Can an employee encash the unused annual leave under the new UAE labour law? Or Can he/she carry forward the entire unused leaves to the following year?
The answer to these questions can be ascertained from the new UAE Labour Law and from the Decrees issued by the Ministry of Human Resources and Emiratisation (MOHRE).
Employees with accumulated annual leave can request the employer to be “paid in lieu of leave according to the Establishment bylaws and specified by the Executive Regulations of this Decree-Law” under Article 29 of the new UAE Labour Law – Federal Decree Law No. 33 of 2021.
In addition to this Article 29, MOHRE further issued Cabinet Resolution No. (1) Of 2022, which clarified that “worker may carry forward not more than half of the annual leave to the following year, or he may agree with the employer to receive a cash allowance thereof, according to the wage he receives at the time of his entitlement to the leave.” Accordingly, one can conclude that, if the employee’s company policies allow for the encashment option, or if the employment agreement with your employer provides for receiving cash in lieu of accrued annual leave, then employee can benefit from this arrangement. It may be noted that only 50% of the unused leaves can be carry forwarded or encashed by the employee, based on the new labour law.