The salary (or salary) is then the base salary (salary) plus the benefits and allowances payable to the employee. In a statement, the ministry urged all private companies to pay salaries on time through WPS, an electronic wage transfer system that allows institutions to pay salaries through banks or stock exchanges and other approved financial service providers. Other payment systems are allowed for certain free zones. Our platform is flexible because the frequency of your payments (daily, weekly, monthly) does not affect the amount you end up paying. NOW Money also offers salary-based mobile bank accounts for your employees, which is especially important for those who don`t meet the standard requirements for opening a bank account with UAE banks. If a company employing fewer than 100 workers does not pay the wage within 60 days of the due date, the following penalties will be imposed: In this article, we look at the provisions of the new UAE Labour Code on the basic salary in the UAE. Let`s watch: Under the new law, employees must use their vacation leave in the same calendar year in which it is due, unless the parties have agreed otherwise. The new legislation does not provide details on how to deal with unused leave (i.e. If it can be considered confiscated). The forthcoming MHRE implementing rules are expected to provide further information on this issue. At the end of the employment relationship, employees are entitled to remuneration for unused leave, calculated solely on the basis of the employee`s basic salary.
The old and new laws did not specify whether commissions and bonuses were part of the base salary. Therefore, inclusion or exclusion depends on the contract you have with your employees. The correct calculation of base salary is crucial in determining an employee`s take-home pay, vacation and gratuities. Base salary is not just the basis of the take-home pay that employees receive. It is also essential for the calculation of annual leave and the bonus at the end of the employment relationship. And given the importance of base salary in calculating it, this is an area where you can`t afford to make mistakes. These are items that are generally deducted from employees` salaries. In the new Labour Code (Article 25), the following deductions are acceptable in the United Arab Emirates: Let us take the example of Mr. A, who has been with Company A for 10 years and earned AED 3,673 as his last base salary.
First, we need to convert the basic monthly wage into a daily wage. In this case, it is AED 3,673 divided by 30, which is equivalent to AED 122.4. According to the Labour Code of the United Arab Emirates (Article 26), annual leave must be calculated on the basis of the last full salary (gross salary) received by the employee: basic salary and allowances. „The judgments state that wages include everything that is given to the employee for the work performed, whether cash or any other nature. According to the Act, anything given to the employee that is not classified as an allowance is considered to be basic wages, regardless of the category designated by the employer, as long as it is related to the work performed. „[Do you want to pay your employees the right salary without extra stress? NOW Money is a digital payroll system that allows you to pay your employees easily, flexibly, economically, quickly and efficiently. Send us a message first or tell us about your organization, and we will contact you to find the best solution.] The distinction between gross salary (salary) and net salary (salary) results from deductions (i.e., net salary is equal to gross salary minus deductions). This is an area where commissions and bonuses are important. If they form part of the basic salary, they must be used to calculate the bonus at the end of the employment relationship, provided that they form part of the last salary received by the employee. If, on the other hand, they form part of the gross salary and not of the basic salary, they cannot be used for such a calculation. Under the UAE Labour Code, there are no standardized wage requirements or minimum wages.
Like the basic salary, the applicable allowances must also be clearly defined in the employment contract in order to avoid unnecessary disagreements and legal complications. However, it is customary for the basic salary to be equal to 60% of the gross salary and for the allowances to be 40% of the gross salary. Again, this is not set in stone; It may be different for your business. In case you have not specified the treatment of commissions and bonuses, the Dubai Court of Cassation has „taken decisions that have removed all doubts regarding the commission and bonus under the base salary”, according to Hamdan AlShamsi Lawyers & Legal Consultants, a law firm operating in the United Arab Emirates. The basic salary and allowances in the United Arab Emirates together form what is also known as the gross salary. Every salary must be paid through this WPS system, which is designed to ensure that you pay your employees the right amount at the right time. The law also limits all deductions to 50% of gross salary. In case of concerns or complaints about salary, employees can contact the Ministry of Human Resources and Emiratization (MoHRE) or report a salary complaint. The bonus for the termination of the employment relationship (defined in Article 31 of the new Labour Code) is calculated on the basis of the basic salary in the UAE, without the addition of bonuses (unlike the case of annual leave). The United Arab Emirates has recently introduced unemployment insurance for workers in the private and public sectors.
The new regulation comes into effect in 2023 and covers 60% of the employee`s base salary. Insured employees are compensated up to AED 20,000 in cash in the event of unemployment. It is available to workers who intend to receive financial assistance until they find employment later. Base salary is the contractual amount you paid to an employee without allowances, expenses or other benefits. Currently, there is no minimum wage in the UAE. In addition, there is no percentage of basic salary in the Labour Code of the United Arab Emirates; That is, the law does not require that the base salary correspond to a certain percentage of the gross salary. Understanding how the base salary is calculated under UAE labour law is essential to generating accurate compensation for employees. There is no minimum wage set in the UAE Labour Code, but it is generally mentioned that wages must meet the basic needs of employees. The employer is authorized to make valid deductions from the wages of an employee under the conditions provided for in sections 60 and 61; However, the amount an employer can deduct from a single salary is limited. A maximum of 10% of the employee`s normal remuneration may be deducted in the event of reimbursement of advances or sums of money paid to the employee in excess of his rights.
In addition, all debts due in execution of a court judgment may not exceed one quarter of the employee`s salary; If the employee has many debts or creditors, no more than half of his salary can be deducted. Finally, if the employee has caused loss, damage or destruction to company property due to a violation of the employer`s instructions or the employee`s fault, up to five days` salary per month can be deducted to correct the error. Employees who have worked five years or more are entitled to 21 working days of base pay for each year of service (up to the fifth year of service). For years of service beyond the fifth year of service, they are entitled to 30 days of basic salary.