Forced Unpaid Leave in UAE: Rights, Consent & Law

Under UAE labour law, an employer generally cannot force an employee onto unpaid leave without the employee’s written consent, and doing so may constitute a breach of the employment contract that entitles the worker to file a complaint with MOHRE or pursue termination-related claims. Despite this, forced unpaid leave remains a surprisingly common practice in the UAE market, leaving many employees unsure of their rights and many employers unaware of their legal exposure.

What UAE Labour Law Says About Forced Unpaid Leave

The Legal Framework Under Decree-Law No. 33 of 2021

The UAE’s primary employment legislation, Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (effective February 2022), governs employment relationships across the mainland and most free zones, with the notable exceptions of the DIFC and ADGM, which maintain their own employment regulations.

The law does not contain a specific provision granting employers the right to impose unpaid leave. Article 29 outlines various types of leave entitlements, including annual leave, sick leave, maternity leave, and others. Unpaid leave is referenced only as a matter that may be agreed upon between the parties.

This distinction is critical. Leave types defined in the law carry mandatory entitlements. Unpaid leave, by contrast, exists in a contractual grey area where mutual consent is the governing principle.

Consent Is Not Optional

For unpaid leave to be lawful in the UAE, both the employer and the employee must agree to it. As of 2025, MOHRE’s published guidance reinforces that an employer cannot deduct wages or suspend work without a legal basis.

If your employment contract includes a clause permitting the employer to place you on unpaid leave under specific circumstances (such as a business downturn), this may create a contractual basis for the arrangement. However, even then, such clauses are interpreted narrowly by UAE courts, and the employer must demonstrate good faith and proportionality.

If your contract is silent on unpaid leave, then the employer has no unilateral authority to impose it.

How Free Zones Handle It Differently

Employment regulations in the DIFC and ADGM operate under their own legal frameworks. DIFC Employment Law No. 2 of 2019 and the ADGM Employment Regulations similarly require mutual consent for unpaid leave. In practice, the principle is consistent across UAE jurisdictions: unilateral unpaid leave is not a right the employer holds by default.

Employees in free zones such as DMCC, JAFZA, IFZA, RAKEZ etc. fall under the federal labour law and can raise disputes through MOHRE or the relevant free zone authority.

When Forced Unpaid Leave Becomes Constructive Dismissal

Understanding Constructive Dismissal in the UAE

Constructive dismissal occurs when an employer’s actions effectively force an employee to resign, even though the employer has not formally terminated the contract. Under Article 45 of the Decree-Law, an employee may leave the job while retaining full end-of-service entitlements if the employer has fundamentally breached contractual obligations.

Being placed on unpaid leave without consent could constitute such a breach. The employee is deprived of their salary, which is arguably the most fundamental obligation the employer owes. If this situation persists, the employee may have grounds to treat the employment relationship as terminated by the employer’s conduct.

What This Means for Termination Rights

If forced unpaid leave is deemed constructive dismissal, the employee may be entitled to:

• End-of-service gratuity (calculated under Articles 51 and 52 of the Decree-Law)
• Payment in lieu of any accrued but unused annual leave
• Compensation for arbitrary dismissal, if applicable (up to three months’ remuneration under Article 47)
• Any outstanding salary and allowances

Employees should be cautious, however. Claiming constructive dismissal without sufficient evidence of employer breach can backfire. Proper legal consultation before taking this step is strongly advisable.

The One-Year Service Mark and Gratuity

A particularly common concern involves employers placing employees on unpaid leave just before they complete one year of service. Under Article 51, end-of-service gratuity becomes payable after a minimum of one year of continuous service. By forcing unpaid leave, an employer may attempt to delay or prevent this threshold from being reached.

This tactic, while not uncommon in practice, is legally risky for employers. UAE courts look at the substance of the employment relationship, not merely the technicalities. If an employee can demonstrate they were effectively employed for a year and the unpaid leave was imposed to circumvent gratuity obligations, a court or MOHRE mediator may still award the gratuity.

Additionally, periods of unpaid leave are typically excluded from the calculation of continuous service for gratuity purposes. This means even legitimate, consensual unpaid leave can reduce the total gratuity amount.

Practical Steps for Employees Facing Forced Unpaid Leave

Step 1: Review Your Employment Contract

Start by checking whether your contract contains any clause addressing unpaid leave. Look for provisions about business downturn, force majeure, or employer discretion regarding work schedules. If the contract is silent, the employer has a weaker legal position.

Step 2: Request Written Communication

Ask your employer to provide the unpaid leave instruction in writing, ideally via email or an official letter. This documentation will be essential if you need to file a complaint later. Verbal instructions are difficult to prove in legal proceedings.

