In the UAE, understanding the breakdown of basic salary and how it is governed by the country’s labour laws is crucial for both employers and employees.
This article provides information about basic salary in UAE labour law, exploring its definition, percentage, and new rules.
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Table of Contents
What is the Basic salary in UAE labour law?
Basic salary refers to the remuneration agreed upon in the employment contract, exclusive of allowances, benefits, or expenses. It is the payment an employee receives in recognition of fulfilling their contractual obligations.
In the new UAE Labour Law (Article 1), the basic wage is defined as the remuneration specified in the employment contract, paid to the worker for his efforts under the employment agreement.
This payment can be made monthly, weekly, daily, hourly, or piecework, excluding any other allowances or benefits in kind.
Salary rules in UAE 2024
The treatment of commissions and bonuses in basic salary is not explicitly defined in the old or new labour law. Therefore, their inclusion or exclusion primarily depends on the contract terms between the employer and employee.
However, according to legal experts at our law firm, the Dubai Court of Cassation clarifies this matter.
The salary includes everything given to the employee for the work performed, in cash or kind.
Therefore, any remuneration not classified as an allowance is considered a basic salary as long as it relates to the work performed.
Considering this, employers should clearly define the treatment of commissions and bonuses in their employment contracts.
UAE Labour Law Salary Calculation
Under the new UAE Labour Law, the total salary an employee receives is calculated by adding the basic salary to any cash allowances and benefits in kind that are stipulated in the employment contract. These allowances might cover various aspects of the employee’s needs, such as housing, transport, communication, and school fees for children.
The salary breakdown in UAE typically includes the basic salary plus any additional allowances. The sum of these components forms the gross salary, which is subject to the relevant UAE tax and employment regulations.
To avoid misunderstandings and potential legal issues, it is essential that all allowances and benefits be clearly specified in the employment contract. This ensures that both the employer and employee have a mutual understanding of the total salary package.
Is There a Minimum Wage in UAE?
No specific minimum wage is stipulated in the UAE labour law. Furthermore, there is no mentioned percentage for the basic or gross salary.
However, the basic salary in UAE labour law constitutes 60% of the gross salary, with allowances making up the remaining 40%.
While there is no established minimum wage, the UAE labour law mandates that the wages must be adequate to meet the basic needs of employees.
Article 27 of the new law also provides a provision for the Cabinet to issue a resolution determining the minimum wage for workers or any category thereof, indicating the possibility of minimum wage legislation.
FAQs about basic salary UAE labor law
Summary: Basic Salary in UAE Labour Law
In the UAE, basic salary is the fixed compensation outlined in the employment contract, excluding allowances and benefits. It serves as the foundation for calculating an employee’s net salary, annual leave, and end-of-service gratuity. The inclusion of commissions and bonuses in the basic salary depends on the employment contract. While there is no minimum wage specified by the UAE Labour Law, employers must ensure that salaries meet the basic living needs of employees.
In legal matters, particularly those related to labour issues, it is always recommended to seek expert advice.
Our labor lawyer in Dubai is a trusted resource for labour cases in the UAE. With their expert knowledge and guidance, you can confidently navigate the complex world of labour law.
Contact our labor law firm in UAE for expert help. Click the Whatsapp icon below.
We recommend you read about when an employee needs an employment lawyer in UAE Dubai and The Top 10 Labour Lawyers in UAE Dubai.
A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.
