Minimum wage in UAE Everything you need to know
When you have a company it is important that you know how to calculate the minimum wage in UAE. The first thing you should know is everything that the UAE labor law says related to the issue of wages. Taking all this into account, you will avoid conflicts with employees. In addition, if you grant a fair but generous salary, you will have a higher performance and, therefore, greater success in your company.
In this article, you will see everything you need to know about the minimum wage in UAE. The first thing will be to define what is the base salary that is granted to employees. Subsequently, we will explain the difference between base salary and basic salary in UAE, and everything that includes. In addition, we will mention what are the expenses or deductions that are made to the workers.
- What does base salary mean?
- Do you know everything that the basic salary in Dubai entails? Continue reading for more information
- Additional information on the uses of basic salary in UAE
- Is there any lowest salary in Dubai?
- How to calculate the Dubai labor salary of your employees?
- How can EOR Middle East help you in calculating the UAE basic salary of your employees?
1. What does base salary mean?
The contractual amount that has been agreed to be paid to employees without including all allowances, expenses, or other benefits is considered the base salary. All employee contracts must specifically state the amount the employee will receive as compensation. This is for carrying out all the obligations that are dictated in the contract.
Article 1 of the new labor law is responsible for defining the base salary. Defining it as the salary stipulated in the employment contract, which is paid to the worker in consideration for the work performed; his can be on a daily, weekly, monthly, piece-rate or hourly basis. Most companies choose payroll solutions to provide their employees with the right salary.
The base salary does not include any allowance or any type of benefit in kind. When placed in this context, base salary only represents the basic compensation that was stated in the employment contract. In addition, in this, the allowances are excluded to form what is known as the base salary.
1.1 Bonuses and commissions
It can be seen how in the old law and the new one it is not specified if commissions and bonuses are part of the base salary. Consequently, both the inclusion and the exclusion will depend on the contract that was signed. However, the Dubai Court of Cassation was commissioned to make the relevant decisions to remove all doubts regarding this issue.
Here it is indicated that the salary is comprised of everything that is granted to the worker for his work done. This can be in money or any other type of species. Therefore, everything that is granted to the worker who is in the gratuity category, will be considered base salary. In addition, without prejudice as long as the relationship with the work you have done is kept.
Due to the aforementioned, the best approach that can be taken is to include the treatment of commissions and bonuses in the employment contract. To honor these bonuses, companies usually hire Employer of Record solutions in the UAE.
2. Do you know everything that the basic salary in Dubai entails? Continue reading for more information
With the above definition of the basic salary, we can say that the salary is the basic salary plus the benefits and allowances that are paid to the employee. Among the most common allowances are those for the telephone, housing, transportation, and school expenses of the children.
If we put together the base salary and all the allowances in the UAE we have what is known as the gross salary. As with base salary, all applicable allowances must be clearly stated in the employment contract. In this way, future disagreements and unnecessary legal complications are avoided.
In case you need your salary in a hurry, the best alternative is to use the DIB salary advance. This is because it allows you to receive up to 90% of the advance of the net salary. However, you have to pay the fees involved in asking for an advance on your salary. The cost of this is 525AED. This will only be available to DIB clients who have their salary credited to the bank.
2.1 Deductions and net salary
It is important to know the difference between gross salary and net salary. This difference arises as a consequence of the deductions. With this, we can say that the net salary is the gross salary minus all deductions. According to the provisions of the new labor law, these are some of the deductions acceptable in the UAE:
- For the recovery of the loans that have been granted to the worker. All are within the maximum limit of the percentage of the monthly deduction from the salary that the worker has. This must be done with the prior written consent of the worker who does not have any interest.
- For the recovery of the amount paid to the worker over his rights. This should be done as long as the amount deducted does not exceed 20% of your salary.
- Fees for any type of social project or any other type of benefit provided by the employer and approved by the ministry. However, this will be possible as long as the worker is committed to writing to participate in the project.
- For the amounts necessary to repair any damage caused by the worker. This will be possible as a consequence of his mistake or disobedience of his boss’s instructions, causing damage to any material property of the boss. All this, provided that these amounts deducted do not exceed the salary of five days for a month.
It is important to keep all of these things in mind for two reasons. The first is that all employees have the right to know what is minimum wage in UAE they earn. The second is that there are currently many procedures that request salary certificates, which include the entire basic salary; if you need it, you have to know that what is written is correct.
