Today, Dubai is one of the most attractive and prosperous cities in the world. Here, thousands of people are constantly searching for work and life opportunities. In order to make the decision to live in this cosmopolitan city, it is important to ask yourself what the minimum wage is in Dubai. In addition, you surely want to know how it affects the workers. Another common and interesting question is whether there is a law regulating the minimum wage in Dubai.
In this article, we will answer all those interesting questions about the minimum wage in Dubai and the UAE. We will tell you how the minimum wage is determined, the factors that influence it, and the rights and benefits that workers have. In addition, we will give you some tips to be able to negotiate your salary and business working conditions in Dubai. Finally, we will show you the methods they use in the UAE to pay the salaries of employees in companies.
What is the minimum wage in Dubai, UAE?
When a person starts a new job it is essential to understand how low their salary may be. For this reason, knowing what is the minimum wage in UAE is essential. However, you must understand what is minimum wage in UAE to know what this term refers to.
In essence, the minimum wage in UAE is the lowest compensation that companies provide to their employees. Therefore, it is the minimum amount of money that you can request for your independent activities. In this way, you can see that it is the same as in any country in the world.
Furthermore, the UAE is a popular country for its great economy and its self-employed, work, and many other visas. However, there is a substantial difference with other countries regarding the minimum wage. In this sense, the UAE does not have a law that establishes a minimum wage in the country.
For this reason, the UAE government declared that its employers must ensure that their employees receive a salary that is sufficient to cover their basic needs. Thus, determining the appropriate salary is the responsibility of the employer and the employee when negotiating their employment contract.
What is the basic salary?
Basic salary is the contractual amount that an employer agrees to pay an employee. Additionally, note the allowances, expenses, or any benefits are not include. Therefore, an employee’s contract must specify the amount the employee can expect compensation for his or her work.
In this way, article 1 of the new labor law defines work as follows. The salary stipulated in the employment contract is paid to the employer in consideration of his work under his employment contract. In addition, this can be monthly, weekly, daily, hourly, or piece-rate. It does not include any other supplementation or benefit in kind.
Therefore, the basic salary represents the basic compensation that is established in an employment contract with all allowances included.
Who determines wages in Dubai? How are they determined?
Knowing what is minimum wage in Dubai is important. However, determining how much to pay employees can be complicated when doing business in the UAE. In this way, the Ministry of Human Resources and Emiratization or MoHRE of the UAE requires that salaries can cover all the needs of employees.
According to ministerial decree number 788 which was issued in 2009, all private companies in the UAE must pay their salaries through the WPS. Therefore, you need to submit a file containing your salary information to a WPS agent. This will be in charge of confirming all the details of the same with the MoHRE.
Salaries must be paid through the WPS system. Additionally, it was designed to ensure that employees are paid the correct amount and at the ideal time.
Are there any minimums for wages in Dubai?
The first thing you need to know is that a region’s minimum wage is legally binding. That is, the minimum wage base payable for any employee will be the same in that region. The UAE labor law does not contain specific provisions on the minimum wage in Dubai. However, thanks to the Ministry of Labor (MOL) in UAE there are some minimum salaries for specific categories of employees.
You have to know that these salaries are not universally applicable to all employees in Dubai. It is not possible to directly define a minimum wage in Dubai. Among the rules underlying minimum wages are the following:
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- People with a university degree: 12,000 Dirhams
- Competent technicians: 7,000 Dirhams
- Competent workers: 5,000 Dirhams
Additionally, in the UAE, they have specific financial obligations in terms of payroll contributions. The main payroll contribution of employers in the UAE is the 12.5% contribution to the pension fund for local employees.
On the other hand, some salaries in Dubai vary depending on key industries. For example, medicine, finance, energy, and others. However, you have to know that even in these industries the minimum salary in Dubai varies depending on the job position. Below, you will see some examples of how salaries vary in the most popular professions in Dubai.
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- Investment Banker: AED 45,000.
- Cook: AED 44,000
- General Manager: AED 35,000.
- Project Manager: 20,000AED
- Health Insurance Agent: AED 19,600.
- HR Manager: AED 18,000.
- Operations Manager: AED 15,000.
- Software Engineer: AED 11,000.
- Business Development Manager: AED 14,000
- Teaching jobs: AED 10,400.
- Tax Consultant: AED 9,500.
- Investment analyst: 8,333 AED.
- Graphic Designer: AED 7,000
- Civil Engineer: AED 7,000
- Mechanical Engineer: AED 6,000.
- Nurse: AED 6,000.
- Customer Service Representative: AED 5,554.
- Paralegal: AED 5,500.
- Secretary: AED 4,000
- Domestic worker: AED 1,830.
What is the Minimum Wage & Basic Salary in Dubai, UAE?
One of the biggest challenges of doing business in Dubai is setting the right salary for your employees. You should already know that currently, there is no minimum wage in Dubai; however, there is an average salary that is important to know. According to surveys the average salary in this city is 258,000 AED.
In other words, the average salary in Dubai is AED 19,000 per month. That is, half of the population in the city earns less than this amount. But, the other half of the population has a salary higher than this figure. You are probably wondering what the difference is between the average salary and the average salary range. To explain it better, you will see the explanation through an illustrative example.
