Payroll Process in UAE ; A Brief Overview

In order to guarantee correct and timely employee remuneration, the payroll process in the United Arab Emirates requires strict attention to detail, compliance with regional laws, and flawless technological integration.

What are the statutory pay components included in employee salary?

 

• • There are NO defined statutory components.

Which are the common pay components that are normally payable to employees?

 

• • Fixed components may include Basic salary, House rent allowance, Transport allowance & Other allowance. The variable components may include Overtime, Sales commission, Bonus, Incentives, Relocation allowance, Mobile allowance etc.

What is the minimum salary payable in UAE?

 

• • There is NO minimum salary payable in UAE.

How is overtime calculated?

 

• • An employee shall be entitled to remuneration equal to his normal wage plus an extra of at least 25% for extra hours beyond normal working hours. If the overtime falls between 9 p.m. to 4 a.m. on a working day, the employee will be entitled to his normal wages plus an extra 50%. If the employee works on a designated rest day, he is entitled to normal wages plus 50%.

How is UAE gratuity accrued?

 

• • UAE Gratuity is accrued against the last drawn basic salary & calculated as follows;

• • Twenty- one day’s pay for every year of the first five years of service.

• • Thirty days pay for every additional year.

When is gratuity paid to an employee?

 

• • An employee, who has completed one year or more in the continuous service, is entitled to the End of Service Remuneration at the end of his service.

What are statutory deductions that are made to employees in the UAE?

 

• • Payroll is not subject to Income tax, & hence there are NO mandated tax seductions UAE nationals are subject to mandatory national pension plans contributions.

How is UAE pension calculated?

 

• • Monthly pension deductions are made on UAE nationals’ total fixed salaries to a maximum limit of AED 50,000/-. Private sector employees in Dubai contribute 5% of their total salary to this plan, the employer contributes 12.5%, and the government contributes 2.5%. In Abu Dhabi, the employees contribute 5% the employer contributes 15%.

What is UAE WPS?

 

• • UAE WPS is an electronic salary transfer system that allows Institutions & Organizations in the private sector to pay their employees through banks, exchange bureaus and financial institutions approved by the UAE Central Bank. WPS is applicable to all the private sector companies registered under Ministry of Human Resources & Emiratization (MOHRE) & Jebel Ali Free Zone Authority (JAFZA).

What are the types of employment contracts available in UAE?

 

• • There is only limited term contract for a maximum period of 3 years.                                                                                                                                                                                              

Are employees eligible for Air Ticket Benefits in UAE?

 

• • Employers are required to provide their employees with a return ticket once in every two years to their home country.

Is employee Medical Insurance mandatory in UAE?

 

• • It is mandatory that an employer provide medical insurance to the employee during the duration of employment.

Which are the currencies that can be used in making salary payments in UAE?

 

• • The salaries shall be paid either in UAE Dirham or any other currency if it is agreed between both parties in the employment contract.

Is bonus or incentives payment mandatory in UAE?

 

• • Bonus and incentives payments are NOT mandatory in UAE.

What are all the statutory leave available in UAE?

 

• • Annual Leave: 30 Days per year.

• • Maternity Leave: 60 Days Maternity leave, 45 days with full pay & following 15 days with half pay.

• • Compassionate Leave: 5 days leave with pay in case of death of Spouse and 3 days in case of death of Parents, Children, Siblings, Grandchildren, Grandparents.

• • Study Leave: 10 working days if two years of service is completed. It is Applicable for an employee enrolled in an education institution approved by UAE.

• • Parental Leave: Five working days for both Father and Mother who has a newly born child.                                                                                                                                                                       

What are the items included in End of Service Benefits calculated in UAE?

 

• • The employee is entitled to the following end of service benefits.

• • End of Service Gratuity

• • Repatriation ticket if applicable

• • Notice period pay if applicable

• • Any unutilized leave (Vacation) pay

• • Any other outstanding payment or deduction                                                                                                                                                            

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