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UAE18 min read

UAE Annual Leave 2026: Encashment, Carry-Over, Forced Leave & MOHRE Rules

Federal Decree-Law 33/2021 grants UAE private-sector employees 30 calendar days of paid annual leave per year, with strict rules on encashment, carry-over, and what happens at termination. This guide covers every scenario — from forced leave and sick-leave overlaps to the MOHRE eComplaint process for recovering unpaid leave.

Wathim Editorial

Wathim Editorial

GCC Services Desk18 min read

Quick Answer: UAE Annual Leave at a Glance

UAE annual leave is governed by Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (effective 2 February 2022) and its implementing Cabinet Resolution No. 1 of 2022. The snapshot below covers every critical parameter; each rule is explained in full in the sections that follow.

ParameterRule
Governing AuthorityMinistry of Human Resources & Emiratisation (MOHRE)
Primary LawFederal Decree-Law 33/2021; Cabinet Resolution 1/2022
Annual Entitlement (after 1 year)30 calendar days of paid leave per year
Partial-Year Entitlement (6–12 months)2 calendar days per completed month of service
Under 6 MonthsLeave accrues from day 1 but employer may defer use; paid proportionally on termination
Encashment on Termination / ResignationMandatory — all unused accrued leave paid at daily rate (annual salary ÷ 365 × days owed)
Encashment While EmployedNot a statutory right; permitted only by mutual written agreement
Carry-OverBy employer–employee agreement; unused leave may be forfeited only after advance written notice and opportunity to take it
Public Holidays12 official days per year; not deducted from annual leave balance
Forced / Administrative LeaveEmployer may require; full salary must be paid throughout
Sick Leave vs Annual LeaveEmployer cannot force annual leave while employee is on approved sick leave
eComplaint Portalmohre.gov.ae or the MOHRE app (UAE Pass required)
Employer Response Window14 calendar days from complaint submission
Statute of Limitations1 year from the date the right to leave or payment arose
Fee note: MOHRE currently charges no fee for an initial eComplaint. Labour Court filing costs vary by claim size. Confirm exact amounts with MOHRE or a licensed UAE employment adviser before filing.

Leave Entitlement by Length of Service

Article 29 of Federal Decree-Law 33/2021 sets annual leave entitlement in three tiers based on length of service. A point many employees miss: the law counts calendar days, not working days. Weekends that fall within your leave period are included in the 30-day count — they do not extend the leave. Public holidays that fall within the period are a separate matter (see the Public Holidays section).

Service DurationStatutory EntitlementDays Owed on Termination (If Unused)
Less than 6 monthsNo statutory right to take leave (employer may defer)Proportional days accrued from day 1 × daily rate
6 months to less than 1 year2 calendar days per completed month2 days × number of completed months served
1 year or more30 calendar days per complete year30 days for full years + 2.5 days per completed month in partial final year

How the 30-Day Entitlement Works in Practice

Once an employee completes a full year of service, the entitlement to 30 calendar days arises at the anniversary date. Most employment contracts — and consistent MOHRE practice — allow leave to be scheduled and taken throughout the year on a rolling basis rather than only after the anniversary. The employer and employee agree on timing within reasonable scheduling constraints.

For subsequent years, the entitlement resets to 30 days at each anniversary. Leave may be taken in one block or in parts, subject to employer approval. Where partial leave is taken, the remaining balance continues to accrue and must be shown on the employee's leave register.

Calendar Days vs Working Days — Why It Matters

The calendar-day rule is frequently misunderstood. An employee who takes annual leave from Sunday 1 June through Saturday 7 June has consumed 7 calendar days of leave entitlement, even if the company only works Sunday–Thursday. For a standard 5-day working week, 30 calendar days of leave is roughly equivalent to 21–22 working days. For a 6-day working week, it is closer to 25–26 working days. The exact equivalent shifts depending on when the leave falls in the calendar.

Salary During Annual Leave

During annual leave, employees receive their full contractual wage — basic salary plus all regular allowances (housing, transport, etc.) that form part of the wage as defined in the employment contract. An employer cannot suspend or reduce allowances during leave. The law provides that salary should be paid before the employee departs on leave wherever practicable, or at the latest on the employee's normal pay date.

If your contract specifies a single consolidated salary with no separate allowance lines, your full monthly salary is the basis for calculations. If your contract itemises basic salary, housing allowance, transport allowance, and other components, confirm with MOHRE which components are included in the 'wage' for leave purposes, as this can materially affect both encashment amounts and end-of-service gratuity calculations. Always confirm the applicable definition with MOHRE or a legal adviser before calculating.

Accrual Rate: The Daily Maths

For an employee completing a full year, the accrual is 30 ÷ 365 = 0.0822 days per calendar day worked. Many payroll systems track leave in this way and display a running balance to two decimal places. Rounding conventions vary: some employers round down to the nearest whole day; others round to the nearest half day. MOHRE's practice on disputes is generally to round in the employee's favour. If your leave register shows a balance you cannot verify, request the detailed accrual calculation from HR.

Employees in free zones (DIFC, ADGM, Jebel Ali, etc.) may be subject to the free zone authority's own employment regulations, which can differ from the mainland Labour Law. DIFC and ADGM, for example, have their own employment courts and statutory entitlements. This guide covers mainland UAE under Federal Decree-Law 33/2021; free zone employees should verify which regime applies to them.

Leave During the Probation Period

The probation period under Federal Decree-Law 33/2021 can last up to a maximum of 6 months (prior to the 2021 law, probation could run up to 6 months with extensions; the current law caps it at 6 months total). A widespread misconception is that leave does not accrue during probation. This is incorrect: leave accrues from the first day of employment. What the employer retains is the right to restrict when that leave is taken.

