Federal Law No. 8 of 1980 which is also known as the Labour Law provides all the provisions that regulate labour relations in the United Arab Emirates (‘UAE’). It is applicable to all the employers, employees (including UAE nationals and expatriate) in the UAE except a few categories like the federal government, the municipalities, federal and local public institutions, etc.
In this article we shall cover rules pertaining to the annual leave, pay for such annual leave, applicability of annual leave and calculation of leave pay in case of termination of employment contracts, both in case of limited and unlimited contracts.
What is annual leave?
Article 75 of the Labour Law provides that every employee shall be provided with annual leave of two a month where the employee has been employed for more than six months or 30 days a year where the employee has been employed for more than a year. In case of termination, the annual leave shall be calculated on proportionate basis. The annual leaves are the same for limited and unlimited contracts.
Furthermore, Articles 76 of the Labour Law provides that the employer may decide on the date of commencement of annual leave of 30 days or may divide such a leave in not more than two periods.
Do public holidays form a part of annual leave?
Yes. Article 77 of the Labour Law provides the same. When any public holidays fall during the annual leave taken by an employee, such an employee shall not be entitled to additional days of annual leave, as these public holidays shall be considered as a part of the annual leave.
How is the salary/pay calculated where an employee takes an annual leave?
Usually, an employee is entitled to receive the basic salary along with housing allowance, if any. The market practice is to deduct the transportation allowance, and provide for all other allowances, if any. Furthermore, the Labour Law doesn’t provide for employees to receive air ticket allowance from the employer. However, most of the employers do provide for an annual air ticket allowance. However, where the employer has provided for division of the annual leave in two periods, usually the market practice is to provide for air ticket for one of the two trips only.
Where an employee takes an annual leave but has to work, how will the pay be calculated?
Article 78 of the Labour Law covers the calculation of the annual leave pay where the employee works during his / her annual leave. Where the employee is on annual leave but has to work, and the number of days he works during annual leave is not carried forward to next year, the employee shall be entitled to receive his salary along with the leave pay/allowance equal to his basic salary.
However, no employee shall be expected work during an annual leave period more than once in two years.
Calculation of pay in lieu of annual leave upon termination of contract of employment.
The employee is entitled to receive the salary in lieu of annual leave not availed upon termination of employment/resignation. Such an employee is entitled to receive basic salary in lieu of annual leave as it was at the time the annual leave should have been availed and not at the time of termination of / resignation from the employment. However, usually employers have a practice of paying basic salary with housing allowance, that is as if it would have been paid if the annual leave would have been availed.
Can an employee work for another employer during annual leave?
No. An employee cannot work for any other employer during annual leave. The employer may terminate the contract if the same comes to the notice of the employer. Such termination can be done without providing any notice period and without payment of annual leave.
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