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Basic Salary in UAE Labour Law Dubai

basic salary in uae labour law

This article delves into the nuances of basic salary in UAE labour law, exploring its definition, percentage, and new rules.

Office of Al Mulla. Whatsapp: Click here. Location: Dubai. Phone: 00971501961291.

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 on a monthly, weekly, daily, hourly, or piecework basis, excluding any other allowances or benefits in kind.

New salary rules in UAE 2023.

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  Al Mulla, Labour Lawyer & Legal Consultant, the Dubai Court of Cassation clarifies this matter.

Stating that 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, it is advisable for employers to clearly define the treatment of commissions and bonuses in their employment contracts.

UAE labour law salary calculation.

As per the new labour law, the wage is defined as the sum of the basic wage and the cash allowances and benefits in kind allocated to the worker under the employment contract.

Simply put, the wage (or salary) equals the basic salary plus benefits and allowances.

Allowances can encompass various aspects, including housing, transport, communication, and children’s school fees. The combined total of basic salary and allowances constitutes the gross salary per UAE labour law.

Specifying the applicable allowances in the employment contract is essential to avoid legal complications and disagreements.

Basic salary percentage in UAE labour law 2023.

No specific minimum wage is stipulated in the UAE labour law. Furthermore, there is no mentioned percentage for the basic or gross salary.

However, it is a common practice for the basic salary in UAE labour law to constitute 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 in UAE labour law.

Basic salary refers to the remuneration agreed upon in the employment contract, excluding allowances, benefits, or expenses. It is the payment an employee receives in recognition of fulfilling their contractual obligations.
No specific percentage is mentioned for basic salary in the UAE labour law. However, it's common for basic salary to be around 60% of the gross salary, with allowances comprising the remaining 40%.

Key Learnings.

  • Basic salary is the compensation an employee receives based on his or her employment contract, excluding allowances and other benefits.
  • Understanding the concept of basic salary in the UAE labour law is crucial as it forms the basis for the net salary of your employees.
  • Basic salary also plays a significant role in determining an employee’s annual leave and end-of-service gratuity.
  • The inclusion or exclusion of commissions and bonuses in the basic salary primarily depends on the employer.
  • While there is no specific minimum wage in the UAE labour law, employers must pay their employees sufficient to meet their basic needs.

In legal matters, particularly those related to labour issues, it is always recommended to seek expert advice.

Al Mulla, Labor Lawyer & Legal Consultant, 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 the office of Al Mulla via Whatsapp. Click here. Or visit us at our law firms: Dubai. You can also call us on phone: 00971501961291.

We recommend you read about When Does an employee need an employment lawyer UAE Dubai and The Top 10 Labour Lawyers in UAE Dubai.

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