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UAE labour law: 6 salary payment options and how wages can be paid

This flexibility ensures that the rights of all parties are protected while maintaining a fair working relationship

Published: Mon 10 Jun 2024, 2:27 PM

Updated: Tue 18 Jun 2024, 3:35 PM

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The UAE labour market attracts thousands of expats annually, who relocate to the Emirates for high standard of living, better career opportunities and enjoy the benefits of tax-free income. The influx contributes to the country's diverse workforce that drives the economy and makes the UAE a hub for international talent and innovation.

To foster a flexible and fair working environment, the UAE's Regulation of Labour Relations Law allows employers and employees to mutually agree on various forms of salary payment.

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This regulation ensures the protection of both parties' rights while accommodating diverse work patterns. These work patterns depend on the nature of the contract signed between the employer and the employee, and as long as it's legally recognised by the Ministry of Human Resources and Emiratisation (MoHRE).

Here are the six recognised wage payment forms in the UAE labour market:

Monthly wage: The monthly payment workers receive wages as according to their employment contract, which includes their basic salary, bonuses, and allowances.

Weekly wage: The payment workers receive for their weekly work, ensuring them a quick cash flow and more flexible wage management for the company

Daily wage: The amount a company pays workers for one day's work, typically used for temporary or seasonal jobs

Hourly wages: Calculated based on the number of hours worked, with the hourly rate determined by experience, skills, and job nature

Commission-based wage: A payment system common in sales and certain service industries, where a worker's income is based on a percentage of the value of goods or services sold

Piece-rate wage: Worker's payment determined by the amount of work completed or units produced

When should employers pay salaries?

The employee's wages are due on the first day of the month following the end of the period specified in the employment contract. If no period is specified, the employee must be paid at least once a month.

The employer is in default of paying the wage if he does not pay it within the first 15 days after the due date, unless a shorter period has been agreed in the employment contract.

How salaries should be paid

The UAE government's Wage Protection System (WPS) seeks to provide a safe, secure, and efficient mechanism to streamline the timely payment of wages to employees by their employers.

All employers registered with MoHRE must subscribe to the WPS and pay the wages to their employees through it, as per the due dates. Under this system, salaries of employees will be transferred to their accounts in banks or financial institutions, which are authorised by Central Bank of the UAE to provide the service.

MoHRE does not process any transactions or deal with the owners of the companies that are not registered with the WPS until they register in the system. Payment can be in Emirati dirham or in any other currency, if it is agreed upon between both parties in the employment contract.

The government has also penalised companies for failing to pay wages on the due dates.

Minimum wages in UAE

There is no minimum salary stipulated in the UAE Labour Law. However, it broadly mentions that salaries must cover basic needs of the employees.

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