Employer's Right to Defer Leave During Probation

During the probation period, the employer can prevent an employee from taking annual leave. This is a deferral right, not an extinguishment of the entitlement. An employer can, in their discretion, approve a leave request during probation (many do for genuine emergencies), but is under no obligation to do so. The probationary context — assessing whether to confirm the employee — is the rationale for this restricted availability.

The practical consequence: most employees on probation accumulate a growing leave balance without access to it. This balance does not disappear on confirmation of employment — it rolls forward and is added to the leave accruing post-confirmation. A 6-month probation results in a 15-day leave balance (6 × 2.5 days) on the day of confirmation, available immediately.

Termination During Probation: What You Are Owed

If employment ends during probation — whether the employer terminates or the employee resigns — all accrued annual leave must be included in the final settlement and paid in cash. The formula is identical to any other termination: daily rate = annual salary ÷ 365, multiplied by days accrued.

A nuance arises for employees terminated before completing 6 months: Article 29 sets the 2-day-per-month entitlement for employees serving 6 months to less than 1 year, which some employers interpret as meaning zero entitlement before 6 months. MOHRE's operational practice and the broad accrual principle in the law support proportional payment from day 1. If your employer refuses to pay any leave on termination during probation, file an eComplaint — do not assume you have no entitlement.

Notice Periods and Probation

During probation, the statutory notice period if the employer terminates is 14 calendar days (as opposed to the 30-day standard minimum applicable post-probation). If the employee resigns during probation, they must also give 14 days' notice. Any leave that accrued up to and through the notice period is included in the final settlement.

Extending Probation

An employer cannot unilaterally extend probation beyond 6 months. If an employer attempts to renew probation or continue calling the employee 'probationary' after 6 months, the employment is legally treated as a confirmed engagement from month 7 onwards, with full statutory rights. If your employer is using extended probation as a mechanism to deny annual leave or other benefits, seek advice from MOHRE's employment mediation service.

Record your start date precisely. Leave accrual, probation calculations, and notice period entitlements all turn on the exact employment commencement date. Keep your offer letter, work permit issuance date, and first pay slip as documentation.

Carry-Over Rules: When Unused Leave Rolls Over — and When It Does Not

Carry-over of unused annual leave is one of the most contested areas of UAE employment practice. The law is clear in principle — carry-over is permitted, forfeiture is conditionally permitted — but disputes arise constantly because employers misapply the forfeiture conditions. The governing rule: carry-over requires agreement; forfeiture requires a specific documented process.

When Carry-Over Occurs

Carry-over happens either by explicit agreement (a company policy or an individual letter acknowledging the balance) or by implicit agreement (the employer's HR or payroll system displays a running leave balance that rolls forward year to year without objection). If your HR system shows an accumulated balance from prior years, that constitutes acknowledgement of the carry-over right. Most large UAE employers maintain such records.

There is no statutory cap on how much leave can be carried over — the law does not limit the carry-over balance the way some jurisdictions do. Large accumulated balances create significant termination liability for employers, which is why well-managed companies actively push employees to take leave and maintain clear annual leave policies.

When Can an Employer Forfeit Unused Leave?

Article 29 of Federal Decree-Law 33/2021, read with Cabinet Resolution 1/2022, permits forfeiture of prior-year unused leave only when all three of the following conditions are satisfied:

  1. The employer gave the employee advance written notice that the leave must be taken by a specified date.
  2. The employer gave the employee a genuine and reasonable opportunity to take the leave before that date — i.e., did not refuse leave requests during this window.
  3. Despite notice and opportunity, the employee chose not to take the leave.

If any of these three conditions is missing, the employer cannot forfeit the unused leave — it must be paid on termination. Blanket 'use-it-or-lose-it' clauses in employment contracts that are not backed by these procedural steps are unenforceable under UAE law.

What 'Reasonable Opportunity' Means in Practice

MOHRE and the UAE courts have considered 'reasonable opportunity' to include: scheduling leave on the company's official leave calendar with at least 30 days' advance notice; not refusing employee-initiated leave requests without genuine operational justification; and not requiring employees to work during their scheduled leave period. An employer who systematically refused leave requests throughout the year and then attempts to forfeit the accumulated balance at year-end cannot satisfy the 'opportunity' condition.

Forfeiture Is Not Automatic and Requires Documentation

Even where all three conditions are met, forfeiture is not self-executing. The employer must produce evidence: the written notice (dated), the leave schedule offered, and records showing the employee did not take the leave despite the opportunity. In a MOHRE complaint or Labour Court proceeding, the burden of proving the forfeiture conditions falls on the employer. If the employer cannot produce documentation, the leave balance is treated as outstanding and payable.

ScenarioOutcome for the Leave Balance
Employer accumulated leave without objection; employee resignedAll accumulated leave paid in cash in final settlement
Employer gave written notice, scheduled leave, employee ignoredEmployer may forfeit prior-year leave — must document the notification process
Employer cancelled employee's scheduled leave; leave then expiredEmployer cannot forfeit; leave remains payable on termination
No carry-over policy discussed; leave accumulated for 4 yearsAll 4 years of unused leave payable on termination
Contract clause states 'unused leave forfeited at year-end'Void under Article 7 unless procedural conditions above were met

Agreements to Waive Leave Rights Are Void

Article 7 of Federal Decree-Law 33/2021 provides that any agreement purporting to waive statutory minimum rights is void to the extent of the waiver. An employee cannot — even in a signed addendum to their contract — validly agree to forfeit the right to be paid for unused leave on termination. If your employer asked you to sign a document waiving accrued leave, that signature does not bind you under UAE law.

