UAE Clarifies Annual Leave Rules; Sets Limits on Carrying Forward Unused Days
•February 17, 2026
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Why It Matters
The clarification tightens compliance with Federal Decree‑Law No. 33/2021, protecting employee rights while giving businesses a clear framework for leave planning and financial liability.
Key Takeaways
- •Minimum 30 days paid leave after one year service.
- •Up to 15 days can be carried forward with approval.
- •Unused leave paid out on termination based on basic salary.
- •Employers cannot block leave beyond two consecutive years.
- •Guidance aligns with Decree‑Law 33/2021 and Cabinet Resolution 1/2022.
Pulse Analysis
The United Arab Emirates has long positioned itself as a hub for expatriate talent, making transparent labour regulations a competitive advantage. By anchoring the new leave guidance in Federal Decree‑Law No. 33 of 2021 and the 2022 Cabinet Resolution, the Ministry reinforces a legal backbone that reduces ambiguity for multinational firms operating in the region. Clear rules around minimum entitlement, accrual rates, and the necessity of mutual consent for carry‑forward help HR teams avoid costly disputes and streamline policy documentation.
From an operational standpoint, the allowance to transfer up to half of an employee’s annual leave—subject to employer approval—introduces flexibility for both staff and managers. Companies can now plan workforce availability more predictably, while employees gain the ability to balance personal commitments without forfeiting earned time off. The requirement to compensate unused leave upon termination, calculated on basic salary, also standardises exit cost calculations, mitigating surprise liabilities and supporting fair treatment across sectors.
For businesses, the updated framework signals a shift toward stronger employee wellbeing safeguards without compromising operational continuity. Organizations must revise internal leave management systems to capture agreement records and enforce the two‑year usage ceiling. Failure to comply could attract regulatory scrutiny, but proactive alignment offers a reputational boost and aids talent retention in a market where work‑life balance is increasingly prized. As the UAE continues to refine its labour landscape, firms that embed these practices will likely see smoother compliance and enhanced employee satisfaction.
UAE clarifies annual leave rules; sets limits on carrying forward unused days
Ministry of Human Resources and Emiratisation has issued fresh guidance on annual leave policies, bringing clarity to how unused vacation days can be carried forward. The update comes as many employees review their time-off plans and discuss leave arrangements with employers.
Under the country’s labour framework, workers are entitled to a minimum of 30 days of fully-paid annual leave after completing one year of service. Those who have spent more than six months but less than a year with an organisation accumulate leave at a rate of two days per month. Once the one-year mark is reached, the full leave balance is typically credited, with employers scheduling time off in coordination with staff and usually providing advance notice.
The Ministry has confirmed that unused leave can be rolled over to the following year, but only if both the employer and employee agree. Legal provisions allow workers to carry forward up to half of their annual entitlement. For someone eligible for 30 days, this means a maximum of 15 days can be transferred to the next year with company approval.
The guidance is aligned with Federal Decree-Law No. 33 of 2021 and supported by Cabinet Resolution No. 1 of 2022, which together outline employee rights and employer responsibilities related to leave management.
The rules also address situations where an employee exits a company before taking their annual leave. In such cases, organisations are required to compensate workers for unused days. The payout is calculated based on the employee’s basic salary.
Additionally, employers are not permitted to prevent staff from using their accumulated leave for more than two consecutive years unless the worker requests to defer the days or opts for financial compensation instead. The clarification reinforces the importance of balancing operational needs with employee wellbeing while ensuring compliance with national labour regulations.
The post UAE clarifies annual leave rules; sets limits on carrying forward unused days appeared first on HR Katha.
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