In a groundbreaking ruling that could reshape employment practices across the UAE, the Abu Dhabi Court of Cassation has ordered a company to compensate a former employee with Dh59,000 for 13 years of unused annual leave.
This landmark decision has sent strong signals across the business and legal communities, setting a new precedent in how long-term employee entitlements are interpreted under UAE labor law.
🏛️ Case Background: 13 Years Without Leave
The case involved an employee who served continuously from 2009 to June 2022. After his contract was terminated, the employee filed a claim stating that during his entire employment period, he had not availed his legally entitled annual leave nor received any compensation for it.
Despite the employer’s attempt to refute the claim, the court found that the company failed to provide proper documentation showing that the leave was either granted or paid for.
Initially, a lower court ruling (case no. 2024/73) acknowledged the employee’s claim but restricted compensation to a maximum of two years of unused leave. However, the employee appealed, and the Court of Cassation reversed the decision, granting full compensation for the entire 13-year period.
📌 Legal Grounding: What the Law Says
The ruling was based on Article 29 of Federal Decree-Law No. 33 of 2021, and Cabinet Resolution No. 1 of 2022, which govern employment rights in the UAE.
According to legal experts, these laws ensure that:
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Employees are entitled to financial compensation for unused leave upon termination.
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Leave can be carried forward under certain conditions.
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The burden of proof lies with the employer to show whether leave was taken or compensated.
🧑⚖️ Expert Opinion: A Turning Point in UAE Labour Law
Dr. Habib Al Mulla, founder of Habib Al Mulla and Partners, highlighted on X (formerly Twitter) that this case “sets a significant precedent” in UAE labour disputes. He stressed that the verdict will influence how companies manage leave entitlements, documentation, and employee rights.
Navandeep Matta, Senior Associate at Kochhar & Co. Inc. Legal Consultants, called the ruling a landmark decision, stating:
“This judgment has sent shockwaves through the employment sector. Awarding compensation for 13 years of unused leave signals a shift in how accrued leave is legally viewed in the UAE.”
⚠️ What Went Wrong for the Employer?
The court’s decision was largely based on a lack of documented proof from the employer. The company could only produce records of one vacation in over a decade, and there was no evidence of payments in lieu of leave.
The court used the employee’s final basic salary as the basis to calculate compensation, ultimately awarding Dh59,000.
🧾 Lessons for Employers: Leave Management Is a Legal Obligation
The case acts as a wake-up call for HR departments and business owners across the UAE. Legal experts urge companies to:
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Maintain accurate leave records
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Ensure timely compensation for unused leave
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Communicate clearly with employees regarding their entitlements
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Review and update internal HR policies regularly
“Employers must act proactively or risk legal consequences,” said Matta. “Accrued rights can’t be dismissed simply due to poor documentation.”
✅ Key Takeaways for Employers and Employees
🔹 For Employees:
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You are legally entitled to your annual leave or compensation upon exit.
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Keep personal records of leave taken or requested.
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You can claim for unused leave — even years later — if not properly settled.
🔹 For Employers:
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Properly track and record leave entitlements.
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Ensure compliance with UAE Labour Law (Federal Decree-Law No. 33 of 2021).
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Communicate clearly about leave balances and entitlements.
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Understand that verbal claims or undocumented practices won’t stand in court.
📣 Final Word
This ruling is a strong reminder that employee rights — especially related to leave — are protected by law in the UAE. As the country continues to strengthen its labour compliance framework, employers must modernize their HR systems to avoid costly legal challenges in the future.
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