Document your leave balance annually. Request a written statement from HR at the start of each year confirming your opening carried-over balance. This is primary evidence in any MOHRE complaint about forfeited or underpaid leave.

Leave Encashment on Termination or Resignation

When employment ends — by termination, resignation, non-renewal of a fixed-term contract, redundancy, or any other reason — all accrued and unused annual leave must be paid in cash as part of the final settlement. This is a mandatory statutory entitlement that cannot be waived by contract, company policy, or any agreement between the parties.

The Legal Encashment Formula

Article 29 of Federal Decree-Law 33/2021 specifies the daily-rate method for calculating the encashment amount. The formula applies regardless of whether the employee is paid monthly, weekly, or on any other cycle:

Formula ComponentValue
Daily rateAnnual wage ÷ 365
Leave owed (full year)30 calendar days per complete year of service
Leave owed (partial final year, after first year)2.5 days per completed month in the final partial year
Leave owed (6–12 months, first year only)2 calendar days per completed month
Total encashment amountDaily rate × total unused leave days (all years combined)

Worked Example

An employee with a total monthly wage of AED 15,000 (annual: AED 180,000) resigns after 3 years and 7 months of service. During that period they took 50 days of leave and have 55 days of unused leave on record.

StepCalculationResult
Daily rateAED 180,000 ÷ 365AED 493.15
Unused leave55 days × AED 493.15AED 27,123.29

This example is for illustration only, using round numbers. Always verify your leave balance record and the salary definition in your contract. Confirm exact amounts with your employer and MOHRE before making any claim.

Timeline for Payment

UAE law requires employers to pay the final settlement — including leave encashment, salary for the last partial month, end-of-service gratuity, and any other owed amounts — within 14 days of the last working day. Delay beyond 14 days without justification is a labour violation. If the employer misses this deadline, the eComplaint route at mohre.gov.ae is available immediately.

Disputed Leave Balance

If your employer's leave balance figure differs from yours, request the full leave register extract immediately — it shows every leave taken, approved, and any deductions applied. The employer is required to maintain accurate records under Cabinet Resolution 1/2022. If they cannot produce the records, the evidential advantage in a MOHRE complaint shifts to the employee.

Disputes most often arise when: (1) the employer uses a lower salary figure than the full contractual wage (e.g., basic salary only instead of total wage); (2) the employer claims leave was forfeited without evidence of the required prior notice; or (3) the leave accrual rate applied is wrong (e.g., working days counted instead of calendar days). Document every instance of approved or taken leave — email approvals, HR system screenshots, and pay-slip leave deductions — before the final day of employment.

Leave encashment applies regardless of who initiated the termination and regardless of the reason. Even if you are terminated for cause or misconduct, you remain entitled to full payment for all accrued unused leave under Federal Decree-Law 33/2021.

Can You Encash Leave While Still Employed?

A question the Wathim desk receives regularly: 'Can I get paid for my annual leave instead of taking it?' The clear answer under UAE law: not as a statutory right while you are still employed. The law treats annual leave as a health and wellbeing entitlement, not a monetary benefit that can be freely converted to cash at the employee's election.

The Mutual Agreement Exception

Federal Decree-Law 33/2021 and Cabinet Resolution 1/2022 create a narrow exception: an employer and employee may agree in writing to encash some or all of the annual leave balance, provided this reflects a genuine situation where operational requirements prevented the employee from taking leave during the relevant period. Both parties must consent in writing — this is not an employer's right to impose, nor an employee's right to demand.

In practice, mid-employment encashment by agreement occurs in industries where leave scheduling is genuinely difficult: offshore oil and gas rotations, project-based construction roles, and certain financial services trading desks where regulatory requirements restrict absence. In standard office roles where leave scheduling is straightforward, MOHRE takes a dim view of consistent encashment in lieu of actual leave.

Why the Law Discourages In-Employment Encashment

The legislative intent is explicit in the law's explanatory memorandum: annual leave exists to protect employees' physical and mental health, not to provide an optional cash supplement to wages. Persistent encashment can mask workplace cultures that informally discourage leave-taking, and MOHRE's enforcement posture has moved toward ensuring employees actually disconnect from work. The approach aligns with ILO Convention No. 132 on annual leave with pay.

Encashment and Its Effect on Your Leave Balance

If you receive a mid-employment encashment payment, those leave days are treated as consumed for the purpose of your leave balance. On termination, you are owed only the remaining balance — the encashed days are not payable again. This seems obvious, but disputes arise where employees claim the encashment was actually a bonus and their leave balance was never reduced; always get written confirmation of how encashed days are credited against your balance.

Employer Leave Cap Policies

Many large UAE employers implement a maximum leave balance cap — for example, no employee may accumulate more than 60 calendar days. When an employee reaches the cap, they are typically required to take leave before accruing further. These cap policies are legal as long as the forfeiture conditions (advance written notice, genuine opportunity) are met before any balance above the cap is forfeited. The cap itself does not override the forfeiture process.

Practical tip: If your employer routinely refuses leave requests and your balance is growing, document every refused request in writing (email) and keep a personal record. If your employer later attempts to forfeit the balance, this documentation demonstrates that the 'reasonable opportunity' condition was not met.

Public Holidays and How They Interact With Annual Leave

The UAE observes 12 official public holidays per year, typically confirmed each year by government circular. Public holidays are entirely separate from annual leave — they are mandatory paid non-working days to which every employee in the UAE is entitled, and they do not reduce your annual leave balance.