3. Additional information on the uses of basic salary in UAE
An important point that you should know is that the basic salary or the UAE minimum salary is the basis for calculating the settlement and annual vacations. Below, you will see detailed information about this.
3.1 How to calculate the annual vacation of employees?
The first thing to analyze is the time the employee has been in the company. According to the UAE labor law; If the worker has been working in the company for a year, he is entitled to 1 month of paid vacation per year. On the other hand, if they have been working in the company for 6 months, employees are entitled to two vacation days per month, until the end of the year. This calculation is made based on the last basic salary you received.
3.2 How to calculate the final settlement of employees?
For different reasons, people stop working in companies and need to be paid for their liquidation. Also, if you are a foreigner, your employer must carry out the visa cancellation and final settlement. This calculation is also made using the base salary as a base; but, the addition of assignments is not taken into account.
4. Is there any lowest salary in Dubai?
The truth is that, currently, there is no minimum wage in the UAE, according to what is written in the UAE labor law. However, depending on the emirate you are in there may be a base salary depending on the condition you are in. For instance, the min salary in Dubai varies depending on the profession and studies. You will see a little more detail about this below.
4.1 What are the Dubai minimum wages?
Currently, there are three possible types of Dubai minimum salary. The first one is for skilled workers, who are required to receive AED 5,000 from Dubai labor salary per month in 2022. But, they are required to have at least a high school certificate.
On the other hand, there is the salary of university graduates and qualified technicians; They receive a higher salary compared to skilled workers. University students are the ones who receive the highest minimum salary in Dubai, this being AED 12,000 per month. Finally, the minimum salary for qualified technicians is AED 7,000 for each month of work.
Something important to mention is that all these salaries can vary depending on the company you work for and the position you hold. For instance, chefs earn a Dubai minimum wage per month of around AED 44,000. To know how much managers must pay their employees, hiring a PEO in the UAE is essential.
In summary, you can realize that living in Dubai can be a very good option, especially if you are a university graduate. This is because the minimum wage in the UAE for university students is around AED 35,000, and it is enough to cover all basic expenses. On the other hand, skilled workers can find it a bit more complicated, but some solutions can be applied.
4.2 Some examples of minimum wages in Dubai
- Domestic workers AED 1,800.
- General manager of a company, 35,000 AED.
- Special Project Managers, AED 20,000.
- Software engineers or any other specialty, the salary is around AED 11,000.
- Human Resources area managers, AED 18,000.
- Sales executives, AED 8,000. The vast majority of companies grant sales commissions, therefore, this salary is generally higher.
- Secretaries in companies, 4,000 AED.
- Paralegals working in law firms, AED 5,500.
- Nurses in clinics or hospitals, AED 6,000.
- Graphic designers, AED 7,000.
4.3 What is the Dubai minimum salary to live?
Every person has certain expenses that he cannot do without, in particular, there are five. These are rent, transportation, education, health care, and food. In general, the living cost in Dubai’s minimum salary is AED 3,477.89 per person per month without taking rent into account. Generally, if you live in the center of the city, the rent is on average AED 5,141.89 per month. But, if you decide to rent an apartment outside the center, the price drops considerably to AED 3,281.72. Consequently, it is important to manage the minimum wage in UAE correctly.
5. How to calculate the Dubai labor salary of your employees?
Currently, there are two ministerial decrees binding on all private companies in the UAE and the Jebel Ali Free Zone (JAFZA); must pay employees’ wages using the Wage Protection System; better known as the WPS system. Therefore, all workers must know how to check their WPS salary.
The WPS system is a platform that allows the payment of employee salaries. It was created with the purpose that the salary reaches all workers at the indicated amount at the corresponding time. Thus, Dubai labor complaints are avoided, due to incorrect payment or delay thereof.
To start using this system, you must complete and send a SIF or Salary Report File to an authorized WPS agent. He will make a confirmation of all the details with the Ministry of Human Resources and Emiratization (MOHRE).
6. How can EOR Middle East help you in calculating the UAE basic salary of your employees?
All business owners should understand the importance of paying the minimum wage in UAE to employees correctly and on time. Many employers, to avoid problems of any kind, decide to hire companies that offer payroll outsourcing services. If you need to outsource your company’s payroll, do not hesitate to contact EOR Middle East.
At EOR Middle East, we have the best teams and people who are complete experts in everything related to payroll. If you want to make a consultation with us, the first one you do by phone will be free for 30 min. You only have to call us at +971 43 316 688. The other contact option that we offer you is by writing to the following email [email protected].
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