Encashment of Annual Leave

I am a Filipino nurse working under government of Saudi Arabia , and as far as I know u cannot be paid for your leave that u never took as cash . Instead,   if you reach the date of your next yearly contract renewal, your vacation days are forfeit and your back to zero. No cash, no nothing . I don't know if this applies to you and your situation though. But that's how it worked with mine . I lost 40 days of my vacation days , they were forfeited . No money was compensated for me . So you should really take ur annual leave than let it pass . Anyway as far as I know in my case , I still receive my monthly salary pay even on my annual leave . But, recently I was informed next month they will hold all salaries to staff who are on annual leave and their salaries will be given at the time they report back to duty on salary day. I don't know if this helps u . Hope it does

Thank you very much for the information.

In the case of termination of employment and the employee has not utilised all his leave, can he be paid all unused leave then?

My friend applied for letter of resignation, thus ending her contract . She was told she cannot be compensated in cash for her vacation she never took. Rather instead they let her took all her remaining vacation days she never took as vacation. She decided to stay here in Saudi to pass the time until she finished all her vacation days , she was recieving still her monthly salary pay . Finally she completed her days and left after wards. I had another friend who was terminated of her contract by the hospital she worked in due to some coe discrepancies of some sort, I'm not sure what. If your terminated , all what you have even vacation days you never had taken will not be given to you to take nor it would be compensated as cash, all Will be null and void and should leave as soon as possible . That's what I know so far.

Thank you so much for the information. Really appreciate the assistance.

This is incorrect information.   Please don't comment on labor law matters if you don't know the facts as you may misguide people. You are basing the advice on policies of your employer which are not in line with labor law.

Saudi labor law does not allow for forfeit or expiry of leave.  We studied this in depth in our company as our accumulated leave balances were sitting on the balance sheet and going up every year.

Encashment is also not allowed unless of course the employee accepts encashment of his entitled leave in writing.  Similarly, when you leave a company, you should be paid for leave that you earned but never took.

Employers use the lack of knowledge of employees to abuse this.  The example you gave above of withholding pay until employee returns from leave is also not in line with labor law but seems to be the policy of your employer.

So, at the end of the employment, they should be paid the leave that they never took. However, is there a limit to the number of days - perhaps only entitlement for two (2) years maximum? Surely they cannot request for encashment of leave that they have accrued for years?

This is the part that I was confused about based on references made to the different articles under the Law.

Theoretically, an employee is entitled to all accrued leave as it cannot be "expired" or "forfeited".  Some employers send the employee on garden leave on resignation i.e. he gets paid while sitting at home vs. paying out accrued leave.

And just for your knowledge, the relevant articles of the labor law.  As you can see, there is nothing in the law about expiry or forfeiting leave.  Encashment is also not there but if the employee consents, it is legally defensible - we did it in the past and it stood up in court.  And article (111) reads as encashment of ALL leave on departure.

Article (109):
(1) A worker shall be entitled to a prepaid annual leave of not less
than twenty one days, to be increased to a period of not less than
thirty days if the worker spends five consecutive years in the
service of the employer.
(2) A worker shall enjoy his leave in the year it is due. He may not
forgo it or receive cash in lieu during his period of service. The
employer may set the dates of such leave according to work
requirements or may grant them in rotation to ensure smooth
progress of work. The employer shall notify the worker of the
date of his leave in sufficient time of not less than thirty days.

Article (110):
(1) A worker may, with the employer’s approval, postpone his
annual leave or days thereof to the following year.
(2) An employer may postpone, for a period of not more than
ninety days, the worker’s leave after the end of the year it is
due if required by work conditions. If work conditions require
extension of the postponement, the worker’s consent must be
obtained in writing. Such postponement shall not, however,
exceed the end of the year following the year the leave is due.

Article (111):
A worker shall be entitled to a wage for the accrued days of the
leave if he leaves the work without using such leave. This applies
to the period of work for which he has not used his leave. He is also
entitled to a leave pay for the parts of the year in proportion to the
part he spent at work.

Thank you very much for taking the time to answer my questions. Really appreciate it

Sorry to following on an old thread. Do you know how leave pay is calculated? Is it on basic salary or base plus HRA (Housing, transport)? I understand that there is new labor laws effective 2020. If you can provide some insight that would be great. Thank you.

Best practice : All elements are included
Common practice: Only on basic

Are you talking about when you go on final exit only visa; or on a repat, i.e. exit/re-entry visa. Two different thing and must read thoroughly your employment contract. It must be stipulated somewhere there.

He is referring to a completely different topic.  Leave encashment is only done when the employee leaves.  The manner of leaving is immaterial i.e. whether local transfer or final exit.  The basic requirement is that you resign and leave the company - if not the country.

Thank you. I understand it is based gross pay but no one gives it. Is there a way claim that at labor court?
Another question, I read that notice period has been made to 60 days instead of 30 is that on effect?

So far on their site, it still has the 30 day notice from what I can see.  You can claim it in labor court but will take time and lots of efforts.

Thanks XTang as always you are doing a great job providing genuine info. Keep it up.