Public HolidayApproximate Timing
New Year's Day1 January
Eid Al Fitr (Day 1)Varies — Islamic calendar (end of Ramadan)
Eid Al Fitr (Day 2)Varies — day after Eid Al Fitr Day 1
Arafat (Eid Al Adha Eve)Varies — Islamic calendar
Eid Al Adha (Day 1)Varies — Islamic calendar
Eid Al Adha (Day 2)Varies — day after Eid Al Adha Day 1
Islamic New Year (Hijri New Year)Varies — Islamic calendar
Prophet's Birthday (Mawlid Al Nabawi)Varies — Islamic calendar
Commemoration Day30 November
National Day (Day 1)2 December
National Day (Day 2)3 December
Additional day (government discretion)Announced annually

Islamic holiday dates are subject to moon sighting confirmation and vary by year. The UAE government issues official circulars confirming exact 2026 holiday dates. Always verify with the official UAE government calendar.

When a Public Holiday Falls Within Your Annual Leave

If an official public holiday falls during your approved annual leave period, that day does not count as a leave day. Your leave period is extended by one day for each embedded public holiday, or the equivalent days are credited back to your leave balance. This rule is frequently misapplied by employers who count raw calendar days without identifying embedded holidays.

Example: an employee takes 10 days of annual leave spanning a period that includes 2 public holidays. The employee has consumed only 8 days of their annual leave balance, not 10. The employer should either extend the leave by 2 days or credit 2 days back to the employee's balance. Any employer who insists on charging those holidays as leave days is in violation of Article 29 of Decree-Law 33/2021.

Working on a Public Holiday: Compensation Rules

If an employer requires an employee to work on a public holiday, the employee is entitled to one of the following — agreed between the parties in advance:

  • A substitute rest day to be taken within 6 months of the holiday, plus the regular daily wage for the holiday worked (effectively an extra day off), or
  • A 50% pay premium in addition to the regular daily pay for the holiday worked (i.e., 1.5× the daily rate in cash, no substitute day).

If the employer and employee do not agree in advance, the employee may elect either option. Refusal to provide either compensation is a reportable labour violation. Employees should raise public holiday compensation disputes through the MOHRE eComplaint portal if the employer does not comply.

Ramadan Reduced Hours Are Not Annual Leave

During the month of Ramadan, UAE law requires a reduction of 2 working hours per day for all employees (regardless of religion). This reduction is a separate statutory entitlement — it is entirely distinct from annual leave. Employers cannot require employees to use annual leave to cover the reduced Ramadan hours, and they cannot reduce salary. An employer who docks annual leave for Ramadan hours is in breach of the law.

When planning annual leave that spans a public holiday period (e.g., Eid Al Adha), count your leave days carefully and get the leave approval in writing specifying exact dates. If Eid is announced as 3 days, those 3 days should not be charged against your annual leave. Confirm this with HR before your leave begins.

Sick Leave vs Annual Leave: What the Law Says

Sick leave and annual leave are entirely separate entitlements under Federal Decree-Law 33/2021. They operate on different pay scales, different approval processes, and different legal conditions. Most critically: an employer cannot force an employee to take annual leave while that employee is on approved sick leave. The two categories of leave do not interchange without the employee's consent.

Sick Leave Entitlement: Article 31 Structure

After completing the probation period, employees are entitled to the following sick leave structure per year:

Sick Leave PeriodPay RateMedical Certificate Required?
First 15 daysFull pay (100% of wage)Yes — from a licensed medical practitioner
Next 30 daysHalf pay (50% of wage)Yes
Following 30 daysUnpaid sick leaveYes

After 90 continuous days of sick leave (or 90 days in aggregate in a single year, depending on interpretation), the employer may terminate the employment. Critically, the employer must pay all termination entitlements — gratuity, leave encashment, and end-of-service pay — even when terminating due to prolonged illness. The employer cannot terminate before the 90-day period is exhausted.

Falling Ill During Annual Leave

If an employee falls ill during an approved annual leave period, the employee may apply to have the illness period reclassified as sick leave. This requires a medical certificate from a licensed practitioner (covering the dates of illness), prompt notification to the employer, and the employer's acknowledgement.

If the reclassification is accepted, the sick days are not counted against the annual leave balance, and the employee is entitled to resume or extend the annual leave after recovery. Employers sometimes dispute sick leave claims arising during annual leave, particularly where notification was delayed. The safest approach: notify HR on the same day you see a doctor, and submit the medical certificate within 24–48 hours.

Employer Cannot Force Annual Leave During Sick Leave

This prohibition is explicit in the law: if you are on certified sick leave, your employer cannot reclassify those days as annual leave or instruct you to use your annual leave balance. To do so would effectively reduce your annual leave entitlement while providing no genuine rest from work — since you are ill, not resting by choice. Any such instruction from HR should be disputed in writing, with the medical certificate retained.

Annual Leave Accrual During Sick Leave

Annual leave continues to accrue during periods of paid sick leave (the first 45 days under the Article 31 structure). During the 30-day unpaid sick leave period, the position on accrual is less clear — it is treated analogously to unpaid leave by most practitioners, meaning accrual may pause during the unpaid phase. Seek specific advice if this affects a significant balance.

Sick Leave During Probation

During probation, sick leave provisions are more limited. A probationary employee who is absent due to illness for an extended period may face non-confirmation by the employer, particularly if the illness prevents completing the probationary assessment. However, the employer must still follow lawful process — arbitrary termination during sick leave, without completing the 90-day sick leave period, is a violation. Seek MOHRE advice promptly if you are ill during probation and your employer is threatening to end the engagement.

If your employer is treating your sick leave days as annual leave without your consent, respond in writing disputing the reclassification, retain your medical certificates, and if the employer persists, file an eComplaint at mohre.gov.ae.

Forced Leave and Administrative Leave: Employer Rights and Limits

Forced or administrative leave refers to a period where the employer requires the employee to take their annual leave, rather than the employee initiating the request. UAE law permits this practice, subject to two non-negotiable conditions: reasonable advance notice and payment of full salary throughout.

