How to calculate overtime as per the UAE Labor Law?
The labor legislation of each country has many differences. In the Emirates, among the most important matters you should know is how to properly calculate overtime as per the UAE Labor Law. Employers must have sufficient knowledge of what is established by the country’s labor legislation. This has clear rules that indicate how to pay employees who work outside the hours established in their work contract.
In this article, you will learn how to calculate overtime as per the UAE Labor Law. Overtime is an extraordinary situation that should not be the norm in a company, since the recharge on the payment to the worker is considerable. Also, the law prohibits working more than 2 hours overtime a day. Let us discuss:
- What is overtime?
- What is the longest an employee can work in a week in the UAE?
- How many hours can an employee work per day in the UAE?
- Overtime hours an employee is allowed to work per day in the UAE
- Other rules for overtime calculation according to the UAE Labor Law
- How to calculate overtime as per the UAE Labor Law
- Conclusions
- How can we help you comply with the labor regulations of the United Arab Emirates?
1. What is overtime?
Overtime is the additional time an employee spends on work activities beyond their regular hours. According to the Labor Law in many countries, these hours must be paid more than conventional hours.
The working day is made up of the number of hours that a person must work per day according to their contract conditions. Usually, this shift consists of eight hours. If an individual who must work eight hours ends up spending ten hours on their duties, they will have worked two hours overtime that day.
There are basically two types of overtime. First, there is overtime due to force majeure. It must be carried out when urgent and extraordinary damages occur; requiring to prevent or repair claims. Then, there is structural overtime. The latter is meant for those tasks that need to be carried out in the face of unforeseen situations, “work peaks” and structural circumstances related to the company’s activity.
In each country, the maximum number of overtime hours that an employee can work in a week is established according to its Labor Law. That limit refers to structural overtime, since force majeure is not limited in any way by law given its nature.
It is important to know that usually, and again, depending on the labor legislation of each country, there are certain employees who are prohibited from working overtime. For example, those who are on maternity or paternity leave or those who work at night.
2. What is the longest an employee can work in a week in the UAE?
The regular weekly shift in the UAE is from Monday to Thursday for 8 hours, and on Fridays for half-time for public employees. The UAE is the only country in the world to have this working day system.
The reason behind this is that on Fridays, locals and Muslim foreigners attend midday prayers at mosques. To prevent this from colliding with the working day, the government decided that these prayers should be held at 1:15 pm.
On the other hand, during the holy month of Ramadan, companies must reduce their daily work schedules by two hours; with most work taking place very early in the morning or after the sun has set and the fast has been broken. This means that there is a different overtime calculation in the UAE during Ramadan.
By taking this measure, the UAE is aligning itself with the parameters used by the great Western powers. For this reason, and thanks to this, the country continues to promote itself as one of the main commercial hubs in the world.
3. How many hours can an employee work per day in the UAE?
The form of payment of overtime is also found in the Labor Law. A maximum of 2 overtime hours per day is allowed. Overtime is paid with a surcharge of 25% of the basic salary, except when overtime is carried out between 10:00 p.m. and 4:00 a.m, which is paid with a surcharge of 50% of the salary.
Workers will be able to work 9 hours a day as long as that extra hour is deducted from their work time on another day of the week. Companies that force their workers to exceed that limit without any extra payment will face non-compliance fines. Workers can report these companies to the Office of Labor Relations. At the same time, employees are also entitled to a one-hour break after five hours of work.
On the other hand, companies can ask their employees to work the weekly rest day in exchange for a higher payment, but they are not allowed to work during two consecutive holidays.
Companies in the UAE must comply with the laws in this area to avoid sanctions, such as high fines. This was introduced in the Labor Law to prevent employers from forcing workers to overwork. And if they work the maximum overtime hours allowed by law, they will receive an additional payment for the hard work they are doing.
4. How many overtime hours can an employee work per day in UAE?
The law stipulates that workers must not work more than two hours of overtime per day and each hour worked must have a surcharge of 25 or 50 percent of the amount of the value that the worker earns per hour.
This rule has its exceptions. For example, in Ramadan, employees only have to work 2 hours a day. This means that there is a Ramadan overtime calculation in the UAE and Eid holiday overtime calculation in the UAE.
5. Other rules for overtime calculation according to the UAE Labor Law
Similarly, there are other important considerations and rules regarding overtime. According to the UAE Labor Law, these are some of the fundamental rules that all subjects of the employment relationship must comply with:
- Public employees must work 8 hours, except on Fridays when they will work part-time, allowing them to attend midday prayers in mosques.
- Employees of private companies will work in the same way, but they will not have the benefit of working half a shift on Friday unless their company grants them this benefit.
