Annual Leave, Sick Leave & Unpaid Leave

Managing employee leave is one of the most critical and most misunderstood aspects of running a business in the UAE. Whether you're an HR manager trying to build compliant leave policies, a business owner worried about penalties, or an employee wondering what you're legally entitled to, the UAE Labour Law lays out clear rules that everyone should know.

The UAE Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (commonly referred to as the New Labour Law), which came into effect on February 2, 2022, significantly updated and clarified leave entitlements for private sector employees. This guide explains annual leave, sick leave, unpaid leave, maternity leave, and more in plain language, so there's no room for confusion.

---

---

---

Annual Leave in UAE Labour Law

Annual leave is the cornerstone of employee welfare in any country, and the UAE is no different. The law is quite specific about what employees are owed, and when.

Who Is Entitled to Annual Leave?

Every employee in the UAE private sector is entitled to paid annual leave once they have completed at least six months of continuous service with the same employer. The entitlement scales with tenure:

• Employees who have completed 6 months but less than 1 year of service are entitled to 2 days of annual leave for each month worked.
• Employees who have completed 1 full year of service are entitled to 30 calendar days of annual leave per year.

Yes, that's calendar days, not working days. This is an important distinction that many employers and employees get wrong. A 30-day annual leave entitlement means 30 consecutive calendar days, including weekends and public holidays that fall within that period.

Can Employers Decide When Employees Take Annual Leave?

Yes, to a reasonable extent. Article 29 of the Labour Law grants employers the right to determine the start date of an employee's annual leave, taking into account the organisation's operational needs. However, this flexibility comes with obligations: the employer cannot withhold annual leave indefinitely, and the employee must be given the opportunity to take their full entitlement within the year.

Employers are also permitted to split annual leave into two parts, but only with the employee's consent. The leave cannot be fragmented beyond that without mutual agreement.

What Happens to Unused Annual Leave?

This is where many disputes arise. Under the UAE Labour Law, unused annual leave can be carried forward, but only if the employer and employee both agree and typically, for a period of up to one year. However, where things get legally significant is upon termination of employment.

If an employee has unused annual leave at the time of contract termination, they are legally entitled to receive it as a cash payment (leave encashment), calculated based on their basic salary. This applies regardless of the reason for termination: whether it's resignation, redundancy, or end of contract.

Can Employees Work During Annual Leave, with other employeer?

No, and this is often overlooked. If it is proven that an employee worked for another employer during their paid annual leave, the original employer has the legal right to withhold annual leave pay for that period. This protects employers who are paying salaries while an employee is technically on rest.

---

Sick Leave in UAE Labour Law

Illness is unpredictable, and the UAE Labour Law recognises that. The sick leave provisions under the New Labour Law are more employee-friendly than many people realise, but they do come with conditions.

Sick Leave Entitlement

An employee who has completed their probation period is entitled to up to 90 days of sick leave per year. However, this is not all paid at the same rate. The 90 days are structured in three tiers:

• First 15 days: Full pay
• Next 30 days (days 16-45): Half pay
• Remaining 45 days (days 46-90): Unpaid

This tiered structure is important for both payroll planning and employee communication. Employees are often surprised to discover that after the first 15 days, their salary reduces and after 45 days, it stops entirely (while the job remains protected).

What Are the Requirements to Claim Sick Leave?

The law requires that sick leave be supported by a medical certificate issued from a certified medical provider. In the UAE, this typically means a certificate from a UAE government hospital, licensed clinic, or company-approved healthcare facility.

It is worth noting that medical certificates from abroad may not always be accepted, particularly for employees who fall ill during overseas travel. Employers have the right to request verification from their own approved medical provider.

Can an Employer Terminate an Employee on Sick Leave?

This is one of the most frequently asked questions and the answer is nuanced. An employer cannot terminate an employee simply because they are on sick leave. However, if the sick leave exhausts all 90 days and the employee is still unable to return to work, the employer may terminate the contract without it being considered arbitrary dismissal.

"Maintaining a centralised leave tracking system helps HR managers stay on top of sick leave accumulation, trigger alerts when employees approach thresholds, and ensure payroll accuracy across all three pay tiers." Try DelicateSoft's  HR Software for Leave Management
built specifically for UAE compliance.

Sick Leave During Probation Period

Employees on probation do not accrue sick leave in the same way. During the probationary period (which can last up to 6 months under UAE law), an employee does not have the right to the standard 90-day sick leave entitlement. The employer and employee may agree on sick leave arrangements during probation, but there is no statutory entitlement until probation is completed.

---

Unpaid Leave in UAE Labour Law

Unpaid leave is not as explicitly codified as annual or sick leave in UAE law, but it is widely practiced and legally permissible. Here's how it works in practice.

Is Unpaid Leave a Right in the UAE?

Strictly speaking, unpaid leave is not a statutory right for private sector employees (unlike in some other jurisdictions). It is, rather, a matter of agreement between the employer and employee. Either party can propose it, and if both agree, the terms, duration, conditions, return date should ideally be documented in writing.

In practice, many UAE companies grant unpaid leave for personal reasons such as family emergencies, extended travel, personal projects, or situations where the employee has exhausted all other leave types. The key is mutual consent.

How Does Unpaid Leave Affect End-of-Service Gratuity?

This is where HR teams need to pay close attention. Unpaid leave periods generally do not count toward the calculation of end-of-service gratuity (EOSG). This means that if an employee takes 60 days of unpaid leave, those 60 days are excluded when calculating the length of continuous service for gratuity purposes.

For employees, this is a financial consideration worth understanding before agreeing to extended unpaid leave. For employers, it must be factored into HR systems to ensure accurate gratuity calculations at the time of separation.