Common Scenarios Where Forced Leave Is Applied

  • Seasonal business closures — e.g., a manufacturing facility shutting for 2 weeks in August
  • Office-wide holiday shutdowns — e.g., the company closes from 24 December to 2 January
  • Low-demand periods where maintaining a full workforce is operationally unnecessary
  • Specific employee roles becoming temporarily redundant during a project transition
  • Regulatory-driven closures requiring all staff to be off premises

In all of these situations, the employer is drawing down the employee's statutory annual leave entitlement. This is lawful as long as the total forced leave does not deprive the employee of their full annual leave entitlement — a company cannot force 30 days of collective leave and then refuse individual leave requests for the remainder of the year.

Advance Notice Requirements

The law does not specify an exact notice period for forced leave. The standard applied by MOHRE and the courts is 'reasonable in the circumstances'. For planned collective closures: at least 30 days' written notice is the generally accepted minimum. For unplanned operational disruptions: a shorter period (1–2 weeks) may be accepted, but the employer must demonstrate genuine urgency. Verbal notice is legally valid but practically very difficult to prove — always request written confirmation of any forced leave instruction.

Forced Leave Cannot Be Unpaid

An employer cannot direct an employee to stay home without pay under the guise of 'leave'. Forced leave without pay is effectively an unlawful wage deduction. If your employer has placed you on a period of absence while withholding salary without your agreement, this is a reportable violation — file an eComplaint at mohre.gov.ae immediately. See also: unpaid leave under UAE law.

Balance Deduction and Remaining Entitlement

Days of forced leave are charged against the employee's annual leave balance. After a 2-week forced closure (14 days), the employee's balance decreases by 14 days, and the remaining balance (30 − 14 = 16 days) is preserved for the employee to take later. On termination, the remaining balance must be encashed at the daily rate. Employers cannot use forced leave to exhaust a balance and then refuse further individual leave for the same year.

What If Forced Leave Exceeds Your Balance?

If the employer's forced leave period is longer than the employee's current accrued balance, the excess days raise a difficult question. In practice, most employers either advance future leave entitlement (treating it as a loan against future accrual) or pay a full salary for the period and treat it as a company closure rather than individual leave. Employees should not accept an arrangement where they owe leave days back to the employer — this is not a recognised legal concept under UAE law.

If your employer declares a forced leave period, confirm in writing: (1) that the leave is fully paid; (2) how many days will be deducted from your annual leave balance; and (3) what your remaining balance will be after the forced leave. These three points prevent disputes when the forced leave ends.

Annual Leave During the Notice Period

The relationship between annual leave and the notice period is frequently misunderstood and regularly leads to disputes at the point of resignation or termination. UAE law allows both notice and leave to run at the same time, and — critically — allows the employer to require the employee to use their leave balance during the notice period.

Simultaneous Running of Notice and Leave

Under Federal Decree-Law 33/2021, an employer may require an employee to take their annual leave balance during the notice period. When this happens, each calendar day serves simultaneously as a notice day served and a leave day consumed. The notice period is not extended or paused; it continues to run to its conclusion on the scheduled last working day.

Example: an employee resigns with a 30-day notice period and holds 20 days of unused leave. The employer requires the employee to take the 20 leave days during the notice period. The employee takes leave from day 1 to day 20 and works days 21 to 30. At the end of 30 days, the notice period is served and the leave balance is zero — there is no additional payment for the 20 leave days, as they were served concurrently with notice.

Employee-Requested Leave During Notice

If the employee requests leave during the notice period (rather than being required by the employer), the employer can approve or refuse. If the employer refuses and the notice period concludes with unused leave, that balance must be encashed in the final settlement — it cannot be treated as forfeited simply because the notice period ended.

Garden Leave: A Different Animal

Garden leave — where the employer asks the employee to stay home during the notice period while remaining on full payroll — is distinct from annual leave during notice. On garden leave, the employment continues and the employee is available for consultation; the employer is not consuming the employee's leave entitlement. An employee on garden leave retains their full annual leave balance, which must be encashed at the end of the notice period unless the parties agree otherwise.

Scenario During Notice PeriodEffect on Leave Balance
Employer requires employee to take leave during noticeLeave consumed; balance reduced; no additional payment; no extension of notice
Employee requests leave; employer approvesLeave consumed; balance reduced accordingly
Employee requests leave; employer refusesUnused leave encashed in final settlement
Garden leave (full pay, no annual leave designation)Leave balance preserved; encashed in final settlement
Immediate termination without notice (employer-initiated)Full payment in lieu of notice + full leave encashment both owed
Resignation without serving notice (employee breach)Employer may deduct notice-period compensation; leave encashment still owed
At the time of resignation, state your leave balance preference in writing: 'I request to take my remaining [X] days of annual leave during the notice period' or 'I request encashment of my remaining leave balance in the final settlement.' A clear written position prevents ambiguity in the final settlement calculation.

Unpaid Leave: When Is It Available and What Does It Cost?

Unpaid leave is a period of employer-approved absence during which the employment relationship continues but no salary is paid. Unlike annual leave (which is always paid) or sick leave (which has a structured pay scale), unpaid leave is entirely a matter of agreement between employer and employee. Neither party has a unilateral right to impose unpaid leave.

How Unpaid Leave Is Arranged

An employee seeking unpaid leave must request it and the employer must agree. Common reasons for unpaid leave requests include: accompanying a spouse posted overseas, caring for a sick family member, pursuing higher education or research, or taking an extended sabbatical. The employer has full discretion to refuse, and refusal is not a labour violation.

