I. Introduction
In a landmark judgment dated December 2024 (Case No. 73/2024), published in July 2025, the Abu Dhabi Court of Cassation delivered a decision with profound practical implications for employers in the United Arab Emirates (UAE). The ruling concerns the payment of accrued but unused annual leave spanning more than 13 years, and it diverges in significant respects from the previously established jurisprudence, particularly in Dubai. The judgment underscores the strict obligation of employers to comply with their contractual and statutory duties regarding employee leave, including comprehensive record-keeping requirements. This article analyses the core reasoning of the judgment, contrasts it with the divergent case law in other Emirates, and highlights practical recommendations for employers to mitigate risk.
II. Facts and Procedural History
The claimant was employed by a company in Abu Dhabi for over 13 years. Upon termination of his employment in 2022, he submitted a claim against his former employer for payment of all accrued but unused annual leave. The employer denied the claim, invoking common practice whereby retrospective leave claims are typically limited to two years.
Both the Court of First Instance and the Court of Appeal upheld the employer’s position, awarding the claimant payment only for a limited period. The claimant subsequently filed an appeal with the Abu Dhabi Court of Cassation, which overturned the lower courts’ decisions and ordered full payment of the accrued leave covering the entire employment period.
III. Legal Reasoning of the Abu Dhabi Court of Cassation
The Court based its decision primarily on the interpretation of Article 29 of Federal Decree-Law No. 33 of 2021 Regulating Labour Relations in the UAE and the corresponding Executive Regulations (Cabinet Resolution No. 1 of 2022). Under these provisions, employees are entitled to a minimum of 30 calendar days of paid annual leave, which should ordinarily be taken within the relevant year.
The Court emphasized that the burden of proof regarding the actual granting or payment of leave lies with the employer. In the present case, the employer failed to produce leave requests, approvals, or evidence of compensation. Accordingly, the Court concluded that the leave was neither taken nor compensated. Contrary to the lower courts’ view, a limitation of the leave payment claim to two years was not warranted. Such limitation presupposes that leave was actually offered to the employee, who voluntarily chose not to take it — a circumstance absent in this case.
Notably, the Court explicitly stated that an internal company practice of disregarding leave entitlements over extended periods or relying on presumptive statutes of limitation contradicts the mandatory protective provisions of labour law. The claimant was awarded AED 59,290, calculated based on his last basic salary.
IV. Contrast with Case Law in Other Emirates
This decision markedly departs from the established case law in other Emirates, notably Dubai. There, the labour courts generally hold that accrued leave claims — unless contractually or organisationally preserved beyond statutory periods — are subject to a two-year limitation period pursuant to Article 54 (7) of Federal Decree-Law No. 33 of 2021, and thus may only be compensated within that timeframe.
By contrast, the Abu Dhabi Court of Cassation places emphasis on the employer’s affirmative duty to proactively grant leave and maintain complete documentation. In the absence of such evidence, the employee’s full leave entitlement is presumed without temporal limitation.
Whether this ruling will prompt a fundamental shift across the UAE or remain confined to Abu Dhabi remains to be seen. Given the Court of Cassation’s position as the highest labour authority in Abu Dhabi, the judgment carries substantial persuasive weight.
V. Legislative Developments: Extension of the Limitation Period
It is also important to note that, effective 31 July 2024, Federal Decree-Law No. 9 of 2024 introduced a legislative reform regarding limitation periods for labour claims. Under the new law, the two-year limitation period for asserting labour rights begins only upon termination of the employment relationship, thereby significantly enhancing the enforceability of retrospective claims, including for unpaid leave. This legislative change further amplifies the practical impact of the Court’s decision.
VI. Practical Recommendations for Employers
Regardless of whether the new jurisprudence gains wider traction, employers in the UAE are strongly advised to review their internal leave management procedures to ensure legal compliance. Recommended measures include:
- Implementing a secure, digital leave application and approval system with clear records of decisions;
- Regularly informing employees of outstanding leave balances and applicable forfeiture deadlines;
- Updating employment contracts and HR policies to reflect current legal requirements and revised limitation periods;
- Documenting any payment of accrued leave upon termination of employment.
Only through consistent and transparent leave management can employers avoid costly disputes arising from accumulated unused leave.
VII. Conclusion
The Abu Dhabi Court of Cassation’s judgment (Case No. 73/2024) represents a paradigm shift in the judicial treatment of annual leave claims. It clarifies that employers cannot rely on presumptive limitation defences if they fail to discharge their duties to grant leave and maintain proper documentation. Given recent legislative reforms extending limitation periods, an increase in retrospective leave claims is anticipated. Employers would therefore be well-advised to proactively align their internal processes with evolving legal standards to mitigate litigation risk.
