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, 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.
Overtime refers to extra hours that an employee works beyond their regular working hours, beyond what was agreed in their employment contract. These additional hours usually receive compensation at a higher pay rate in recognition of all of their efforts and time that were poured into the task at hand.
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.
There are certain obligations that an employer has towards their employee in the UAE. Depending on the job role and the contract that was signed, factors like working conditions, provision of accommodation, sick leaves, not withholding the employee’s documentation, etc. may or may not be included.
Here are some points relevant to you if you’re an employer:
- According to the law, unless the employee holds a managerial position, they are entitled to receive overtime pay for any work performed beyond the standard working hours.
- The time spent by the worker in commuting from their place of residence to the workplace ideally cannot be calculated within the working hours, except for certain categories of workers according to the controls set by the Executive Regulations of this Decree-Law. However, this is not fixed for every worker and job profile, so employees can discuss this with their employers, and they can decide on an option that is mutually convenient to them.
- Workers cannot be employed for more than two rest days in a row. Daily workers could be an exception.
- If the worker is not a full-time worker or an original employer, they cannot insist that the worker must work for him more than the agreed hours in the employment contract, unless this was agreed in advance by both of them.
- 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
1. The total working hours should not exceed 144 across three weeks, as stated by the MOHRE. A worker can be asked to work for additional hours, as long as the additional work time does not exceed 2 hours per day.
2. If the worker is required to work over their usual hours, then this will certainly be treated as overtime. For this, the worker will be paid their basic wage, in addition to at least 25% of that wage.
3. If the worker is required to be employed for extra hours, between 10 pm and 4 am, then the worker shall be paid their basic wage, in addition to at least 50% of that wage. This shall not apply to workers by shifts.
4. If the worker is required to be employed on their ‘rest day’, which might be agreed on and specified in the Employment Contract or in the internal work policies, then they shall be compensated with a ‘substitute rest day’. Alternatively, they can be paid their basic wage in addition to at least 50% of that wage, depending on the policies.
Overtime Rule in UAE
In the UAE, overtime rules are governed by the UAE Labor Law (Federal Law No. 8 of 1980), which outlines the rights and responsibilities of employers and employees. 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
- Employers in the UAE are generally required to obtain the consent of the employee before requesting them to work overtime.
- The law also mandates that employers maintain records of overtime worked by employees and pay the appropriate overtime rates.
- Overtime work should be compensated in either additional pay or compensatory time off, as agreed upon between the employer and employee.
As previously discussed, all employees in the UAE are entitled to receive between 25% and 50% of their salary as overtime pay for any overtime work performed. 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.