As an employer in the United Arab Emirates, it is crucial to understand every aspect of salary processing, WPS payroll, and how to run payroll efficiently, UAE labor laws overtime to ensure that your workforce remains happy and motivated. Let’s dig into the aspect of employees working overtime, the UAE laws governing it, and see whether your employee qualifies for overtime.
Defining overtime
Overtime refers to extra hours an employee works beyond their regular schedule and agreed-upon employment contract. The company usually compensates these additional hours at a higher pay rate to recognize their efforts and time invested in the task.
Overtime may or may not be synonymous with working additional hours at any particular job. To better comprehend this distinction, an employee could voluntarily work additional hours without receiving overtime pay.
UAE regulations regarding overtime
The UAE Labour Law has certain provisions in place, for private sector employees in the UAE in order to protect their rights:
- Article 17 (1) of Federal Decree-Law No. 33 of 2021 on Labour Relations in the Private Sector (“New Employment Law”) stipulates: Maximum working hours: 8 per day/ 48 per week
- Article 17 (2) grants the Cabinet authority (after consultation with relevant entities and receiving their agreement) to alter working hours for certain economic sectors or categories of workers; working times, breaks, and prohibition periods also depend upon this determination.
Employer’s obligations
There are certain obligations that an employer has towards their employee in the UAE. Depending on the job role and the signed contract, employers may or may not include factors like working conditions, accommodation, sick leaves, and employee documentation policies.
Here are some points relevant to you if you’re an employer:
- The law entitles employees to receive overtime pay for any work performed beyond standard working hours unless they hold a managerial position.
- The worker cannot typically include commuting time from home to the workplace within working hours, except for certain categories defined by the Executive Regulations of this Decree-Law. However, this rule does not apply to every worker and job profile, so employees should discuss it with their employers to find a mutually convenient option.
- Workers cannot be employed for more than two rest days in a row. Daily workers could be an exception.
- If the employer requires the worker to work beyond their usual hours, they will certainly treat it as overtime. For this, the employer will pay the worker their basic wage plus at least 25% extra.
- If the worker wants to perform work remotely, whether inside or outside the UAE, and with the consent of the employer, the employer may specify a certain number of working hours.
Calculating overtime compensation of UAE labor laws overtime
1. The total working hours should not exceed 144 across three weeks, as stated by the MOHRE. If the employer requires the worker to work beyond their usual hours, they will certainly treat it as overtime. For this, the employer will pay the worker their basic wage plus at least 25% extra.
2. If the employer requires the worker to work beyond their usual hours, they will certainly treat it as overtime. For this, the employer will pay the worker their basic wage plus at least 25% extra.
3. If the employer requires the worker to work extra hours between 10 pm and 4 am, they must pay the worker their basic wage plus at least 50% of that wage. This shall not apply to workers by shifts.
4. If the employer requires the worker to work on their ‘rest day,’ as specified in the Employment Contract or internal work policies, they must compensate them with a ‘substitute rest day.’ Alternatively, the company can pay them their basic wage plus at least 50% more, depending on the policies.
FAQs of UAE labor laws overtime
Overtime Rule in UAE
In the UAE, the UAE Labor Law (Federal Law No. 8 of 1980) governs overtime rules and outlines employers’ and employees’ rights and responsibilities. According to the UAE Labor Law:
How Overtime Pay is Calculated in UAE?
- Overtime pay in the UAE is typically calculated at different rates, depending on whether the overtime is done during regular working hours, on a rest day, or on a public holiday.
- Article 68 of the UAE Labor Law states that overtime pay is calculated as follows:
- For overtime during regular working hours: 25% of the employee’s hourly wage.
- For overtime during rest days: 50% of the employee’s hourly wage.
- For overtime on public holidays: 150% of the employee’s hourly wage.
Article 72 of the UAE Labor Law
Article 72 of the UAE Labor Law stipulates that the maximum number of overtime hours an employee can work in a week should not exceed two hours per day, unless such work is necessary to prevent substantial loss or serious accident or to eliminate or alleviate the consequences of the same.
Policy for Overtime Hours
- In the UAE, the UAE Labor Law (Federal Law No. 8 of 1980) governs overtime rules and outlines employers’ and employees’ rights and responsibilities.
- The law also mandates that employers maintain records of overtime worked by employees and pay the appropriate overtime rates.
- The employer should compensate overtime work with either additional pay or compensatory time off, as agreed upon with the employee.
Last, explain of UAE labor laws overtime
As previously discussed, all employees in the UAE receive between 25% and 50% of their salary as overtime pay for any overtime work they perform. There may be exceptions based on factors such as an employee’s role, nature of work done during overtime hours and time of day they worked extra hours.
In case of any disputes regarding UAE regulations and employer obligations, please reach out to the Ministry of Human Resources and Emiratisation (MoHRE).
If you are a business in the UAE and you want to ensure that salary processing remains efficient, accurate, and compliant, then make sure to work with a Ministry-approved payroll card provider, who can help streamline your salary processing operations.
