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Here is how the new UAE Labour Law will affect annual leave

As the country’s new labour law goes into effect on February, some ambiguities remain amid the wait for executive regulation clarification. Hazem Balbaa spoke with Arabian Business to clarify some of the legalities.

The UAE business community has been attempting to prepare for the introduction of the country’s new labour law on Wednesday, but there has been uncertainty regarding how it will impact the number of annual leave days that employees are entitled to, with some suggesting that the new law represents an increase in time off.

However, while the new labour law has made significant changes in some areas, the number of leave days remains unchanged from the current 30 days per year, Hazem Balbaa, litigation associate, BSA Ahmad Bin Hezeem & Associates LLP confirmed to Arabian Business.

“The number of days for an employee’s annual leave has not changed. Under the old labour law, an employee was also entitled to 30 days of annual leave given that the employee completes at least one year of service with its employer,” said Balbaa.

“Article 29 of Law No. 33/2021 on Regulation of Labour Relations [the new labour law] provides that an employee is entitled to an annual leave with full pay of not less than 30 days for each year of their service,” he explained.

Still, HR professionals told Arabian Business that some ambiguity remains on several aspects of the law’s implementation, especially when it comes to the annual leave days.

“It’s quite grey and open to interpretation at the moment on many aspects of the law. I believe we’ll get more clarity from [February 2] onwards and we will be updated accordingly,” Sara Maria Boueri, senior HR director at Ras Al Khaimah Tourism Development Authority, told Arabian Business. 

“I am still waiting for clarification on whether the 30 days of annual leave are 30 calendar days or 30 working days, however it makes more sense that it is 30 calendar days,” she added, explaining that if is calculated per working days it would mean “eight extra days per employee per year that the finance department needs to account for.”

Questions also abound on whether annual leave days can be carried into the next calendar year, if not taken during the specified time period. Balbaa clarifies this, noting: “The new labour law, in Article 29(4), makes it clear that an employee should use their annual leave in the year of its entitlement.”

“With that being said, it does not bar an employee from carrying over the balance of their annual leave to the following year, subject to the company’s internal regulations and procedures. From the wording of the Article 29, it can be the case whereby an employer refuses to have any of its employees carry over any number of days of their annual leave to the following year,” he added.

Federal Decree-Law No 33 of 2021 governing employment relations, will introduce several amendments to the labour law, including anti-discrimination clauses, flexible contracts, more favourable end-of-service terms, and longer maternity and compassionate leaves – all of which are aimed at making the country a more attractive place to work and entice talent.

Regarding ambiguities with the new law, experts said that its implementation is pending executive regulations, which should clarify any outstanding issues.

“It is essential to note that there still remains great uncertainty in regard to the implementation of the new Labour Law as the law relies heavily on the Executive Regulations that are yet to be issued. However, it is obvious that the legislator in its recent amendments attempts to balance the interests of both the employee and the employer,” said Balbaa.

As the private sector prepares to implement the new law, Boueri said, “the main thing HR departments need to manage and prepare for are the changes in the financial liability on companies due to the changes in the law.”

“Other than financial liabilities which pose the biggest threat, I believe HR heads should treat the labour law change as a chance to shift away from the status quo and get rid of certain policies they still abide by that have become outdated or inefficient to the business operation. It’s a good excuse to stop and reset,” she added.

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