UAE Annual Leave Entitlements and Calculations

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The headline figure is the part nobody argues about. Thirty calendar days a year, once a year of service is complete; two days a month for an employee who has passed six months but not yet twelve. Article 29 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations sets those numbers, and no contract can set a lower one.

The disputes that reach the Ministry of Human Resources and Emiratisation (MOHRE) are almost never about the numbers. They are about everything the numbers do not settle: who decides when the leave is taken, what notice is owed, how much of an untaken balance survives into the next year, what happens when a public holiday or a hospital admission lands in the middle of a booked holiday, and what an employee is actually paid for unused days on the way out. This article works through each of those in turn.

The floor set by Article 29

Entitlement under the UAE Labour Law tracks length of continuous service with the employer, on a tiered basis:

• More than one year of service. A minimum of 30 calendar days of paid annual leave. Calendar days, not working days — a point worth confirming against any policy inherited from a jurisdiction that counts the other way.
• Between six months and one year. Two days for each month of service. An employee who resigns at nine months has accrued eighteen days on that basis, whether or not a single one of them was ever taken.
• Part-time employees. Leave is worked out on a pro-rata basis by reference to the hours actually worked, as specified in the employment contract. The contract is doing real work here, which is a reason to draft the hours provision with the leave calculation in mind rather than as boilerplate.

Service Duration	Annual Leave Entitlement	Calculation Basis
Less than 6 months	No paid annual leave entitlement	N/A
6 months to 1 year	2 days per month of service	Pro-rata accrual
More than 1 year	30 calendar days per year	Full entitlement
Part-time worker	Pro-rata equivalent	As per employment contract

Everything in the table runs off one date: the start of continuous service with that employer. Where a business has restructured, moved an employee between group entities or converted a contract from one type to another, that date is the first thing to establish and the first thing an employee will dispute, because a difference of a few weeks around the six-month or twelve-month mark changes the entitlement bracket rather than merely adjusting it.

Because these are statutory minimums, the only permitted departure is upward. A policy offering more than 30 days, or granting paid leave before the six-month mark, is perfectly lawful and becomes a contractual promise the employer must then honour. A policy offering less is not a policy; it is a breach waiting to be quantified.

Who picks the dates

Employees frequently assume that because the leave is theirs, so is the timing. It is not, or not entirely. The employer determines the dates of annual leave in accordance with work requirements, which is what allows a business to keep a team covered through an audit, a peak trading season or a product launch rather than losing half of it in the same fortnight.

That prerogative comes with a condition attached. The employer must notify the employee of the leave dates at least one month in advance. The notice requirement is what stops the power being exercised arbitrarily: an employer cannot direct an employee to take leave starting next week because a project was cancelled, and an employee given proper notice cannot treat the scheduling as a negotiation that stays open indefinitely.

In practice the friction is procedural rather than legal. Where a business operates a request-and-approval system — the norm — the statutory position sits underneath it and surfaces only when the two sides disagree. An employer that has never once scheduled leave on its own initiative still holds the power to do so, provided it gives the month.

Carry-over, and payment instead of time off

Leave that is not taken does not simply roll forward without limit. With the employee's consent, an employer may carry over a maximum of half the annual leave into the following year, or agree to pay the employee in lieu of the leave, calculated on basic salary.

Two features of that rule do most of the work. The first is the ceiling: half, not all. An employee on the 30-day entitlement who takes nothing in a given year cannot bank the entire thirty days as of right; fifteen is the outer limit of what a carry-over arrangement can preserve. The second is consent. Carry-over and payment in lieu are both agreements, not unilateral acts. An employer that decides on its own account to pay out a balance rather than release the employee for the time, or an employee who declares a balance carried forward because nobody responded to the request, has each skipped the step that makes the arrangement effective.

Both should be documented at the time. A short written record confirming what was agreed, for which days, and on what basis, costs nothing in the year it is created and is the whole of the evidence when the balance is queried two years later.

A public holiday inside the leave period

A booked holiday that happens to span an officially declared public holiday raises an obvious question, and the default answer disappoints employees. Where a public holiday declared by the UAE government falls within an employee's annual leave, it is treated as part of that annual leave. It does not extend the leave by a day, and the employee does not get the day back.

The default can be displaced. Where the employment contract or the company's own policy expressly provides otherwise — that public holidays falling within annual leave are not counted against the balance, for instance — that more generous term governs, on the same principle that allows any enhancement of the statutory floor. What matters is that it is written down. An informal practice of quietly crediting the day back, applied to some employees and not others, produces exactly the inconsistency that turns a minor administrative question into a claim.

Illness inside the leave period

The position is different when the interruption is medical. If an employee falls ill during annual leave, the days of illness may be treated as sick leave rather than annual leave, so that the annual leave balance is not consumed by days the employee spent unwell.

That treatment is conditional, and the conditions are evidential. The employee must be able to produce a valid medical certificate from a recognised health authority, and must notify the employer in line with company policy. An employee who returns from four weeks away and mentions in passing that a week of it was spent in bed, with nothing to show for it, is asking the employer to accept an account it has no means of testing. An employee who obtained the certificate at the time and sent it in has a straightforward case.

The corresponding obligation on the employer is to have a notification procedure that an employee abroad can actually comply with. A policy requiring in-person delivery of a certificate to an office the employee is a thousand kilometres away from is not a procedure; it is a trap, and it will be treated as one.

What is paid out on exit

When the employment contract ends, the employee is entitled to be paid for annual leave that has accrued and has not been taken. This is part of the final settlement and one of the most common sources of end-of-employment disputes, largely because the two sides calculate it differently.

The calculation is made on basic salary as at the date the leave fell due, excluding allowances. That exclusion is where the gap usually opens. An employee whose package is heavily weighted towards housing and transport allowances will arrive at a figure well above the one payroll produces, and will assume an error has been made. Explaining the basis before the settlement is issued, rather than defending it afterwards, resolves most of these before they start.

The rule also has a substantive point behind it. Because untaken leave converts into a payable sum on exit, annual leave is an earned benefit rather than a use-it-or-lose-it privilege the employer can quietly extinguish by never approving a request. An employer that habitually refuses leave is not saving anything; it is accruing a liability and postponing it to the day the employee leaves.

Records on both sides of the relationship

Almost every point above is decided on documents. For employers, that means an auditable record of service dates, accrual, leave taken, carry-over agreements, in-lieu payments and final settlement calculations. Where a claim is brought, a clear and consistently applied written policy backed by contemporaneous records is the difference between a defensible position and an argument from memory.

Employees have the same interest from the other direction. Requests and approvals kept in writing, medical certificates retained, and a personal note of days taken cost nothing to maintain and give a claim about leave entitlement UAE balances something concrete to rest on. Disputes over vacation days UAE and unpaid balances are generally not close questions of law; they are questions about who can show what.

The point that survives everything else

Article 29 sets a floor, not a starting position for negotiation. An employment contract, a staff handbook or a settlement discussion may improve on annual leave UAE entitlements, and may organise scheduling, carry-over and encashment in whatever way suits the business — but it cannot reduce the days, cannot convert the notice requirement into a courtesy, and cannot write off a balance that has already accrued. Employers who build their leave policy on that understanding tend to spend very little time at MOHRE explaining it.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Please consult with a legal professional for advice on your specific situation.

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