Change in Case Law in UAE Labor Law – Statute of Limitations for Vacation Claims

With its ruling of December 2024 (case no. 73/2024), published in July 2025, the Abu Dhabi Court of Cassation has made a landmark decision that has considerable practical relevance for employers in the United Arab Emirates. The decision concerns the compensation of vacation days not taken over a period of more than 13 years and deviates in essential points from the previously established case law practice, particularly in Dubai. It emphasizes the strict adherence to the employment contract duty of care and the employer’s comprehensive documentation responsibility. This article analyzes the key considerations of the decision, compares the differing line of case law in the other emirates, and identifies practical action requirements for operational implementation.

The plaintiff was employed by a company in Abu Dhabi for a period of 13 years. After termination of the employment relationship in 2022, he asserted a claim against the former employer for payment of all vacation days not taken in kind. The employer rejected the claim, citing the common practice that retroactive claims are regularly limited to a period of two years.

Both the first-instance decision and the appeal judgment followed this argument and recognized only a partial amount. The employee then filed a revision with the Abu Dhabi Court of Cassation, which overturned the lower court decisions and ordered the employer to fully compensate all untaken vacation days over the entire period of employment.

The decision is essentially based on the interpretation of Article 29 of Federal Law No. 33 of 2021 on the regulation of employment relationships in the UAE and on the implementing regulation issued for this purpose (Cabinet Resolution No. 1 of 2022). According to this, employees are entitled to at least 30 calendar days of paid annual leave, which must generally be granted in the current year.

The court clarified that the burden of proof for the actual granting or payment of vacation days lies with the employer. In the specific case, the employer was unable to provide evidence of vacation requests, corresponding approvals, or compensation payments. Against this background, the court assumed that the vacation was neither taken nor compensated. Contrary to the opinion of the lower courts, a restriction of the compensation claim to two years was not considered, as such a limitation presupposes that the employee was actually offered the vacation and did not take it of his own free will – which was not the case here.

It is noteworthy that the court expressly emphasized that a company-internal practice of ignoring vacation claims over longer periods or hoping for a statute of limitations is not compatible with the mandatory protective provisions of labor law. The plaintiff then received vacation compensation in the amount of AED 59,290, calculated on the basis of his last basic salary.

The decision deviates significantly from the previous case law of the courts in other emirates, particularly in Dubai. There, the labor courts largely take the view that outstanding vacation claims – unless they have been expressly contractually or operationally secured for several years – are subject to a two-year statute of limitations in accordance with Article 54(7) of Federal Law No. 33 of 2021 and are therefore only to be compensated to a limited extent.

The Abu Dhabi Court of Cassation, on the other hand, focuses on the employer’s duty to proactively grant vacation and on complete documentation. In the absence of corresponding evidence, the employee’s full vacation entitlement is assumed, without a time limit.

Whether this case law heralds a fundamental turnaround in the entire federal territory or initially remains limited to Abu Dhabi remains to be seen. In view of the position of the Abu Dhabi Court of Cassation as the highest Emirati labor court, the judgment has considerable signaling effect in any case.

It should also be noted that the entry into force of Federal Decree-Law No. 9 of 2024 with effect from July 31, 2024, legally re-regulated the relevant limitation period for labor law claims. According to the new regulation, the two-year period for asserting such claims now only begins to run upon termination of the employment relationship. This significantly strengthens the enforceability of outstanding remuneration claims, including vacation compensation, and gives the decision additional practical relevance.

Regardless of the question of whether the new case law will consolidate beyond Abu Dhabi, employers in the UAE are strongly advised to review their internal processes for vacation management for their legal resilience. In particular, the following measures should be considered:

• Establishment of an audit-proof, digitally documented vacation request system with clear approval and rejection notices,
• Regular notification to employees about open remaining vacation days and their expiration dates,
• Adaptation of existing employment contracts and HR policies to the current legal situation, taking into account the new statute of limitations regulations,
• Documented compensation of vacation claims upon termination of the employment relationship.

Only a consistent and transparent vacation practice can prevent untaken vacation days from accumulating into significant financial burdens in a legal dispute.

The judgment of the Abu Dhabi Court of Cassation (case no. 73/2024) represents a paradigm shift in the labor court assessment of vacation claims. It makes it clear that employers cannot rely on a presumed statute of limitations if they do not fulfill their obligations to grant vacation and to provide proper documentation. In view of the current amendment to the law on the statute of limitations for labor law claims, an increased number of corresponding lawsuits is to be expected. Companies are well advised to proactively design their internal processes in compliance with the law – not least in order to effectively counter legal disputes.