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February 24, 2021
A COVID-19 middle east survey provides that 64% of employers had allowed the employees to carry forward the unused leaves (owing to the pandemic) to the following year but the other 36% of the employers had uncertain as to whether they will allow such carry forward or not.
The dilemma that these employers have is that it leads to a high leave balance that gets accumulated on the balance sheet. From the point of view of the employer, he does not prefer such carry forward, firstly due to the above reason of difficulty in accounting and secondly, it creates a situation where the employees tend to take a long vacation which eventually leads to the deduction in productivity, thereby affecting the business.
The employment lawyers of Dubai will discuss the steps taken by most companies concerning annual leaves of employees during the pandemic and their justifications under the Employment Law.
What Does the Law Say?
The employment law of UAE is Federal Decree-Law No. 33 of 2021. Additionally, regulations from DIFC and ADGM, namely DIFC Law No. 2 of 2019 and ADGM Employment Regulations 2019, respectively, are also applicable in their respective free zones. The above-mentioned set of rules provides the employees with distinct regulations which are present at their disposal. Such regulations are discussed below along with some suggestions.
The DIFC and the ADGM regimes on employment law are somewhat similar to each other.
The legal aspect of the annual leaves under these regulations are inclusive of provisions such as Firstly if the employee has completed 90 days of employment in the firm, he will be entitled to 20 days of paid leaves per year.
In case the employees have not used such paid leaves, then they are entitled to carry forward only 5 paid leaves which have been accrued to them but have not been utilized. Such carry forward is subject to expire automatically after the 12 months of the following annual year.
Owing to the annual leave, the employee can only get paid for such leaves if it is provided for in the agreement between the employee and the employer. Some employers can also require their employees to give seven days prior notice for the leaves the employee is planning to take to the current annual year.
Unlike the above, the UAE labour law, in Article 29(1), provides that if the employee has completed one year of employment service in the firm, he will be entitled to 30 calendar days of paid leaves per year (approximately 22 working days of paid leaves), two days for each month if the service period is between six months and one year, or leave for the fraction of the year he spent at work, in case his service ends before using his annual leave balance.
In accordance with Articles 29(4) and (5) of the labour law, the employer is entitled to determine the dates of the leave in accordance with the work requirements and agreement with the worker, and the worker is entitled to carry over the balance of his annual leave to the following year. Article 29(8) of the law states that the employer may not prevent the employee from benefiting from his annual leave due for more than two years unless the employee wishes to carry it over or obtain a cash payment for it in accordance with the regulations in force.
It is thus implied that the rule of “use it or lose it“ is not provided for in the framework. No limitation is provided as in the case of the DIFC rules for the number of holidays they can carry forward. The court just provides that in case of the termination of the service, the employee will be allowed to encash the annual paid leaves of the two holiday years before such termination.
In the current scenario of the pandemic, employers are required to efficiently manage the paid leave regime in order to ensure sufficient employee coverage as well as the continuity of the business.
They can do so through the following ways: Firstly, they need to communicate properly the annual leave policy to their employees and in case of the carry forward rule, they have to clearly reach a consensus with the employees; secondly, there must be a proper dialogue mechanism between the employee and the employer, whereby the employer should, on regular basis, inform the employee that they should utilize the annual paid leaves before their expiry and in case the facility of encashment is available, such communication shall also be done without any ambiguity; and lastly, a reminder or a follow-up mechanism must be adopted by the employer which provides with the continuous reminding facility for the employees so that they are continuously reminded of the number of leaves they can take during the year and the ones which will be getting expired soon.