There are three employees, A, B, and C. In principle, employee A has a salary of AED 10,000, employee B has a salary of AED 20,000 and employee C has a salary of AED 40,000. To calculate the average salary, you must add all the salaries and divide them by the number of people. In this case, the average salary is AED 23,333. On the other hand, the average salary range is the average value between all salaries. That is, in this case, the average salary range is 20,000 AED.
In summary, as there is currently no minimum wage in Dubai, the average salary or the average salary range is usually used. In addition, there is also the basic salary, which in short is the contractual amount that must be paid to the employee. You have to know that this salary does not take into account allowances, expenses, or other benefits. Finally, another important characteristic of this salary is that it is with prior agreement between the employer and employee.
How can you pay employees in the UAE?
In the United Arab Emirates, you have to go through a series of steps to make the payment of salaries. Specifically, to comply with the regulations of the Ministry of Human Resources and Emiratization (MoHRE). Below, you will see all the steps you have to follow to pay the minimum wage in Dubai for your employees.
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- First step (register on the MoHRE website): All UAE employers must register with the MoHRE. In other words, the Ministry of Human Resources and Emiratization.
- Second step (subscribe to the WPS Wage Protection System): Subsequently, employers have to subscribe to the WPS system. This system gives employees the guarantee of receiving their salaries on time and in full.
- Third step (open a bank account): If the employer does not have a bank account in the UAE, they have to find a bank approved for the system.
- Fourth step (enter into a WPS agreement): The employer has to agree on a WPS agreement with the bank or agent.
- Fifth step (issue salary transfer instructions): The employer issues specific salary transfer instructions to the bank. Wages must go directly to the employee’s financial institution or bank within 15 days of the salary due date. Otherwise, the employee can report a delay in the payment of his salary.
Thanks to this process, employers can pay their employees’ salaries promptly. In addition, thanks to this, compliance with labor laws in the UAE is guaranteed. It is important to note that the MoHRE does not process any transactions or deal with business owners who are part of the WPS. For this, you have to register in the system. Payment of salaries may be in Emirati dirham, the national currency of the United Arab Emirates, or in any other currency.
What is the Wages Protection System?
The Wage Protection System (WPS) is an electronic wage transfer system. Thanks to this, institutions have to pay through exchange houses, banks, and financial institutions authorized to provide the service. The development of this system is by the Central UAE and is so that the Ministry of Labor can create databases. Thus, wage payments are part of the private sector to ensure timely and full payment of wages.
The WPS is part of all institutions belonging to the Ministry in all industries and sectors. In addition, it benefits different categories of workers. In order to be part of this agreement, different parties have to agree, which are:
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- Workers: Any person who is in the private sector for an agreed salary. In addition, having a work card from the Ministry.
- Employers: That is, any person who owns a company or institution registered with the Ministry. In addition to employing one or more workers in exchange for a proposed salary.
- Banks: That is, financial institutions in which the employer maintains a bank account to transfer salaries through the WPS network.
- Agent: In other words, an exchange office, any bank or financial institution with the approval of the Central Bank in the UAE. Specifically, to offer payment for services through WPS. The Central Bank of the UAE publishes lists periodically with the names of new agents.
What happens if the employer does not pay on time?
Currently, there is a new legal provision against companies that are not paying salaries on time. For these cases, the Dubai courts can issue an order to freeze the rights of the companies. Especially for those companies that manage to pay the salaries of more than 100 workers.
The management and the labor court use this measure as part of efforts to toughen legal measures against employers. Specifically, against those involved in unpaid wages for a large group of workers. The idea is to safeguard the rights of employees in any area.
If a large group of employees in a company are not paid on time, they can file a complaint online. This online complaint is specifically for the competent authority that was in charge of your employment contract. It can be in the free zone or the Labor Office of the Ministry of Human Resources and Emiratization (MoHRE).
The relevant authority has the obligation to review the complaint and work to reach an amicable agreement between the employer and employees. Otherwise, the case will be the work of the Labor Court. The steps that employees have to follow to file a complaint online in case of non-payment of wages are as follows:
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- The employee group has to register the complaint online.
- Select the category of unpaid wages. Subsequently, you have to include all the names of the complainants.
- Save the complaint number.
- The authority’s purpose is to notify the employer of a complaint.
- The competent authority (free zone or Labor office) designates a hearing that both parties must attend before the ministry to reach a conciliation.
- If a conciliation is not reached, the case will be referred to the labor court.
Conclusion
The UAE labor law does not establish a minimum wage, nor does it establish a minimum wage in Dubai for foreigners. However, it does mention that salaries have to cover all the needs of employees. In this way, employers can set the salaries of their employees according to their discretion.
The government has established minimum wages for skilled and unskilled workers. Thus, a qualified technician has to receive a minimum monthly salary of 7,000 AED. On the other hand, unskilled workers have to receive a minimum monthly salary of 5,000 AED. However, this requirement applies only if the individual possesses a certificate indicating successful completion of secondary school.
The UAE offers many benefits to its employees and also employment visas to foreigners. Additionally, employers must provide employees with transportation, lodging, and health insurance. Employees even have days off and paid vacations.
In summary, the UAE does not have a minimum wage defined in its labor law. However, the government has established rules so that employees can have compensation that meets their needs. Thus, if you want to know more about the minimum wage in the UAE, you can contact us. At Connect Group you can count on professional advice from experts in UAE salaries.