Step 3: File a Complaint with MOHRE

If your employer insists on unpaid leave without your consent, you can file a complaint through MOHRE’s Tasheel service centres or via the MOHRE mobile app. MOHRE will attempt to mediate the dispute. If mediation fails, the case is referred to the labour court.

For employees in the DIFC or ADGM, the relevant dispute resolution bodies are the DIFC Courts or ADGM Courts, respectively.

Step 4: Understand Your Resignation Rights

If forced unpaid leave persists, you may consider resigning and claiming constructive dismissal. However, this is a significant step with real consequences for your visa status and employment record. Before proceeding, seek professional guidance to evaluate whether your situation meets the legal threshold. A specialist in mediation and dispute resolution can help you assess your options before escalating.

What Employers Need to Know About Compliance

Legal Risks of Imposing Unpaid Leave

Employers who unilaterally impose unpaid leave face several risks:

• MOHRE complaints and potential fines for non-compliance with the labour law
• Constructive dismissal claims that trigger full end-of-service entitlements
• Arbitrary dismissal compensation claims (up to three months’ wages)
• Reputational damage and difficulty attracting talent

The cost of a properly handled termination or a negotiated unpaid leave arrangement is often lower than the total liability from a successful employee claim.

How to Structure Unpaid Leave Properly

If business conditions genuinely require a temporary reduction in workforce costs, employers have lawful options:

1. Mutual agreement: Negotiate an unpaid leave arrangement with the employee and document it in a signed addendum specifying the duration, terms of return, and impact on benefits.
2. Reduced working hours: Under Article 15 of the Decree-Law, part-time and flexible work arrangements can be agreed upon. This may be preferable to full unpaid leave.
3. Redundancy termination: If the role is genuinely redundant, follow the proper termination process, including notice periods and end-of-service payments, rather than using unpaid leave as a workaround.

Employers operating across multiple entities or free zones should ensure their HR practices are consistent and legally sound. A thorough review of employment contracts through legal due diligence can identify gaps before they become disputes.

Documentation Best Practices

Every unpaid leave arrangement should be supported by:

• A written request or proposal (ideally from the employee, or clearly offered by the employer)
• A signed addendum to the employment contract
• Clear terms on duration, conditions for return, and impact on gratuity calculation
• Evidence that the employee was given reasonable time to consider and was not coerced

Frequently Asked Questions

Can an employer force unpaid leave in the UAE without employee consent?

No, under UAE Federal Decree-Law No. 33 of 2021, an employer cannot unilaterally impose unpaid leave without the employee’s agreement. The law requires mutual consent for unpaid leave arrangements. If your employer forces you onto unpaid leave without your written consent, you may file a complaint with MOHRE or the relevant free zone authority.

Does unpaid leave affect my end-of-service gratuity in the UAE?

Yes, periods of unpaid leave are generally excluded from the calculation of continuous service for gratuity purposes. This means that time spent on unpaid leave may reduce your total gratuity entitlement. If you suspect your employer is using unpaid leave to prevent you from reaching the one-year service threshold for gratuity eligibility, this could be grounds for a legal complaint.

What can I do if my employer puts me on unpaid leave without my agreement?

You can file a labour complaint through MOHRE’s Tasheel service centres or the MOHRE mobile app. MOHRE will first attempt mediation between you and your employer. If mediation does not resolve the dispute, the matter is referred to the labour court. It is important to keep written records of all communications regarding the unpaid leave.

Can forced unpaid leave be considered constructive dismissal in the UAE?

Forced unpaid leave may constitute constructive dismissal if it fundamentally breaches the employer’s obligation to pay wages. Under Article 45 of the Decree-Law, an employee can leave the job and retain full end-of-service rights if the employer has materially breached the contract. However, claiming constructive dismissal requires evidence, and the decision should be made with proper legal advice.

Is forced unpaid leave handled differently in DIFC or ADGM?

Yes, the DIFC and ADGM operate under their own employment laws, separate from the federal labour law. However, the principle is similar: employers in DIFC and ADGM also cannot impose unpaid leave unilaterally. Employees in these zones should raise disputes through the DIFC Courts or ADGM Courts rather than MOHRE.

How long can unpaid leave last in the UAE?

There is no statutory maximum duration for unpaid leave in the UAE because it is based on mutual agreement. The duration depends on what the employer and employee negotiate. However, an extended period of forced unpaid leave without consent strengthens an employee’s case for constructive dismissal. If you are placed on indefinite unpaid leave, seek legal advice promptly.

Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or regulatory advice. Rules and fees in the UAE change frequently. Before acting on anything you read here, speak to a qualified advisor — we are happy to help.