Spotlight on annual leave: Abu Dhabi ruling underscores the cost of poor leave management

A recent ruling by the Abu Dhabi Court of Cassation has sent a strong signal to employers across the UAE: failure to implement and document clear annual leave procedures can carry significant financial consequences. In Cassation No. 73/2024, the court awarded an employee compensation for 13 years of unused leave, reinforcing the critical importance of having well-defined leave policies, transparent approval processes, and meticulous recordkeeping systems in place. In this update we highlight the points that employers across the UAE should take note of.

The case: 13 years of unused leave 

The case involved a long-serving employee who worked for the same employer from 2009 until June 2022. Upon termination, he claimed he had not taken any of his statutory annual leave and sought compensation. The employer, notably, failed to present any documentation to the contrary, no leave approvals, usage logs, or records of cash payouts in lieu of leave.

While the lower courts had awarded compensation for only the final two years of employment (in line with traditional interpretations), the Court of Cassation adopted a broader view. Relying on Articles 29(8) and 29(9) of the UAE Labour Law and Article 19 of the Executive Regulations (Cabinet Resolution No. 1 of 2022), the court found the employee was entitled to compensation for his entire 13-year tenure. A total award of AED 59,290.

The message: Employers must prove leave was taken or paid

This ruling clarifies a key principle: the burden of proof lies with the employer. Without clear documentation that leave was granted, used, or paid out, the courts may assume that the employee's full entitlement remains outstanding, regardless of how much time has passed.

A compliance wake-up call

The judgment highlights a persistent compliance gap across many workplaces: managing leave informally or through inconsistent tracking exposes employers to retrospective liability. 

Lessons for employers

1.    Maintain detailed leave records:

Employers must maintain accurate and up-to-date records of employee leave, including approvals, rejections, carryovers, and payments made in lieu. Absence of such records can shift the burden of proof and expose the business to financial liabilities.

2.    Implement a clear leave policy:

A well-drafted leave policy should cover accrual rates, carryover limits, approval procedures, and the consequences of unused leave. The policy should align with the UAE Labour Law and be communicated to all staff.

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