Large UAE employers typically have formal unpaid leave policies setting maximum durations (commonly 3 or 6 months) and conditions (minimum service period, no pending disciplinary action, HR director approval). Smaller employers handle these requests on a case-by-case basis. Any agreed unpaid leave should be documented in a written addendum to the employment contract specifying exact dates, salary treatment, and conditions for return.

Impact on End-of-Service Gratuity

Unpaid leave periods are excluded from the service period calculation for end-of-service gratuity. If an employee served 5 years and took 6 months of unpaid leave, gratuity is calculated on 4.5 years, not 5. This is a significant financial consideration. For an employee earning AED 10,000/month, 6 months of excluded service costs approximately AED 5,000 in gratuity.

Annual Leave Accrual During Unpaid Leave

Annual leave does not accrue during unpaid leave. The entitlement is based on actual service — and unpaid leave is a period of suspended service for calculation purposes. An employee who takes 3 months of unpaid leave mid-year accrues leave only for the 9 months of active service in that year: 9 × 2.5 = 22.5 days instead of 30. This reduced accrual should be reflected in the leave register.

Medical Insurance and Visa During Unpaid Leave

The residence visa remains valid during agreed unpaid leave — the sponsor–employee relationship is maintained and the employer remains the visa sponsor. However, medical insurance coverage depends entirely on the specific policy. Many UAE employer group insurance policies exclude employees on unpaid leave after a set period (often 30 days). Clarify the insurance position with HR before beginning any extended unpaid leave, and consider purchasing private cover if the group policy lapses.

If Your Employer Imposes Unpaid Leave Without Consent

An employer cannot unilaterally put an employee on unpaid leave — not during a business slowdown, a renovation, a restructuring, or any other operational scenario. The employer's lawful options when it cannot sustain full operations include: requiring paid annual leave (legal), applying for Ministry approval under specific redundancy procedures (complex), or initiating a lawful termination with entitlements. Unilateral imposition of unpaid leave is a reportable violation at MOHRE.

Any unpaid leave arrangement must be in writing, signed by both parties, specifying: exact start and end dates; salary treatment; gratuity accrual basis; medical insurance status; and return-to-work conditions. Oral agreements are almost impossible to enforce if disputed later.

Part-Time Employees: Proportional Leave Calculation

Federal Decree-Law 33/2021 and Cabinet Resolution No. 1 of 2022 explicitly recognise and regulate part-time employment arrangements in the UAE. Part-time employees enjoy the same fundamental rights as full-time employees — including annual leave — calculated proportionally to their contractual working hours compared to the full-time standard.

The Proportional Formula

The UAE sets a maximum of 48 working hours per week (8 hours per day × 6 days) for full-time employees (reduced to 36 hours during Ramadan). The part-time annual leave formula is:

Formula ComponentValue
Full-time annual leave entitlement30 calendar days
Standard full-time hours (UAE max)48 hours per week
Part-time hours per weekActual contractual hours
Part-time leave entitlement(Part-time hours ÷ 48) × 30 days

Worked Examples

Weekly HoursFraction of Full-TimeCalculated LeaveRounded Entitlement
24 hours24 ÷ 48 = 50%15.0 days15 days
30 hours30 ÷ 48 = 62.5%18.75 days19 days (rounded up)
20 hours20 ÷ 48 = 41.7%12.5 days13 days (rounded up)
36 hours36 ÷ 48 = 75%22.5 days23 days (rounded up)
40 hours40 ÷ 48 = 83.3%25.0 days25 days

Fractions are generally rounded up in the employee's favour in practice, though the law does not specify a rounding rule. Confirm rounding convention with MOHRE if the difference is material to your claim.

Part-Time Encashment on Termination

The encashment formula on termination uses the same logic: Daily rate = part-time annual wage ÷ 365, multiplied by unused leave days (calculated proportionally). Since the part-time salary is already proportional to hours worked, the formula self-adjusts — you do not need a separate step to pro-rate the daily rate.

Multi-Employer Part-Time Arrangements

UAE law has increasingly permitted employees to hold multiple part-time engagements under specific visa arrangements. Where an employee works part-time for two employers, each employer is independently responsible for the leave entitlement proportional to that employment. Leave from one engagement cannot be applied against or aggregated with the other. Each employer's MOHRE registration should reflect the part-time nature of the arrangement.

Public Holidays for Part-Time Workers

Part-time employees are entitled to public holidays on the same basis as full-time employees, subject to whether their working schedule includes the holiday day. If a part-time employee works only Monday, Wednesday, and Friday, a public holiday falling on a Tuesday does not give rise to a compensating rest day or premium pay — because the employee was not scheduled to work that day. The holiday entitlement applies only to scheduled working days.

Part-time workers: always ensure your contract explicitly states the weekly hours and the resulting annual leave entitlement figure. If the contract is silent on leave, apply the proportional formula above and confirm with HR in writing. A silent contract leaves room for disputes on termination.

Domestic Workers and Annual Leave Under Decree-Law 9/2022

Domestic workers — including housemaids, personal chauffeurs, cooks, nannies, gardeners, and other household employees — were historically outside the scope of the main UAE Labour Law. Federal Decree-Law No. 9 of 2022 on Domestic Workers (effective January 2023) brought domestic workers into a dedicated legal framework with entitlements closely mirroring those available to mainstream private-sector employees.

Annual Leave Entitlement for Domestic Workers

Under Decree-Law 9/2022, domestic workers are entitled to 30 calendar days of paid annual leave after completing 1 year of service. The same accrual and encashment principles apply: leave accrues from the first day of employment, partial-year accrual operates in the same way as for mainstream employees, and all unused leave must be encashed on termination.

