UAE Unused Leave 2026: Can You Cash Out or Carry It?

Private sector employees in the UAE who have unused annual leave in 2026 may be able to carry forward up to 50% of their yearly entitlement or receive cash compensation, depending on their employment circumstances and company policies. Under Federal Decree-Law No. 33 of 2021 and Cabinet Resolution No. 1 of 2022, employees are entitled to payment for legally accrued unused leave when their employment ends, whether through resignation or termination. However, carrying forward leave or exchanging it for money while still employed requires an agreement with the employer, making it important for workers to understand their rights before the end of the year.

How Many Annual Leave Days Are Employees Entitled to in the UAE?

Under Article 29 of the UAE Labour Law, full-time private sector employees are generally entitled to 30 calendar days of paid annual leave for each completed year of service. Employees who have worked for more than six months but less than one year are entitled to two days of leave for each month of service.

Workers whose employment ends before completing another full year are also entitled to leave accrued during the relevant portion of their final year. Part-time employees receive annual leave based on their actual working hours and the applicable employment regulations.

Employers may schedule annual leave according to operational requirements, in agreement with employees, and are generally required to notify workers of their leave dates at least one month in advance.

Can Employees Cash Out Unused Annual Leave in the UAE?

Yes, UAE employees can receive cash compensation for unused annual leave, although the conditions differ depending on whether they remain employed or are leaving their job.

Under Article 19 of Cabinet Resolution No. 1 of 2022, employees may agree with their employers to receive a cash payment instead of taking eligible annual leave during their employment. Such arrangements must comply with the applicable company policies and legal requirements.

However, employees cannot automatically demand payment for their entire unused leave balance while continuing to work. Cash compensation during employment depends on agreement between the employer and employee.

What Happens to Unused Leave When You Resign or Are Terminated?

Employees whose contracts end are entitled to payment for their legally accrued and unused annual leave, regardless of whether they resign or their employment is terminated.

The payment must include eligible leave days accumulated during the employee’s final period of service. Unlike annual leave taken during employment, which is paid at the applicable full wage, unused annual leave paid upon termination is calculated using the employee’s basic salary.

This distinction is important because a worker’s basic salary may differ from their total monthly salary, which can include housing, transport and other allowances.

Can You Carry Forward Unused Annual Leave to 2027?

The UAE Labour Law allows employees to carry forward unused annual leave, but the amount and conditions are regulated.

According to Article 19 of Cabinet Resolution No. 1 of 2022, employees may carry forward up to half of their annual leave entitlement to the following year, subject to their employer’s approval and the organisation’s applicable regulations.

For example, an employee entitled to 30 days of annual leave may be able to carry forward up to 15 days, provided the employer approves the arrangement.

If an employee has accumulated more leave than the permitted carry-forward amount, they should discuss whether the remaining days can be taken before the end of the leave year or exchanged for compensation through an agreed arrangement.

Employees can review these requirements through the official UAE Government annual leave guidance.

Can Employers Refuse to Carry Forward Annual Leave?

Employers are permitted to apply organisational policies when considering requests to carry forward leave or receive compensation during ongoing employment.

However, Article 29(8) of the UAE Labour Law prevents employers from denying workers the opportunity to use their annual leave for more than two years, unless the employee chooses to carry it forward or receive cash compensation under the applicable rules.

This means employers cannot simply require employees to continue working indefinitely without allowing them to benefit from their legally entitled annual leave.

At the same time, employees should not assume that unused days will automatically transfer into the next year without approval. The correct approach is to review the employment contract, confirm the company’s leave policy and reach an agreement with the employer about the remaining balance.

Can You Lose Your Unused Annual Leave in the UAE?

Unused annual leave does not automatically disappear simply because an employee has not taken a holiday before the end of the calendar year. However, the treatment of outstanding leave depends on the applicable legislation, the employer’s leave arrangements and whether an approved carry-forward or cash compensation agreement exists.

Employees should therefore avoid leaving substantial balances unresolved. Reviewing leave records, submitting requests in writing and confirming approved arrangements can help prevent disputes over outstanding entitlements.

For employees planning to resign, checking the remaining leave balance before their final settlement is particularly important, as legally accrued unused leave must be accounted for when employment ends.

What Employees Should Know Before the End of 2026

With the end of the year approaching, UAE employees are encouraged to review their annual leave balances and discuss any unused days with their human resources departments.

The most important distinction is that payment for legally accrued unused leave at the end of employment is an entitlement, while carrying forward leave or receiving cash instead of leave during ongoing employment generally requires employer agreement.

These rules primarily concern employees covered by the UAE’s federal private sector labour legislation. Certain categories of workers and employment jurisdictions may be subject to separate regulations.

For further guidance, employees can consult the Ministry of Human Resources and Emiratisation (MOHRE) and the UAE Government’s official employment resources.

Understanding these provisions can help employees make informed decisions about their remaining annual leave, protect their employment rights and avoid unexpected complications when changing jobs or planning holidays.