Annual Leave Policies in the UAE: What Employers Should Know

Key Annual Leave Entitlements Under UAE Labour Law

Under the UAE’s Labour Law, annual leave entitlements are designed to protect employee well-being while supporting business continuity. Employers must provide the following:

• Minimum Annual Leave Allowance:
  Employees are entitled to a minimum of 30 calendar days or 22 working days of paid annual leave after completing one year of service. For employees who have worked less than a year but more than six months, leave is prorated at two days for each month of service.
• Provisions for New Employees:
  Employees who have worked less than six months are not entitled to take annual leave; however, employers may offer unpaid leave as a gesture of goodwill.
• Carrying Forward Unused Leave:
  Employees can carry forward unused annual leave to the next year with the employer’s consent, or it may be paid out if not utilised. Employers must manage this process transparently to avoid disputes.

Public Holidays in the UAE

In addition to annual leave, employees are entitled to public holidays with full pay as outlined by UAE law. These include:

• New Year’s Day (1 January)
• Eid Al Fitr (approximately 3-4 days)
• Arafat Day and Eid Al Adha (4 days)
• Islamic New Year (1 day)
• Prophet Mohammed’s Birthday (1 day)
• National Day (2 days)

*Note: Islamic holidays are determined according to moon sightings. 

Employers should ensure these holidays are observed or offer alternatives such as compensatory days off or additional pay if employees are required to work during these periods.

Employer Obligations Regarding Annual Leave

To ensure compliance and employee satisfaction, employers must adhere to specific obligations:

Granting Leave Requests

Employers should accommodate annual leave requests as per business needs and employee rights. While businesses may schedule leave to ensure operational continuity, any refusal must be justified and communicated respectfully.

Payment During Leave

Employees are entitled to their regular wages during annual leave. If the leave includes public holidays, these days must not count as part of the annual leave allowance, ensuring employees receive the full benefit of their entitlement.

Leave Encashment

If an employee’s contract is terminated before they utilise their annual leave, they are entitled to compensation for unused leave based on their basic wage. Employers must calculate this accurately to avoid legal disputes.

Balancing Compliance and Operational Needs

Managing annual leave effectively requires balancing employee rights with organisational requirements. Here are strategies to achieve this balance:

• Implement Transparent Policies:
  Clearly outline leave policies in employment contracts and handbooks, including the process for requesting and approving leave.
• Use Technology:
  Adopt HR management systems to track leave balances, schedule requests, and automate approvals, ensuring accuracy and efficiency.
• Plan for Peak Periods:
  Identify busy periods and plan leave schedules accordingly to minimise disruptions to business operations.

How an EOR Can Help With Compliance

Navigating UAE labour laws can be complex, especially for international businesses unfamiliar with local regulations. Partnering with an Employer of Record (EOR) offers several advantages:

• Compliance Assurance:
  An EOR ensures your annual leave policies align with UAE labour laws, reducing the risk of fines or disputes.
• Administrative Support:
  From managing leave requests to calculating payouts for unused leave, an EOR handles the administrative workload, freeing up your HR team.
• Tailored Employee Support:
  An EOR can provide insights into employee expectations regarding leave, helping you create a workplace culture that values work-life balance.

Tips for Enhancing Employee Satisfaction

Adhering to annual leave regulations is only part of the equation. To create a workplace where employees thrive, consider the following:

• Encourage Leave Utilisation:
  Regularly remind employees to take their entitled leave to avoid burnout and maintain productivity.
• Offer Flexibility:
  Allow employees to split their leave or take shorter breaks if it suits their personal and professional needs.
• Recognise Cultural Diversity:
  In a multicultural workforce, employees may wish to align their leave with significant cultural or religious events. Being accommodating fosters inclusivity and loyalty.

Building a Fair and Compliant Workplace

Adhering to the UAE’s annual leave policies is not just a legal obligation, it’s a chance to build trust and loyalty among your employees. A well-managed leave policy demonstrates that you value their well-being, creating a positive workplace culture that supports long-term business success.

For growth-driven businesses looking to launch or expand operations in the GCC, Auxilium is your ideal partner. As a leading Employer of Record (EOR) and outsourced staffing solutions provider in the region, we specialise in helping organisations establish and scale their businesses in Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain, and Oman. 

Our expertise ensures your business navigates local regulations seamlessly. Discover how we can support your expansion journey by reaching out to our dedicated team today.

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