Published: 12 September 2026
Quick Answer
Private sector employees in the UAE who complete one year of continuous service are entitled to 30 calendar days of paid annual leave per year, under Article 29 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations. Employees with more than six months but less than one year of service accrue leave at 2 calendar days per month. You can carry forward up to 50% of your annual leave, a maximum of 15 days out of a standard 30-day entitlement, only with your employer’s written agreement. Unused leave can be encashed during employment if your employer agrees, and it becomes a statutory right at the end of your employment, calculated on your basic salary.
This guide breaks down exactly how the entitlement builds up, what happens if you leave your job partway through the year, how carry-forward and encashment actually work, and how annual leave differs from sick leave, maternity leave, and public holidays.
How Annual Leave Accrues
The UAE Labour Law sets out a clear accrual scale based on length of service:
| Length of service | Annual leave entitlement |
|---|---|
| Less than 6 months | No statutory paid annual leave |
| 6 months to less than 1 year | 2 calendar days per month of service |
| 1 year or more | 30 calendar days per year |
Because the entitlement is measured in calendar days, not working days, weekends and any public holidays that fall within your leave period count toward the 30 days. This is a common point of confusion, since many employees expect their leave to be extended if a weekend falls in the middle of it, which it is not under the federal labour law.
Calculating Leave on Early Termination
If your employment ends before you have used your full annual leave entitlement for the year, you are owed a pro-rated cash payment for the unused days, calculated based on your length of service in that leave year. This applies whether you resign or your employer ends the contract, and it is separate from your end of service gratuity, which is calculated on a different basis entirely.
Employers must include this unused-leave payment in your final settlement. Employees who leave during their probation period, or before reaching six months of service, are generally not entitled to a paid leave balance, since no statutory entitlement had accrued yet at that point.
The Employer’s Right to Schedule Leave
While employees are entitled to the leave itself, employers retain the right to determine when leave is taken, based on business needs, provided the employee is notified with reasonable advance notice as set out in company policy or the employment contract. An employer cannot indefinitely refuse to let an employee take leave. Under the Executive Regulation, an employer is not permitted to prevent an employee from taking their annual leave for more than two consecutive years, even where carry-forward has been agreed.
Carry-Forward Rules
Article 19(1) of Cabinet Resolution No. 1 of 2022, the Executive Regulation of the labour law, allows an employee to carry forward a maximum of 50% of their annual leave entitlement into the next year, which works out to 15 days for an employee on the standard 30-day entitlement. Key conditions:
- Carry-forward requires your employer’s agreement, it is not automatic just because you did not use your leave.
- Any agreement to carry forward leave should be documented in writing, whether in the employment contract, a company policy, or a specific written approval.
- The employer cannot use carry-forward as a way to prevent you from ever taking leave, the two-year cap on withholding leave still applies.
If your employer does not agree to carry-forward and you do not use your leave within the year, company policy will typically determine whether the balance is forfeited, encashed, or handled another way, provided that policy does not undercut your minimum statutory rights.
In practice, most UAE employers set out their carry-forward and forfeiture policy in the employee handbook or the employment contract itself, since the law leaves the details of how an unused balance is handled, beyond the 15-day cap and the two-year withholding limit, to be agreed between employer and employee. It is worth checking your own contract for this clause specifically, rather than assuming the federal minimum automatically applies in your favor, since many contracts are silent on forfeiture and simply default to encashment at year-end instead of losing the days outright.
Encashment: During Employment vs End of Service
Encashment means being paid cash in place of taking the leave days. The rules differ depending on when it happens:
During employment. Encashing annual leave while you are still employed is only possible with your employer’s agreement and subject to company policy. It is not a right you can demand unilaterally during active employment.
At the end of employment. Encashment of any unused leave balance becomes a statutory entitlement once your employment ends, regardless of whether you resigned or were terminated, and regardless of the reason for termination. Your employer cannot withhold payment for unused leave days at end of service.
What Salary Basis Applies
This is one of the most misunderstood parts of UAE leave rules, and a frequent source of MOHRE disputes:
| Situation | Salary basis for leave payment |
|---|---|
| Leave taken during active employment | Full wage, meaning basic salary plus regular allowances |
| Leave encashed at end of service | Basic salary only, under Article 29(9) of Federal Decree-Law No. 33 of 2021 |
Some employment contracts specify that end-of-service leave encashment should be calculated on total package rather than basic salary alone, and where the contract explicitly provides for this, the more generous contractual term applies. Absent that specific contractual language, the statutory minimum is basic salary only.
A Worked Example
Consider an employee with a monthly basic salary of AED 8,000 and a housing allowance of AED 2,000, for a total monthly wage of AED 10,000. If this employee resigns with 12 unused annual leave days remaining:
- Daily basic wage: AED 8,000 divided by 30 calendar days, equal to AED 266.67 per day.
- Leave encashment owed: AED 266.67 multiplied by 12 days, equal to approximately AED 3,200.
- The AED 2,000 housing allowance is excluded from this calculation entirely, since end-of-service leave encashment uses basic salary only, not total wage.
