have been included;
- Failure to pay encashment of unused leave on termination based on basic wage, or failure to include all accrued fractions of leave years;
- Incorrect calculation of the number of annual leave days, for example by using working days instead of calendar days where the federal Labour Law applies;
- Disagreement on carry forward of annual leave, particularly where employers attempt to declare unused leave forfeited contrary to law or where employees claim rights to unlimited accumulation;
- Misclassification of part‑time or flexible workers leading to under‑accrual of leave entitlements; and
- Disputes over public holidays overlapping with annual leave and whether those days should be deducted from the leave balance.
- Legal remedies and dispute resolution
As of 2024 and 2025, amendments to the Labour Law framework have reinforced the role of the Ministry of Human Resources and Emiratisation in resolving labour disputes and enforcing compliance. The typical procedural route under the federal regime is as follows:- Internal resolution
The employee raises a formal written complaint with the employer or human resources department, setting out the facts, the relevant provisions of the Labour Law and Executive Regulations, and a clear calculation of the entitlement claimed. Many disputes can be resolved at this stage where the employer is willing to review its practices against the statutory framework. - Complaint to the Ministry of Human Resources and Emiratisation
If the matter is not resolved internally, the employee may lodge a complaint with the Ministry of Human Resources and Emiratisation. The Ministry will attempt to mediate between the parties and, where mediation fails, will issue a referral to the competent labour court. The Ministry may also impose certain administrative measures, especially in cases of systemic non‑compliance or repeated breaches. - Labour court proceedings
Upon referral, the employee may file a labour claim before the competent Court of First Instance, seeking, in particular:- Payment of unpaid leave salary or encashment of unused annual leave;
- Any associated wage arrears or contractual benefits linked to leave; and
- In appropriate circumstances, compensation for harm caused by unlawful denial of leave, improper recall without reimbursement, or other breaches of the Labour Law, subject to proof and judicial discretion.
Limitation periods apply to labour claims. Although the legislation now includes time limits for bringing claims, the precise calculation may depend on the type of claim and the timing of the alleged breach. Employees and employers are therefore well advised to seek early advice from a reputable law firm in the United Arab Emirates when a dispute arises.
- Free zone remedies
In free zones with their own employment laws and courts, such as the Dubai International Financial Centre and the Abu Dhabi Global Market, the dispute resolution procedure will follow the zone’s own rules and court system. However, the general corrective measures, including payment of unpaid leave salary, rectification of miscalculations and, where appropriate, compensation for breach of contract, are conceptually similar. Parties in such zones must carefully review both the zone‑specific employment law and the relevant court practice.
- Internal resolution
Practical guidance for compliance with UAE labour law annual leave
To conclude, it is helpful to draw out practical steps that employees, human resources professionals and employers can take to ensure full compliance with United Arab Emirates labour law annual leave rules and to reduce the risk of costly disputes.
- For employers and human resources teams
Employers should:- Review all employment contracts and human resources policies to confirm that annual leave entitlements meet or exceed the statutory minimums under Federal Decree‑Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022;
- Expressly state that annual leave is calculated in calendar days for employees covered by the federal Labour Law and identify any more favourable internal rules;
- Define whether fixed allowances are included in leave salary during employment and clarify that annual leave encashment on termination is calculated at basic wage, unless a more generous approach is adopted in writing;
- Implement clear rules on carry forward of annual leave, consistent with the legal limit of carrying forward up to half of the entitlement and the 2‑year maximum for preventing the use of accrued leave, and ensure these rules are applied consistently;
- Ensure payroll and human resources systems correctly calculate part‑time and flexible work leave entitlements in line with Article 18 of the Executive Regulations and maintain transparent records of hours worked and leave accrued;
- Train line managers and human resources personnel on notice obligations, recall procedures, public holiday rules and the correct handling of annual leave during probation and on termination; and
- Document all leave approvals, refusals, recalls and settlements in writing, to provide clear evidence in the event of a dispute and to demonstrate compliance with the statutory regime.
- For employees and private individuals
Employees should:- Understand whether their employment is subject to the federal Labour Law or a special free zone regime and adjust expectations accordingly;
- Keep a personal record of employment start date, annual leave accrued each year, leave taken and current balance, and reconcile this against payslips and employer records;
- Review the employment contract and employee handbook to see how leave salary is calculated, whether fixed allowances are included, and how public holidays are treated during annual leave;
- Raise concerns regarding annual leave calculations or encashment promptly and in writing, referring where appropriate to Federal Decree‑Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022; and
- Seek specialist advice from a law firm experienced in United Arab Emirates labour law where significant sums are in dispute, where there are complex issues involving free zones, or where termination is involved.
A well‑designed annual leave framework, aligned with the current United Arab Emirates labour law and its Executive Regulations, not only protects employers from legal risk but also promotes employee wellbeing and productivity. Whether an individual is seeking clarity on personal rights or an employer is designing a compliant leave policy, careful attention to the details discussed above is essential. For complex situations or high‑value disputes, engaging a qualified law firm in the United Arab Emirates is strongly recommended in order to ensure that the legal position is fully protected under the law as it stands on 18 December 2025.
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Article by ProConsult Advocates & Legal Consultants, the Leading Dubai Law Firm providing full legal services & legal representation in UAE courts.
