A prominent judicial development set to transform employee rights management in the UAE has emerged from the Abu Dhabi Court of Cassation. The Court issued a ruling granting an employee compensation for all unused annual leave accrued during his 13 years of service, establishing a legal precedent that significantly reinforces employee protection.
Case Background: Lack of Documentation Favors the Employee
The lawsuit (Case No. 73 of 2024) involved an employee who worked for a private entity from 2009 until June 2022. Following the termination of the employment relationship, the employee claimed compensation for annual leave he had not taken. The employer failed to provide any documents proving that the employee had utilized the leave or received cash compensation for it.
Judicial Shift: From Restriction to Extension
While the Courts of First Instance and Appeal limited compensation to the last two years only, in line with the traditional interpretation of Article 29 of the Labour Law, the Court of Cassation adopted a divergent stance. It relied on Articles 29(8) and (9) of the Federal Labour Law and Article 19 of the Executive Regulations to rule that the employee was entitled to full compensation for all unused leave throughout his entire service period.
The Court stressed that the burden of proof lies with the employer; in the absence of this proof, it is legally presumed that the leave was not utilized.
Contrasting Judicial Interpretations: Abu Dhabi vs. Dubai
This ruling marks a deviation from the traditional approach often followed by Dubai Courts, which typically restrict compensation to two years unless the employee provides written evidence justifying carry-over. This reflects a difference in the interpretation of Article 29(8):
- Dubai Courts view it as a time limit on the claim.
- Abu Dhabi Court views it as a tool to protect the employee against the employer’s failure to maintain proper documentation.
Regional judicial approaches tend to be more conservative: Saudi Arabia and Kuwait typically impose the burden of proof on the employee and apply temporal restrictions, with Kuwait even suspending cash compensation in the public sector. Qatar, Oman, and Bahrain adopt intermediate positions but still require the employee to prove that the leave was not utilized.
Legal Amendment Reinforces the Employee’s Position
This expanded interpretation aligns with Federal Decree-Law No. 9 of 2024, which came into effect on July 31, 2024. This law stipulates that the statute of limitations (two years) begins from the date of service termination, rather than the date the right accrued. This grants employees a longer window to claim their rights and strengthens their legal standing.
Key Takeaways for Employers (Compliance and Governance)
The ruling’s impact extends beyond a single employee’s compensation; it redefines the legal framework for annual leave entitlements in the UAE. It reflects a more progressive judicial trend focused on employee protection and reinforces the principles of transparency, accountability, and sound governance in HR management. - Financial Liability Risk: Lack of proper documentation can lead to significant financial liability, as the Court may now presume leave was unused for the entire service period.
- Mandatory Documentation: Companies must maintain meticulous records of annual leave utilized or compensated, and enforce clear internal policies that encourage employees to take their leave within the entitlement year.
This judgment represents a qualitative shift in the philosophy of labour jurisprudence in the UAE, reflecting a fairer and more realistic approach to employee rights. It raises legitimate questions about the readiness of other Gulf states to adopt a similar approach that balances rights protection with institutional compliance.