EntitlementDomestic Worker Rule Under Decree-Law 9/2022
Annual leave (after 1 year)30 calendar days, fully paid at current wage rate
Partial-year leave2 calendar days per completed month of service
Medical leave30 days per year: first 15 days full pay, next 15 days half pay
Weekly restAt least 1 full day per week (to be agreed in writing)
Daily rest12 hours per day, of which 8 must be continuous
End-of-service gratuity1 month's wage per year of service
Notice period (employer)1 month if service ≥ 1 year; 2 weeks if service < 1 year
Notice period (worker)Same as employer notice periods above

Mandatory Written Employment Contract

Every domestic worker must have a written employment contract in a language they understand, registered with MOHRE through a licensed Tadbeer centre or directly via the MOHRE platform. The contract must specify the salary, working hours, rest days, and leave entitlement. An oral arrangement is unenforceable and leaves the worker in a highly vulnerable position if a dispute arises. The standard MOHRE domestic worker contract template is available through Tadbeer centres.

Filing a Complaint as a Domestic Worker

Disputes involving domestic workers are handled by MOHRE's Domestic Workers Division. The dedicated helpline is 800 60 (free, 24/7). Complaints can also be filed via the eComplaint system at mohre.gov.ae. The employer has 14 days to respond. Unresolved disputes are referred to the Public Prosecution (for serious matters such as abuse or withholding of passport) or the Labour Court (for financial disputes such as unpaid wages and leave encashment).

Protection Against Passport Confiscation

A specific protection under Decree-Law 9/2022: employers are prohibited from confiscating a domestic worker's passport. If your employer holds your passport, you can report this to the MOHRE helpline at 800 60 or directly to the nearest police station. Passport confiscation is a criminal offence under UAE law, separate from any labour dispute.

Domestic workers: you have the same right to 30 days of paid annual leave per year as any other employee in the UAE. If you are terminated without receiving leave encashment, call 800 60 or visit the nearest Tadbeer centre. You do not need a lawyer to file the initial complaint.

Filing a MOHRE Complaint for Unpaid Leave or Encashment Disputes

If your employer refuses to pay annual leave encashment on termination, forces unpaid leave, denies approved leave, or otherwise violates your leave rights under Federal Decree-Law 33/2021, the primary remedy is a MOHRE eComplaint. The complaint process is free at the initial stage, accessible online and via app, and typically resolves within 4–8 weeks — or escalates to the Labour Court if settlement is not reached.

Before Filing: The Direct Resolution Step

MOHRE's process technically begins with an attempt at direct resolution. In practice, this means sending a written demand to your employer — email to HR and your line manager — setting out the exact amount owed, the calculation basis, and a clear deadline for payment (typically 7 days). Keep a copy of this email. It demonstrates you attempted to resolve the matter amicably and is evidence that can be referenced in the complaint.

Step-by-Step: Filing an eComplaint

  1. Gather your documents — employment contract or offer letter, Emirates ID, recent pay slips (at least 3 months), termination letter or resignation acceptance, final settlement statement (if received), leave balance records from HR, and any written demand sent to the employer.
  2. Access the portal — visit mohre.gov.ae or open the MOHRE UAE app on your phone. Log in using your UAE Pass credentials.
  3. Select 'Submit a Complaint' and choose the appropriate category — 'Annual Leave / Wage Disputes' or 'End of Service' depending on the nature of the claim.
  4. Complete the complaint form — enter your employer's name and trade licence number (if known), your Emirates ID, the date of your last working day, the exact amount claimed, and a concise explanation of the dispute with your calculation.
  5. Upload supporting documents — all items gathered in step 1. The more documentation, the stronger the complaint.
  6. Submit and record your reference number — you will receive an SMS and email confirmation with a case reference number. Keep this safe.
  7. Await employer response — the employer has 14 calendar days to submit a response through the MOHRE system.
  8. Amicable settlement session — if the employer responds but disputes the claim, a MOHRE labour relations officer convenes an amicable settlement session (typically via video call or in-person at the Ministry) to attempt mediation.
  9. Referral to Labour Court — if no settlement is reached, MOHRE issues a referral letter allowing you to file the claim at the Labour Court. Court filing fees vary; confirm exact amounts with the court before filing.

Key Documents Checklist

DocumentPurpose in the Complaint
Employment contract or offer letterEstablishes salary, leave entitlement, and contract terms
Emirates ID (copy)Identity verification — required to file
Pay slips (last 3–6 months)Confirms salary basis for the encashment calculation
Termination letter or resignation acceptanceConfirms the exact end date of employment
Final settlement statementShows what has been paid vs. what remains disputed
Leave balance record / leave register extractQuantifies the unused leave days claimed
MOHRE labour card or work permitConfirms MOHRE-registered employment
Written demand sent to employerEvidence of good-faith resolution attempt
Medical certificates (if sick leave is involved)Supports sick leave reclassification claims

Statute of Limitations: File Within 1 Year

Labour claims in the UAE must be filed within 1 year of the date the right arose — typically the date of termination or the date the final settlement payment was due. Courts will dismiss claims filed after this period on limitation grounds, regardless of the merits. Do not delay. If your employer misses the 14-day final settlement deadline, file your MOHRE complaint immediately.

Precautionary Attachment on Employer Assets

In large claims — typically above AED 50,000 — or where there is a credible risk that the employer may liquidate assets or abscond before the claim is resolved, a lawyer can apply to the Labour Court for a precautionary attachment on the employer's bank accounts or assets. This prevents dissipation of funds while the claim is pending. Precautionary attachment requires a licensed UAE lawyer, a court application, and judicial approval — it is not available through the MOHRE eComplaint route directly.

What Happens If the Employer Does Not Appear?

