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19 March 2024

Annual leave in UAE: When, how much can you encash?

Published
By Shuchita Kapur

All employees working in the UAE are entitled to an annual leave, which in certain cases can be cashed. If an employee is terminated or he resigns after serving the notice period determined by law, s/he is entitled to get money instead of the number of unused leaves.

According to Article (79) of the UAE Labour Law, an employee is entitled to receive cash in lieu of annual leave days not availed by him, if he was dismissed or if he left the service, after the period of notice stipulated by law.

How is the payment calculated?

Cash in lieu of leave is calculated on the bases of pay received by the employee at the time of maturity of such leave.

The payment is based on the basic wage received including any housing or accommodation allowance where applicable.

Some employers can also include transportation allowance but this depends on a case-by-case and is solely the prerogative of the company.

How many years of leave can be included?

An employee may have annual leave accrued over the past years but may only claim remuneration for the annual leave not taken for the last two years of employment at the rate of the wages paid during that time.

Past judgements delivered on encashing annual leave when leaving the job highlights this.

How is annual leave calculated?

The country’s Labour Law (Article 75) states that a worker shall be entitled during every year of service an annual leave of no less than the following periods:

1 - Two days for each month should the period of service of the worker is at least six months and a maximum of one year.

2 - Thirty days for each year should the period of service of the worker exceed one year.