Hajj Leave - A Special Category of Unpaid Leave

One specific type of unpaid leave that is enshrined in UAE Labour Law is Hajj leave. Muslim employees are entitled to unpaid leave once during their entire period of employment to perform the pilgrimage to Mecca. This leave cannot exceed 30 days and is granted only once per employment but not annually.

Employers cannot deny this entitlement, nor can they penalize an employee for taking it. However, because it is unpaid, there is no salary obligation on the employer during this period.

---

Other Types of Leave Under UAE Labour Law

Beyond the big three: annual, sick, and unpaid leave; UAE Labour Law and its associated regulations cover several other leave types that HR managers need to be aware of.

Maternity Leave

Female employees are entitled to 60 days of maternity leave: the first 45 days are paid at full salary, and the remaining 15 days are paid at half salary. This applies to all female workers regardless of marital status or number of children.

Additionally, in the unfortunate event of a miscarriage after 6 months of pregnancy, or the delivery of a stillborn baby, the employee retains full maternity leave entitlement. For miscarriages before the 6-month mark, the employee is entitled to sick leave as applicable.

Paternity Leave

UAE Labour Law grants male employees 5 working days of fully paid paternity leave, which must be taken within 6 months of the child's birth. This is a relatively recent addition to UAE labour legislation and reflects a growing recognition of shared parenting responsibilities.

Bereavement Leave

In the event of the death of a close family member, UAE employees are entitled to paid bereavement leave as follows:

• 5 days in the case of the death of a spouse.
• 3 days in the case of the death of a parent, child, sibling, grandparent, or grandchild.

Study Leave

Employees who are enrolled in approved educational programmes may apply for study leave. While the UAE Labour Law references this entitlement, the specific conditions are subject to Ministry of Human Resources and Emiratisation (MoHRE) decisions and are often governed by the employment contract or company policy.

Public Holidays

UAE employees are entitled to paid leave on official public holidays as announced by the government. These typically include Islamic holidays such as Eid Al Fitr and Eid Al Adha (dates vary annually based on the lunar calendar), as well as National Day, New Year's Day, and others.

If an employee is required to work on a public holiday, they are entitled to a substitute rest day or additional pay, depending on the employment contract or applicable policy.

---

UAE Leave Law Compliance: What HR Managers Must Get Right

Non-compliance with UAE leave laws can result in significant penalties, including fines, legal disputes, and reputational damage. Here are the most common compliance mistakes that HR teams makes, and how to avoid them.

• Miscounting calendar vs. working days: Annual leave is calculated in calendar days, not working days. Many companies still compute this incorrectly, particularly for employees on non-standard schedules.
• Failing to track sick leave tiers: Payroll systems must be configured to automatically shift an employee from full pay to half pay to no pay as sick leave days accumulate. Manual tracking is error-prone.
• Ignoring leave encashment on termination: All unused annual leave must be paid out upon termination, calculated on basic salary. Forgetting this is a common and costly.
• Lack of written leave agreements: Unpaid leave, in particular, must be properly documented. A verbal agreement provides no protection to either party in a dispute.
• Not updating policies post-2022: The New Labour Law introduced several changes from the previous 1980 law. Companies that haven't reviewed their HR policies since 2022 may be operating on outdated provisions.

---

Why a Smart and Easy HR Management System Makes All the Difference

If you're managing leave manually with spreadsheets, emails, and paper trails, you're not just making your HR team's life harder. You're creating genuine legal and financial risk for your business. A dedicated HR management system transforms leave administration from a compliance headache into a streamlined, transparent process.

Here's what a robust HR system can do for leave management in the UAE context:

• Automated leave accrual: Accurately calculates annual leave balances in real time, accounting for joining date, service tenure, and calendar days.
• Sick leave tier tracking: Automatically adjusts payroll deductions as sick days progress through the full-pay, half-pay, and no-pay tiers.
• Gratuity-aware unpaid leave: Flags unpaid leave periods and excludes them from EOSG calculations.
• Digital leave requests and approvals: Streamlines the approval workflow with notifications, delegation options, and complete audit trails.
• Compliance reporting: Generates reports to demonstrate compliance with UAE Labour Law in the event of a MoHRE inspection or labour dispute.
• Employee self-service: Allows employees to check their own leave balances, request leave, and receive approvals: reducing HR's administrative burden significantly.

For businesses operating across multiple UAE entities, free zones, or with mixed workforces (local, expatriate, part-time), the complexity multiplies quickly. A centralised system isn't a luxury, it's a necessity.

🚀Ready to simplify leave management for your UAE business?
Our HR Management System is built specifically for UAE Labour Law compliance with automated leave tracking, payroll integration, and real-time reporting.
Explore the platform today and see how much time your HR team could save every month.

---

Final Thoughts

Understanding leave entitlements isn't just a legal obligation, it's a fundamental part of building a workplace where employees feel respected and protected. Whether you're an HR professional drafting a leave policy, a manager handling a team request, or an employee wanting to know your rights, the UAE Labour Law provides a clear framework that protects everyone.

The challenge, as always, is in the execution: tracking leave accurately, processing it fairly, and staying ahead of compliance requirements. The companies that get this right aren't just avoiding penalties, they're building cultures of trust that attract and retain top talent in a competitive market.

If your business is still managing leave through spreadsheets or manual HR processes, now is the time to consider a better way. An integrated HR management system purpose-built for the UAE can eliminate errors, save time, and give both HR teams and employees the transparency they deserve.

---

Note: This article is for informational purposes only and does not constitute legal advice. For specific legal guidance, consult a UAE-qualified employment lawyer or MoHRE certified consultant.

---

---