- There are exceptions to these rules in the cases of employees who work in a store, hotel, or security guard. In these cases, the employer can increase working hours up to a maximum of 9 hours per day.
- The time it takes for an employee to go from home to the work site is not considered overtime. Likewise, a break of 1 hour for every 5 hours worked is not overtime either.
- If the nature of the job requires employees to work beyond their hours, they must receive additional pay. They will be entitled to remuneration equal to the remuneration of the normal working day plus an additional 25%. Also, in some cases, this percentage could increase to 50% if employees work overtime between 10 pm and 4 am.
- Note that this rule does not apply to the crew of warships and to UAE maritime employees.
6. How to calculate overtime as per the UAE Labor Law
To calculate overtime as per the UAE Labor Law, we have to take into account the gross salary. If you are looking for an accurate overtime calculation formula in the UAE, take a look at the following information:
6.1 Overtime calculation in the UAE
If the job, due to its nature, requires working overtime, the payment will be the equivalent of the salary paid in normal working hours plus a surcharge of not less than 25% of the salary.
Take a look at the following example:
Gross salary X 12/365 = daily salary.
Daily salary /8 = hourly salary.
Overtime = the number of overtime hours X hour of salary X 1.5 or an additional day off.
6.2 Holiday overtime calculation in the UAE
Under the UAE Labor Law, when circumstances cause an employee to work on public holidays or rest days for which they are entitled to full or partial salary, the compensatory leave will be given for those days, together with equivalent compensation at 50 percent of their salary. If you are not compensated for such days of leave, your employer must pay the equivalent of 150 percent of your basic remuneration in relation to the days worked.
Take a look at the following example:
Gross salary/30 = daily salary.
Salary day/8 = hourly salary.
Overtime = the number of overtime hours X hourly wage X 1.5 and one day of compensation rest.
6.3 100% of regular daily pay + bonuses + 150% of base pay
Take a look at the following example:
Gross salary/30 = daily salary.
Salary day/8 = hourly salary.
Overtime = the number of overtime hours X hour of salary X 2.5
Also, this applies as Friday overtime calculation in the UAE or public holiday overtime calculation in the UAE.
As you can see, this process, according to the local Labor Law, is very simple and easy to apply. In this way, you can carry out your overtime calculation in UAE in Excel.
7. Conclusions
As of February 2022, a new Labor Law came into force in the UAE. It regulates, among other things, overtime. This is with the aim to guarantee that there are no employers abusing the working hours of their employees in the country.
Specifically, in relation to overtime, this law provides that the full working day consists of 8 hours and the employees can only work a maximum of 2 overtime hours in one day, which will have to be deducted from the working hours of the following day. In turn, these overtime hours must be paid with a recharge according to the circumstances indicated above.
Likewise, the 8-hour full-time rule has exceptions in the cases of employees who work in a store, hotel or security guard, who can work up to a maximum of 9 hours a day.
Also, the UAE has a unique weekly shift system. It consists of a weekly shift of 4 and half days. That is to say, on Fridays only half a shift is worked. In this way, workers can attend the noon prayers in mosques without this representing a conflict with their work schedule.
But the most important thing is to know these labor regulations to avoid your company having to go through the inconvenience of a fine or any other kind of sanction for ignoring the UAE Labor Law.
8. How can we help you comply with the labor regulations of the United Arab Emirates?
We understand that complying with many regulations can be challenging for companies. For this reason, we offer you the assistance of our expert HR team. Our professionals are always up-to-date with the latest changes in the Labor Laws of the UAE. In this way, we guarantee that your company’s name will be protected from any sanctions that could harm not only its reputation, but also its finances.
In addition, our firm, EOR Middle East, can help you access talent in the UAE through our human resources and other related consulting services. If you are interested in learning more about the UAE market or are looking for a way to hire local talent without first setting up a branch, EOR Middle East is your solution.
Our agency has years of experience in the UAE market. For this reason, you can always count on us as your main business consultant. With us, you can learn how to apply the overtime calculation in UAE on a public holiday, and much more. You can request any of our services in any of the following countries:
- Egypt
- Saudi Arabia
- Jordan
- United Arab Emirates
- Israel
- Lebanon
- Oman
- Bahrain
- Libya
- Turkey
- Kuwait
- Qatar
- Sri Lanka
- Singapore
Are you looking forward to implementing our solutions and ensure full compliance for your business? Take a moment to contact our team at [email protected]. Our team is dedicated to guiding you through this process and always willing to help you. Do not hesitate any longer!
Also, talented professionals in the region can now apply for a position in our firm on thetalentpoint.com. We are looking for experienced specialists in any of our fields of expertise to become part of our team. In addition, you can send us your CV through [email protected].
