UAE Annual Leave, Sick Leave & Carryover Rules: HR Compliance Guide
UAE annual leave rules are among the most frequently misapplied provisions in the entire labour law framework. Leave management is consistently one of the top sources of MOHRE complaints and labour disputes in the UAE — not because companies are deliberately non-compliant, but because many are still operating on leave policies written before Federal Decree-Law No. 33 of 2021 came into force. If your leave policy, HR system, or employment contracts haven't been updated since 2021, there is a meaningful compliance gap worth closing before it reaches dispute stage.
This guide gives you a practical, current breakdown of every leave category under the 2021 Labour Law — annual leave entitlement, sick leave rules, carryover mechanics, and how to handle leave disputes before they escalate. For the full legislative text, refer to the MOHRE Laws and Regulations page.
UAE Annual Leave Entitlement: The Current Rules
Under the 2021 Labour Law, annual leave entitlement is calculated as follows:
- After 1 year of continuous service: 30 calendar days of annual leave per year.
- Between 6 and 12 months of service: 2 calendar days of leave per completed month — accrual applies from month six, not from day one.
- Less than 6 months: No annual leave entitlement applies during this period.
Leave scheduling is at the employer's discretion within reason — employers can specify when leave is taken, provided they give reasonable notice. The law suggests notifying employees at least 30 days before a scheduled leave period. Employees who request leave during operationally critical periods may have their request deferred, but cannot have it denied entirely without compensating cash settlement at termination.
Sick Leave: 90-Day Entitlement with a Pay Taper
UAE sick leave entitlement for each year of employment is 90 days total, structured on a tapering pay scale:
- First 15 days: Full pay.
- Days 16 to 45: Half pay.
- Days 46 to 90: Unpaid leave.
Notification requirements are strict: the employee must inform the employer within a maximum of 3 days of becoming unable to work. For sick leave extending beyond 2 days, a medical certificate from a licensed healthcare provider is required — and this should be a formal requirement stated in your employment contracts, not an informal expectation. An employer cannot dismiss an employee during the first 45 days of a sick leave period, regardless of how the illness affects business operations.
Maternity, Paternity, and Special Leave
The 2021 law significantly updated special leave entitlements. These are now mandatory minimums — employment contracts cannot offer less:
- Maternity leave: 60 calendar days — the first 45 days at full pay, the remaining 15 days at half pay. An additional 45 days of unpaid leave can be taken immediately following the statutory period if a pregnancy or childbirth-related illness is certified by a licensed medical provider (Article 30(3)).
- Paternity leave: 5 working days, to be taken within 6 months of the child's birth.
- Compassionate leave: 5 days for the death of a first-degree relative (spouse, child, parent, sibling).
- Study leave: 1 day per exam for employees enrolled in an approved educational programme, up to 10 days per year. The employer may request proof of enrolment and examination scheduling.
Leave Carryover and Encashment: What the Law Actually Requires
This is one of the most misunderstood areas of UAE leave law. The law does not require employers to permit leave carryover — it only requires that unused leave be paid out in cash at the point of termination or resignation, calculated at the employee's basic daily salary rate. Whether unused leave can be carried into the next year is entirely a matter of employment contract or company policy.
In practice, many employers permit carryover of up to 30 days (one year's entitlement), with any excess treated as forfeited or cashed out at year end. If your policy document specifies carryover terms, those terms are contractually binding — MOHRE will uphold a written policy even if it is more generous than the statutory minimum. The safest approach is to have a written leave policy that clearly states carryover limits, the cash-out calculation method, and the deadline for taking accrued leave.
Leave During Notice Period
An employee may use remaining annual leave during the notice period if the employer agrees. Alternatively, the employer may pay out the unused leave balance as a cash settlement in lieu of the employee taking the actual days. What employers cannot do is unilaterally substitute notice period with annual leave — the notice period clock runs independently unless both parties agree otherwise in writing.
