UAE: Former Employee Who Missed 13 Years of Annual Leave Awarded Dh59000 Compensation
In a groundbreaking decision that has sent ripples across the UAE employment sector, the Court of Cassation in Abu Dhabi recently awarded Dh59,000 compensation to a former employee who had accumulated 13 years of unused annual leave. This case underscores the significance of meticulously managing leave records and understanding employee rights under UAE labour law.
Employers and employees alike should carefully study this case, which not only clarifies legal entitlements but also highlights the critical importance of maintaining accurate documentation to avoid costly disputes.
The Background: A 13-Year Story of Untaken Leave
The case revolved around an employee who had been with his employer from 2009 until June 2022, when his employment was terminated. Throughout this extended period, the employee claimed he never availed his annual leave, a right granted under UAE law. Upon leaving the organisation, he sought financial compensation for the entirety of his unused leave entitlement.
The employer, however, failed to provide any substantive documentation proving that the employee had taken his leave or received compensation in lieu of it. This absence of records proved decisive.
Legal Proceedings: From Initial Ruling to Landmark Judgment
Initial Court Decision
In the first round, under case number 2024/73, a lower court acknowledged the employee’s claim but capped the compensation to only two years’ worth of unused leave. This ruling was based on a common interpretation intended to limit prolonged liabilities on employers.
Court of Cassation Overturns Ruling
The employee subsequently appealed the decision. The matter reached the Court of Cassation in Abu Dhabi, which took a significantly different view. In December 2024, the Court overturned the lower court’s judgment, ruling that the employee was entitled to compensation for the entire 13-year period.
This resulted in the employee being awarded Dh59,290 based on his final basic salary.
Why This Case is a Turning Point in UAE Labour Law
According to Dr Habib Al Mulla, founder of Habib Al Mulla and Partners, this decision establishes a significant precedent. It firmly anchors the principle that employers must be diligent in maintaining leave records and underscores the potential financial obligations that can arise from unpaid leave entitlements.
Navandeep Matta, Senior Associate at Kochhar & Co. Inc. Legal Consultants (Dubai Branch), described this ruling as a landmark judgment that reshapes the interpretation of accrued leave under UAE employment law. He stated that the case “has sent shockwaves through the employment sector,” noting that it clearly places the burden on employers to prove either the granting of leave or compensation in lieu.
The Legal Basis: Understanding the UAE’s Labour Law on Annual Leave
This ruling heavily cited:
| Legal Reference | Description |
|---|---|
| Article 29 of Federal Decree-Law No. 33 of 2021 | Guarantees employees the right to annual leave and compensation for untaken leave on termination. |
| Cabinet Resolution No. 1 of 2022 | Details procedures and limitations concerning leave entitlements, accruals, and carry-forwards. |
Under these provisions, upon termination, employees are entitled to compensation for unused annual leave, including limited portions of leave carried forward.
The Employer’s Responsibility: Documentation is Critical
Perhaps the most crucial takeaway from this case is the employer’s legal obligation to maintain accurate records. The court found that the company’s internal documents only reflected one vacation taken in over a decade, and there was no proof of payments in lieu of leave.
This absence of evidence tipped the scales entirely in favour of the employee. The court explicitly stated that it is the employer’s responsibility to prove that annual leave was either taken or paid out. Failure to do so can result in substantial financial penalties.
This case serves as a powerful reminder that accurate leave tracking and timely settlement of entitlements are not merely administrative best practices—they are essential for legal compliance in the UAE.
Broader Implications for UAE Businesses
This decision is expected to have wide ranging implications for employers throughout the UAE. As Dr Al Mulla noted, it highlights the need for companies to:
- Review existing leave policies to ensure compliance with the law.
- Regularly update HR systems to accurately track leave balances.
- Educate management teams about the risks of inadequate record-keeping.
What Employees Should Learn from This Case
For employees, this ruling is equally significant. It reinforces that:
- You have a legal right to annual leave, and if not taken, to be compensated.
- Upon termination, you should carefully review your leave balances.
- In case of disputes, UAE courts will examine whether the employer has maintained adequate records to justify any non-payment.
Practical Advice for Employers: How to Avoid Similar Pitfalls
To help avoid similar costly outcomes, employers should:
- Maintain robust leave records: Ensure every leave request, approval, and payout is documented.
- Conduct periodic audits: Regular checks can identify inconsistencies early.
- Use reliable HR software: Automated systems reduce human error and maintain secure records.
- Issue regular statements to employees: Keep staff informed about their leave balances.
This proactive approach can save companies from unexpected liabilities running into tens of thousands of dirhams, as illustrated by this case.
FAQs About UAE: Former Employee Who Missed 13 Years of Annual Leave Awarded Dh59000 Compensation
How does UAE law calculate compensation for unused annual leave?
Ans: Under Article 29 of Federal Decree-Law No. 33 of 2021, compensation for unused leave is generally calculated based on the employee’s basic salary at the time of termination, including portions of carried-forward leave within the legally allowed limits.
Who bears the burden of proof in disputes over annual leave?
Ans: According to UAE labour law and clarified by this recent Court of Cassation in Abu Dhabi ruling, it is the employer’s responsibility to prove that an employee either took their leave or was compensated. Employers failing to provide this evidence may be ordered to pay substantial compensation.
What can UAE employers do to prevent disputes over annual leave?
Ans: Employers should implement clear leave policies, maintain accurate and accessible records, and ensure employees regularly take their leave or are properly compensated. This case demonstrates that poor record-keeping can result in significant financial penalties.
Conclusion
This ruling by the Court of Cassation in Abu Dhabi awarding Dh59,000 compensation for 13 years of unused annual leave is more than just a single employee’s victory it signals a new era of heightened scrutiny under UAE labour law.
