Annual leave in the UAE : entitlements, accrual, carryover and payout

Annual leave is a core employment entitlement in the United Arab Emirates (UAE). Its duration, accrual, scheduling, and payout rules are set by labour legislation and shaped by company policy. This practical guide explains the fundamentals for employers and employees, including how annual leave interacts with public holidays and other statutory absences.

Duration and eligibility

After completing one full year of continuous service with the same employer, employees are entitled to 30 calendar days of annual leave. This applies to both limited-term and unlimited-term contracts. Before one year, prorata leave may be calculated based on months of service.

Accrual and prorata calculation

Annual leave typically accrues at about 2.5 days per month. When employment ends midyear, the employer calculates a prorata balance based on months worked. Internal policies should clarify rounding rules and minimum accrual thresholds, within statutory minima.

Scheduling and notice

Employers schedule annual leave, balancing business needs with employee preferences. Reasonable advance notice is expected from employees, as outlined in internal policy. Peak periods may justify postponement, provided the right to rest is preserved and leave can be taken within a reasonable timeframe.

Carryover and company policy

Carryover to the next year is commonly permitted subject to employer rules (caps, useby deadlines). The aim is to ensure employees take proper rest and avoid excessive accumulation. Practices vary: some employers mandate partial use before yearend; others allow broader carryover.

Payout of unused leave

Upon termination (resignation, dismissal, or contract expiry), unused annual leave is paid out based on the employee’s usual pay, referencing the most recent salary. The payout ensures financial fairness when leave was not taken in kind.

Annual leave during probation

During probation, employees are typically not entitled to paid annual leave unless company policy is more favourable. Some employers authorise paid or unpaid absences depending on seniority and operational needs.

Public holidays and annual leave: distinct regimes

UAE public holidays (e.g., Eid, New Year’s Day, National Day) are separate from annual leave. Where employees work on a public holiday, premium pay (for example, 150% of basic salary) may apply according to internal policy and legal requirements. If a public holiday falls during annual leave, it is generally not deducted from the leave balance, subject to company policy.

Interaction with other leave regimes

Annual leave coexists with other statutory absences: sick leave (with staged pay), maternity/paternity/parental leave, Hajj leave, study leave, and bereavement leave. Avoid unauthorised overlap and clearly classify each absence to apply the correct rules.

Management best practices

• Create a shared leave calendar with manager approval and visibility of “critical” periods.
• Set clear carryover and cap rules, communicated at onboarding.
• Automate balance tracking (HRIS) and send reminders on useby deadlines.
• Define the payout calculation on termination (scope of pay elements included/excluded).
• Encourage employees to take leave to support wellbeing and productivity.

Practical examples

Example 1 : an employee with 14 months’ service has 30 days for the first year plus approximately 5 additional days (2.5 per month) for the two extra months, subject to company rules.

Example 2 : on termination after nine months, the annual leave payout would be around 22.5 days (2.5 × 9), adjusted for any days already taken and internal calculation rules.

In the UAE, annual leave centres on a familiar framework: 30 days after one year, monthly accrual, employerled scheduling, and payout on termination. Clear internal rules (carryover, counting methods, public holiday treatment) and robust tracking ensure compliance and support employee wellbeing. For edge cases (scheduling conflicts, termination, overlapping absences), seek tailored legal guidance to avoid disputes and align practices with current regulations.

Our lawyers, who are experts in labour law, are available to answer all your questions and provide advice. We offer face-to-face meetings or videoconferencing. You can make an appointment directly online at https://www.agn-avocats.fr/.

AGN AVOCATS – Labour Law
contact@agn-avocats.fr
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