In a ruling that could reshape how employers in the UAE manage leave entitlements, the Abu Dhabi Court of Cassation has awarded an employee compensation for 13 years’ worth of unused annual leave, setting a powerful precedent in favour of employee rights.
The case, Cassation No. 73/2024, centres around an employee who served from 2009 until the termination of his contract in June 2022. After leaving the company, the employee claimed he had never taken his annual leave and sought compensation accordingly. The employer, notably, failed to provide any documentation proving otherwise.
A Fresh Take on Long-Standing Entitlements
While the Court of First Instance and the Court of Appeal both limited compensation to only the final two years of service, consistent with traditional interpretations, the Court of Cassation took a markedly different view. Citing Articles 29(8) and 29(9) of the UAE Labor Law, along with Article 19 of the Executive Regulations, the court ruled that the employee was entitled to payment for all unused leave accrued across his entire tenure.
Importantly, the ruling emphasized that the employer carries the burden of proof in demonstrating that leave entitlements were either used or paid out. Without such evidence, the law will assume the leave remained unutilized.
Abu Dhabi vs. Dubai: Diverging Judicial Paths
The ruling marks a divergence from the more conservative approach often seen in Dubai courts, where leave compensation has generally been limited to the final two years of employment, unless the employee can produce explicit documentation (such as a contract clause or internal policy) allowing for carryover.
This reflects differing interpretations of Article 29.8: Dubai courts view it as a time cap on claims unless there is written evidence to support exceptions, while the Abu Dhabi court treated it as a protective shield ensuring employees are not deprived of their accrued entitlements due to an employer’s administrative failure.
Timing is Everything: A New Statute of Limitations
The Court’s broader interpretation also aligns with Federal Decree-Law No. 9 of 2024, which came into effect on 31 July 2024. This amendment clarified that the two-year limitation period for filing labor claims begins from the date of employment termination, rather than from when the entitlement originally arose. That change gives employees more time, and a stronger legal position, when seeking compensation for unpaid dues.
What This Means for Employers
This ruling sends a strong message to employers across the UAE: maintain proper records or risk liability. The default assumption in court may now be that leave was never taken, unless employers can prove otherwise.
The case also raises a broader strategic question: Will Dubai courts adopt Abu Dhabi’s more expansive interpretation in light of the updated labor law? That remains to be seen, but the ripple effects of this judgment are already being felt.
Holding Companies Accountable: Legal Implications
The verdict makes clear that the UAE’s judiciary is increasingly attuned to the realities of employment relationships and is prepared to hold companies accountable for procedural lapses. For businesses, especially those with large workforces, the financial exposure could be significant if leave tracking systems are not robust.
To mitigate risk, companies are advised to:
- Maintain clear, documented records of annual leave taken or paid out
- Encourage employees to use their annual leave within the accrual year
- Include clear leave policies in employment contracts and internal handbooks
Final Word: A Win for Labor Rights
The Abu Dhabi Court of Cassation’s ruling doesn’t just compensate one employee—it redefines the landscape for annual leave entitlements across the UAE. It underscores a more progressive, employee-focused interpretation of the law and places a renewed emphasis on transparency, accountability, and proper HR governance.
As the legal environment continues to evolve, employers and employees alike must stay informed and stay compliant.
For further insights or legal advice on employee entitlements, feel free to reach out to our Partner Alia Al Mulla or our Senior Associate Bassem Ehab for strategic guidance and legal support.