Need Help and information.the scenario is I PUT RESIGN and the resign has been accpeted.now i am on three month notice. My HR Department send me an email mentions that i have leave balance of 60 days and according to article 109 the employee has right to set the dates for this vacations.I don't want this vacation i want this with my end service benefits.they ask me to take the vacation after 10 days acceptance of my resignation. please guide me

Think you are reading 109 wrong. The employer sets your leave.... Your right is to get it.

And a lot of employers do what yours is doing ie adjust leave in notice period and let you leave early. Agree with them that you will leave after 10 days and work for another employer and they should transfer your iqama.

The only other option is to go to labour court which will take a while to resolve and it may not be in your favor.

Thanks for your quick reply.The matter they dont want to leave me early they want me to stay till end of november now they want me to take this anual leave and come back for last 7 days to finish your other things like EOBS etc

i dont want this leave can i refuse if i refuse is legal ?????? or any other way

You can refuse but there is no easy solution.  They will notify you to take paid leave and ask you to come for 7 days at the end when it finishes.  Theoretically, they would have done nothing wrong.  You can challenge in labor court but it will take months and as I said, the judgement may not be in your favor.

Sir can you provide numeric example of annual leave computation. I am at present 4 years and 3 months here in my company without vacation. How much would I get sir if my total salary is 3000 but my basic is 1500? Thank you in advance.

debotellas wrote:

Sir can you provide numeric example of annual leave computation. I am at present 4 years and 3 months here in my company without vacation. How much would I get sir if my total salary is 3000 but my basic is 1500? Thank you in advance.

Foreign expat working in KSA is entitled to get 21 days fully paid annual leave, for a service of less than 5 years. In your case, annual leave calculation:

Total monthly salary = SR 3,000
Annual leave days = 21
Leave salary calculation formula: salary / 30 X annual leave days
Vacation pay calculation: 3,000 / 30 X 21 = SR 2,100

2100 for only 1 year?
  I ask the secretary of our hr manager in his office and he told me it will be computed in my basic salary. I ask because he provided me the total of 4200 sar 4 years. What should I do? Where should I complain?

Does the SR 3,000 written as gross salary per month in your contract or not?

debotellas wrote:

2100 for only 1 year?
  I ask the secretary of our hr manager in his office and he told me it will be computed in my basic salary. I ask because he provided me the total of 4200 sar 4 years. What should I do? Where should I complain?

Half salary per year.
Half of a basic salary.
If you are working in the company more than 5 years then it will be full salary.
There is no way to get 2100 per year at all.

I am now in total of 7 years.  It is just my vacation that I mean that it's been 4 years  that I had not exercise my vacation.

Not

debotellas wrote:

I am now in total of 7 years.  It is just my vacation that I mean that it's been 4 years  that I had not exercise my vacation.

Then you will get 2 half and 2 full basic salaries if it is mentioned in your contract. Because, you have completed 2 years after the 5 years limit and 2 falls in the 5 years limit.
And some times some allowances can be included in the basic salaries.
I don't know what is your basic.

Hello,

i have a question. My end of contract is on april 27. After i gave my notice that i will not continue for another contract. They gave me a letter that they are giving me my 37days vacation leave that I didn’t consume starting march 23 up to my end contract. My question is, is this 37days leave they must pay it right? And i am entitled for 2 years end of service benefits. Also can i go back to my country before my contract ends. Like april 9? Because they are the one who gives this vacation leave. I did not ask for it.

please enlighten me about this.. thank you in advance

When you resign, the employer can decide to adjust your annual leave against your notice period.

And this question has been asked before in this same thread.   Scroll up and read the responses.

@XTang hii! Can vacation leave can convert to money without taking any leave here in Saudi? Thanks for the reply.

The labor law does not allow for it.  So you have no right to demand it.   An employer can choose to give it to you.   Read my previous posts on this same thread - I have answered in detail here already.

@XTang do you have a Saudi labor law with english and arabic documented

And please send it to my email add ***so i can tell it to the payrol because my vacation leave once i never use it will forfeit

Thank you

@XTang

Hi sir, please send me if you have a saudi labor law documented copy like PDF file or any that i proof to our HR or a payroll as my vacation once not using it it was forfeited  please help me. nicanor.medad@[link moderated]

Just google it.  You will find it online.

@XTang thanks, i have a situation where employees have 3-5 years of leave accrued and business now wants to pay encashement of these leaves while here on they use then fine else it will laspe.

for these 3-5 years of balance, does saudi labor law stops us to not to encash and whats the right way of doing this ?

Any supporting article or way forward?

Post #8.  Saudi labor law excerpts.  Read what I wrote about it.

Leave CANNOT lapse or expire.  If the employer does it then it is against labor law. 

Dear All,

I recently resigned from the company. I have 15 unused days of my annual leave. My notice period is 2 months, and my company is not willing to shorten it. When I requested them to reduce my notice period to 45 days by using my annual leave, my manager informed me that HR stated Saudi labor law doesn't permit compensation from annual earned leave days.

After repeated requests, they agreed to let me leave the company after serving 45 days. My question is, is it possible for me to request payment for my unused earned leave? Is it legal according to Saudi labor law?

1) All of this discussion has happened in the thread above

2) Your employer apparently adjusted the unused leave so how can you be asking for encashment now