Had this same employee taken those 12 days as actual leave while still employed, rather than encashing them at the end of service, the pay for that leave period would have been based on the full AED 10,000 monthly wage, not the AED 8,000 basic figure. This is exactly why the distinction between “leave taken” and “leave encashed at termination” matters so much for payroll accuracy, and why HR teams frequently get it wrong when the same employee has both types of leave in their final settlement calculation.
Final Settlement Timing
Employers are required to settle all final dues owed to a departing employee, including any unused leave encashment and other end-of-service amounts, within 14 days of the employment relationship ending. Missing this deadline can expose the employer to penalties and gives the employee grounds to file a MOHRE labour complaint if payment is delayed without a valid reason.
Annual Leave vs Other Types of Leave
Annual leave is often confused with other statutory leave categories, but each has its own rules and eligibility conditions:
- Sick leave is a separate entitlement that only begins after the probation period and follows its own graduated pay scale depending on how many sick days have been used in the year. See our UAE Sick Leave Rules 2026 guide for the full breakdown.
- Maternity leave is a distinct, fully paid entitlement for eligible female employees, calculated separately from annual leave and not deducted from it. Full details are in our UAE Maternity Leave Rules 2026 guide.
- Public holidays are separate paid days off announced by the UAE government each year and do not count against your annual leave balance if they fall on a working day outside your leave period. See our guide to UAE Public Holidays and Overtime Pay Rules 2026 for how these interact with scheduled leave.
None of these entitlements can be substituted for one another. An employer cannot, for example, deduct sick days taken from your annual leave balance, or count public holidays that fall during your vacation against your 30-day entitlement.
Free Zone and Mainland Employees
These annual leave rules apply to all private sector employees registered under a MOHRE-issued work permit or labour card, whether they work for a mainland company or a commercial free zone company that falls under MOHRE’s jurisdiction. Government sector employees and employees of certain financial free zones with their own separate employment regulations, such as the DIFC or ADGM, follow different rules and are outside the scope of this federal labour law.
FAQs
Do I accrue annual leave during my probation period?
No statutory paid annual leave accrues during the first six months of employment, which typically covers most probation periods. Accrual begins once you pass six months of continuous service, at 2 calendar days per month until you reach one year, after which the full 30-day annual entitlement applies.
Can my employer refuse to let me take my annual leave at all?
No. While the employer can schedule when leave is taken based on business needs, they cannot prevent you from taking annual leave for more than two consecutive years, even if carry-forward has been agreed.
How many days of annual leave can I carry forward to next year?
Up to 50% of your entitlement, which is a maximum of 15 days for an employee on the standard 30-day annual leave. Carry-forward requires your employer’s written agreement, it is not automatic.
Can I ask to be paid instead of taking my annual leave while I’m still employed?
Only if your employer agrees and your company policy allows it. Encashment during active employment is discretionary, unlike encashment at the end of employment, which is a statutory right.
What salary is used to calculate my leave encashment when I resign?
Basic salary only, under Article 29(9) of Federal Decree-Law No. 33 of 2021, unless your employment contract specifically states that total package (basic plus allowances) applies to end-of-service leave encashment.
Does annual leave still accrue while I’m on unpaid leave?
No. Periods of unpaid leave generally do not count toward the continuous service used to calculate your annual leave accrual for that period, since the entitlement is built on time actually worked or on paid service.
If I’m terminated for a disciplinary reason, do I still get paid for unused annual leave?
Yes. Unused annual leave encashment at the end of employment is a statutory entitlement regardless of the reason for termination, including termination for cause. It is separate from gratuity, which can be affected differently depending on the circumstances of termination.
How long does my employer have to pay my final leave encashment after I leave?
14 days from the date your employment ends. If this deadline passes without payment, you can raise the matter with MOHRE directly.
Do public holidays that fall during my scheduled annual leave get added on top?
The federal labour law does not require public holidays falling within a scheduled leave period to be added to your leave balance separately, though some employers offer this as a company policy benefit beyond the statutory minimum. Check your employment contract and company policy for anything more generous than the federal baseline.
Can my employer’s internal policy give me more annual leave than the 30-day statutory minimum?
Yes. The 30-day entitlement, and the carry-forward and encashment rules described here, are statutory minimums. Employers are free to offer more generous leave terms in the employment contract or company policy, but they cannot offer less than what the federal labour law guarantees.
Know Your Leave Balance
Annual leave in the UAE is a straightforward entitlement on paper, 30 calendar days after a year of service, but the accrual scale, the carry-forward cap, and the difference between full-wage and basic-salary encashment are where most disputes actually happen. Keep a written record of your leave taken and your remaining balance, and raise any discrepancy with HR before it becomes a final-settlement dispute.
If your employer is not honoring your leave entitlement, delaying your end-of-service leave payment past the 14-day settlement window, or applying carry-forward or encashment terms that fall below the statutory minimum, you have the right to raise a MOHRE labour complaint. For help understanding your specific leave situation or documenting a dispute, reach out to Yalah Dubai on WhatsApp at +971 52 580 2100.