If the employer fails to respond to the MOHRE complaint within 14 days, MOHRE will issue the referral letter to proceed to the Labour Court without the amicable settlement stage. At the Labour Court, a default judgment can be issued if the employer fails to appear. The court may also refer the matter to the execution judge for enforcement against the employer's registered assets.

Important: The initial MOHRE complaint stage is free of charge. Labour Court filing fees vary depending on claim size and emirate jurisdiction. Confirm current fee schedules with the relevant court before filing. This guide provides general information only and is not a substitute for legal advice.

Need Help Claiming Your Leave Entitlement?

Annual leave disputes — from unpaid encashment at termination to carry-over forfeiture, forced unpaid leave, or a final settlement that short-changes your leave balance — follow a consistent legal process, but the specifics of your contract, service length, salary structure, and employer behaviour significantly affect both the calculation and the strategy.

The UAE Services Desk handles leave encashment claims, MOHRE complaint preparation, final settlement reviews, and employment dispute support end-to-end. We review your contract, calculate the correct amount owed, draft the written demand to your employer, and prepare your MOHRE complaint documents so that nothing is missed and the timeline is managed correctly.

The UAE desk handles this end-to-end — email info@wathim.com with one sentence about your situation.

Frequently Asked Questions

Yes. Under Federal Decree-Law 33/2021, an employer can schedule when annual leave is taken, including requiring employees to take leave during slow periods or company-wide shutdowns. The employer must give reasonable advance notice (at least 30 days for planned closures is generally accepted) and must pay full salary throughout the forced leave period. Forced unpaid leave is not permitted — if the employer is withholding salary during a forced absence, that is a reportable violation at MOHRE.

Not as a statutory right. You have no entitlement to encash annual leave while still employed. The law is designed to ensure employees actually take rest — not simply receive additional wages. Mid-employment encashment is permitted only by mutual written agreement between you and your employer, typically where genuine operational requirements prevented leave from being taken. The right to cash out on termination (for any unused balance) is unconditional and separate.

The employer can recall approved leave for genuine operational reasons, but those leave days must be rescheduled — they cannot be forfeited. If you incurred non-refundable costs as a result of the cancellation (flights, hotel bookings), you may have a claim against the employer for reimbursement, particularly if the cancellation was without emergency justification. Put any leave cancellation acknowledgement in writing and document financial losses with receipts.

The formula under UAE law is: Daily Rate = Annual Wage ÷ 365. Multiply the daily rate by the number of unused leave days owed to get the total encashment amount. 'Annual Wage' is typically the total contractual wage — basic salary plus regular allowances (housing, transport, etc.). The exact definition depends on how your contract defines 'wage'. Always confirm the applicable figure with your employer and MOHRE before making a formal claim, as the choice of salary base can materially affect the encashment amount.

Yes. If you have completed at least 6 months of service, you are owed 2 calendar days of leave per completed month worked. If you have completed more than 1 year, you are owed a proportional share of the 30-day annual entitlement for the partial final year (2.5 days per completed month). This payment must be included in your final settlement regardless of who initiates the termination or resignation. If your employer refuses, file an eComplaint at mohre.gov.ae.

Only under strictly defined conditions: the employer must have given you advance written notice that the leave must be taken by a specified date, provided a genuine opportunity for you to take the leave before that date, and you chose not to take it despite both. If the employer refused your leave requests, gave no written notice, or failed to schedule the leave on the calendar, the forfeiture conditions are not met and the leave remains payable. Any contract clause attempting to waive the encashment right on termination is void under Article 7 of Federal Decree-Law 33/2021.

No. The 2-hour daily reduction in working hours during Ramadan is a statutory entitlement under UAE law and has no connection to annual leave. Employers cannot require you to use annual leave to offset reduced Ramadan hours, and they cannot dock your pay for those hours. The Ramadan reduction applies to all employees regardless of religion. If your employer is deducting annual leave for Ramadan hours, file a complaint with MOHRE.

All accrued and unused annual leave must be paid in full as part of your redundancy final settlement, calculated at the daily rate (annual wage ÷ 365 × unused days). This payment is in addition to your end-of-service gratuity, any salary owed, and agreed severance. The leave encashment entitlement is unconditional — it applies regardless of the reason for termination and regardless of who initiated the end of employment.

Yes. The employer can require you to take your annual leave balance during the notice period. When this happens, each day counts simultaneously as a notice day served and a leave day consumed — the notice period is not extended. If unused leave remains at the end of the notice period and the employer did not require it to be taken, that balance must be encashed in the final settlement. State your preference clearly in writing at the time of resignation to avoid ambiguity.

No. Sick leave and annual leave are separate entitlements under Federal Decree-Law 33/2021 and cannot be interchanged without your consent. If you are on certified sick leave supported by a valid medical certificate, your employer cannot reclassify those days as annual leave. If this happens, respond in writing disputing the reclassification, keep the medical certificate, and file an eComplaint at mohre.gov.ae if the employer persists.

The essential documents are: your employment contract or offer letter, your Emirates ID, recent pay slips (at least 3 months), your termination letter or resignation acceptance email, any final settlement document the employer provided, and a leave balance record from HR. If you sent a written demand to your employer before filing, include that too. The more documentation you submit, the stronger your complaint and the harder it is for the employer to deny the claim without evidence.

Yes. Federal Decree-Law No. 9 of 2022 on Domestic Workers grants domestic workers 30 calendar days of paid annual leave after completing 1 year of service — the same entitlement as mainstream private-sector employees. Unused leave must be encashed on termination at the daily rate (annual wage ÷ 365 × days owed). Disputes are handled by MOHRE's Domestic Workers Division; call the dedicated helpline at 800 60 or file a complaint at mohre.gov.ae.

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