Imagine an employee who, upon resigning, discovers they have several unused annual leave days. They wonder, how to calculate leave encashment fairly according to UAE labour law. This scenario is common, and understanding leave encashment in UAE is essential for both employees and employers to safeguard their rights and fulfill obligations accurately.
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What Is Leave Encashment in UAE?
Leave encashment refers to the monetary compensation employees receive for unused annual leave days. Instead of taking time off, employees may opt for a cash allowance calculated based on their basic salary, in accordance with UAE labour law. This benefit is particularly relevant during resignation or the end of service.
How to Calculate Leave Encashment in UAE?
The leave encashment calculation in UAE is straightforward but requires adherence to legal provisions:
- Basis of Calculation: The calculation is based on the employee’s basic salary at the time the leave entitlement arises.
- Applicable Law: Article 29(9) of the UAE Employment Law states employees are entitled to cash compensation for unused leave upon termination of employment.
- Proportional Leave Pay: Employees who leave before completing a full year receive leave pay proportionate to the time worked.
Using a Leave Encashment Calculator UAE
To simplify this, many use a leave encashment calculator UAE, which factors in:
- Number of unused leave days
- Basic monthly salary
- Length of service
This tool helps employees and employers estimate the exact amount payable for annual leave encashment UAE.
Annual Leave Entitlement and Carry Forward Limits
Understanding leave encashment requires familiarity with annual leave rules:
- Employees are entitled to 30 days of annual leave per year after completing one year of service (Article 29(1)(a), UAE Employment Law).
- Those with less than one year of service earn 2 days of leave per month worked.
- According to Cabinet Resolution No. 1 of 2022 (Article 19), only 15 days of unused annual leave can be carried forward to the next year with employer approval, preventing indefinite accumulation.
Learn about UAE Labour Law Leave Pay in Dubai and read about UAE Labour Law Annual Leave Air Ticket Obligations in 2024.
Annual Leave Entitlement
According to the UAE Labour Law, specifically Article 29(1)(a) of the Employment Law, employees are entitled to 30 days of annual leave for each year of service with their employer.
This means that for every year you work, you earn 30 days of paid annual leave.
This applies to employees who have completed one year of service. Employees with less than one year of service are entitled to 2 days of leave per month.
Limitations on Carry Forward.
While you can accumulate annual leave, the UAE labour law sets a limit.
Article 19 of Cabinet Resolution No. 1 of 2022 states that employees can carry forward only 15 days of their annual leave to the following year (subject to employer approval).
This limitation ensures that employees do not indefinitely stockpile their leave days.
Why Choose Our Labour Law Firm for Leave Encashment Assistance?
Navigating leave encashment in UAE labour law can be complex, especially when disputes arise over calculations or entitlements. Our law firm offers:
- Expert advice on leave encashment calculation UAE and related labour issues.
- Representation in negotiations or legal proceedings.
- Tailored solutions aligned with the latest UAE labour legislation.
FAQs
Understanding leave encashment in UAE and the precise method of unused leave calculation UAE is essential for employees and employers alike. The law clearly defines entitlements to ensure fair treatment upon resignation or contract termination.
By knowing your rights and the correct annual leave encashment procedures, you can secure your financial benefits without ambiguity. Our experienced labour lawyers in UAE are ready to assist you in safeguarding your employment rights effectively.
For expert guidance on labour cases in the UAE, our employment lawyer in Dubai is your best choice.
Contact our labor law firm in UAE for expert help. Click the Whatsapp icon below.
A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.