Leave Compliance Checklist
- Leave policy updated to reflect 2021 Labour Law entitlements
- Annual leave accrual set to start from month 6 (not month 1) for employees under 1 year
- Sick leave 90-day structure (15/30/45 days) reflected in payroll and HR system
- Maternity leave updated from 45 to 60 days for contracts issued after February 2022
- Paternity leave of 5 working days added to all employment handbooks
- Written leave carryover policy in place with defined limits and cash-out rules
- Leave settlement calculation uses basic salary — not gross — for daily rate
- Leave approval workflow documented with timestamps retained for MOHRE audit
How to Avoid Leave Disputes
The majority of leave disputes that reach MOHRE have a common thread: the employer could not produce a clear, documented record of leave balances, approvals, or settlement calculations. Courts and MOHRE adjudicators consistently find in the employee's favour when documentation is absent — not because the employer was necessarily wrong, but because they cannot prove they were right.
Building dispute-proof leave management means four things: real-time leave balance visibility for every employee and manager, a documented approval workflow for every leave request, payroll integration so leave encashment is calculated automatically, and an audit trail that shows the history of every balance change.
Mai HRMS handles all four — leave accrues automatically from the employee's start date, syncs with payroll for settlement calculations, and stores every approval with a timestamp.
Book a free demo and see leave management built for UAE compliance in action. 30-day free trial, no credit card required.
Frequently Asked Questions
Can an employer forfeit an employee's unused annual leave?
No. Under UAE labour law, unused annual leave cannot be forfeited. If an employee leaves the company with unused leave days, those days must be paid out in cash at the basic daily salary rate, regardless of why they were not taken. Any internal policy clause stating leave expires at year end without cash-out is unenforceable under Federal Decree-Law No. 33 of 2021.
How is UAE annual leave pay calculated?
Annual leave pay is calculated on the employee's basic salary — not gross salary. Housing allowance, transport allowance, and other recurring allowances are excluded from the calculation. The daily rate is the basic monthly salary divided by 30 calendar days, multiplied by the number of leave days taken or cashed out. This distinction between basic and gross is a frequent source of underpayment claims.
Can an employer refuse an employee's annual leave request?
Yes, an employer can defer or reschedule a leave request for legitimate operational reasons — but they cannot permanently deny leave entitlement. If leave is deferred, the employer should communicate a revised date and ensure the leave is taken or paid out before the end of the following year. Repeated deferrals without resolution can expose the employer to a MOHRE complaint.
Does annual leave accrue during sick leave?
Yes. Annual leave continues to accrue during sick leave. An employee on 90 days of sick leave who returns to work retains their full annual leave entitlement for that period, as if they had been working.
Can an employee take annual leave during their notice period?
An employee may use remaining annual leave during the notice period if the employer agrees. The employer may also pay out the unused leave balance in cash instead of the employee taking the actual days. Neither party can force the other to convert notice into leave without written mutual agreement.
What happens to annual leave if an employee resigns before completing 1 year of service?
Employees who have worked between 6 and 12 months are entitled to 2 days of accrued leave per completed month. If they resign before the 12-month mark, those accrued days (up to the actual months worked from month 6) must be paid out as cash settlement. Employees who leave before completing 6 months have no annual leave entitlement.
Is Hajj leave a legal entitlement in UAE?
Yes. Employees who wish to perform the Hajj pilgrimage are entitled to unpaid leave once during their employment relationship, not exceeding 30 days. This cannot be taken by the same employee more than once with the same employer and does not affect the annual leave entitlement.
What is the maximum notice an employer must give before scheduling annual leave?
The 2021 Labour Law recommends that employers notify employees at least 30 days before a scheduled annual leave period. While enforcement of this specific timing is not strictly penalised, failure to give reasonable notice — particularly for family planning or personal commitments — can be cited by employees in MOHRE complaints as evidence of unreasonable management of leave entitlement.
For informational purposes only, reflecting MOHRE guidance and UAE legislation as of June 2026. Consult a qualified UAE employment lawyer for business-specific advice.
Last updated: June 2026 by the Mai HRMS editorial team.
