An employee in the UAE is entitled for cash in lieu of annual leave salary.
Question-I requested my company to remit my annual leave salary for this year instead of taking a vacation. However, they gave me only 80 per cent of the leave salary. When I asked the HR manager about it, she told me that I had agreed to a temporary salary cut due to Covid-19 impact and that leave salary was part of the temporary contract I had signed. Is annual leave salary affected by the temporary salary reduction?
Answer: Pursuant to your queries, we assume that you are employed in a mainland company based in the UAE. Therefore, the provisions of Federal Law No. (8) of 1980 Regulating Employment Relations in the UAE (the ‘Employment Law’) and the provisions of Ministerial Resolution No. (279) of 2020 Concerning the Employment Stability in Establishments of the Private Sector During the Application of Precautionary Measures to Control Novel Coronavirus Outbreak (the ‘MR 279’) are applicable.
It should be noted that an employee in the UAE is entitled for cash in lieu of annual leave salary for the annual leave not availed by him. Such payments are calculated based on the salary of the employee. This is in accordance with Article 79 of the Employment Law, which states: “The employee is entitled to receive cash in lieu of annual leave days not availed by him, if he was dismissed or if he left the service, after the period of notice stipulated by law. Cash in lieu of leave is calculated on the bases of pay received by the employee at the time such leave became due.”.
Based on the aforementioned provision of law, an employee’s annual leave salary shall be computed based on the salary the employee received at the time his annual leave became due. However, since we assume that your annual leave became due after you had signed a temporary employment contract with regard to your salary reduction, you may only be entitled for your annual leave salary in accordance with your current salary as after reduction. Further, the temporary employment contract you have signed stipulates the reduction of your salary which is in accordance to Article 5 (1) of the MR 279, which states, “Establishments that wish to temporarily reduce the salary of a non-national employee during the mentioned period shall take the following actions:
1. Conclude a ‘Temporary Additional Addendum’ to the employment contract between both parties, in accordance to the template attached to this Resolution, provided that it shall expire at the end of its term or enforceability of this Resolution, whichever comes first.”
The aforementioned MR 279 is silent with respect to the payment of annual leave. Therefore, we may have to refer the provisions of Employment Law related to payment of annual leave salary. As mentioned above, Article 79 of the Employment Law clearly states that an employee is entitled for cash in lieu for the annual leave not availed by him and such payment is calculated as per the salary withdrawn by the employee when his annual leave has become due. In view of the foregoing, you may be entitled for annual leave salary as per your current salary which is paid by your employer. It is recommended that you approach the Ministry of Human Resources & Emiratisation and seek further advice on this matter.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: firstname.lastname@example.org or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
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