Today, Dubai is one of the most attractive and prosperous cities in the world, drawing thousands of people in search of work and better life opportunities. Before deciding to settle and start a business in this cosmopolitan hub, it’s crucial to consider factors such as the current minimum wage in Dubai and how it affects the workers. Another common question is whether there is a law regulating the official minimum wage in Dubai.
In this article, we will address all your questions about the Dubai minimum wage. We will explain how the Dubai minimum wage is determined, the factors that influence it, and the rights and benefits available to workers. Finally, we will explore how companies pay wages to their employees in the UAE.
Understanding the Concept of Minimum Wage in Dubai
When starting a new job in Dubai, whether you’re self-employed or hold a work visa, it’s crucial to understand what your salary might be. For this reason, knowing the current minimum wage in the UAE is essential.
The term “minimum wage” in the UAE represents the lowest compensation that companies are required to provide to their employees. In other words, it is the minimum amount you can expect or request for your work. While the concept of a minimum wage in the UAE is similar to that in other countries, Dubai stands out with its unique and distinctive wage guidelines.
What is the current minimum wage in Dubai, UAE?
The UAE does not have a law that specifically establishes an official minimum wage across the country. There is no mandatory minimum salary like in other countries.
However, while there is no official minimum living wage, the UAE government declared that its employers must ensure that their employees receive a salary that is sufficient to cover their basic needs. Consequently, in Dubai, determining a fair wage is the responsibility of the employer and the employee when negotiating their employment contract.
Why is there no official minimum wage in Dubai?
Currently, there is no UAE minimum wage because the UAE labor law doesn’t mandate a fixed minimum salary. The country is a free-market economy, and wage structures are determined according to the employees’ qualifications, nationality, industry, and several other factors. In addition, the absence of government-approved minimum wages allows businesses to drive foreign investment and stay competitive.
Is there a minimum salary per hour?
Because there is no approved minimum wage in Dubai, there is also no minimum salary per hour. The mandatory current minimum wage or mandatory minimum salary set is agreed upon by the employee and the employer.
What is the basic salary?
The basic salary is the contractual amount that an employer agrees to pay an employee for their work, as outlined in the employment contract. It is important to note that in Dubai, official minimum wage guidelines have no allowances, expenses, and benefits included in the basic salary. The employment contract must clearly specify the amount of compensation the employee can expect for their work.
According to Article 1 of the new labor law, the salary stated in the employment contract is paid to the employee in exchange for their work under the agreement. This salary can be paid monthly, weekly, daily, hourly, or on a piece-rate basis.
The difference between basic salary and gross salary
Basic salary is the pay an employee receives for their work. It represents the core compensation outlined in the employment contract, excluding allowances and other benefits. Gross salary, on the other hand, refers to the base salary plus any additional compensations.
Who determines wages in Dubai?
Understanding the minimum wage laws in Dubai is important for both job seekers and employers. In the UAE, determining appropriate salaries for employees can be complex due to various regulations and minimum wage guidelines. For this reason, the Ministry of Human Resources and Emiratization or MoHRE of the UAE requires employers to ensure that salaries meet the full needs of their employees.
For which employee categories in Dubai has a minimum wage been established?
The UAE labor law does not contain specific provisions for Dubai minimum wage. 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. Among the rules underlying minimum wage guidelines are the following:
- People with a university degree: 12,000 Dirhams
- Competent technicians: 7,000 Dirhams
- Competent workers: 5,000 Dirhams
Additionally, employers in the UAE have specific financial obligations related to payroll contributions. The primary payroll contribution for employers in the UAE is a 12.5% contribution to the pension fund for official citizens of UAE or Emiratis.
Average Minimum Salaries in UAE
Salaries in Dubai vary across key industries such as medicine, finance, energy, and others. However, even within these industries, the mandatory minimum salary in Dubai differs based on the job position. Here is a salary comparison for some of the most popular professions in Dubai.
Minimum Salary in Dubai [Salary comparison by position]
- 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 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 there is currently no set Dubai minimum wage; however, there is an average salary that is important to know.
Average Salary in Dubai
According to surveys, the average annual salary in Dubai is approximately 258,000 AED (equivalent to 19,000 AED per month). Half of the population earns less than this amount, while the other half earns more.
Understanding Average Salary vs Average Salary Range
To better understand the concepts of average salary and average salary range, let’s explore them using an illustrative example. Imagine three employees: A, B, and C. Employee A earns AED 10,000, employee B earns AED 20,000, and employee C earns AED 40,000.
To calculate the average salary, you add all the salaries together (10,000 + 20,000 + 40,000 = 70,000 AED) and divide by the number of employees (3). The result is an average salary of AED 23,333.
The average salary range (or median salary), on the other hand, refers to the median or middle value when comparing all salaries. In this case, the median salary is AED 20,000, which represents the midpoint among the salaries listed.
How can you pay employees in the UAE?
In the United Arab Emirates, you have to go through a series of steps to pay salaries. Specifically to comply with the regulations of the Ministry of Human Resources and Emiratization (MoHRE). Your HR services should assist in ensuring that these steps are followed properly.
Below, you will see all the steps you have to follow to pay the wages for your employees in Dubai.
- Step 1: Register on the MoHRE website. All UAE employers must register with the MoHRE (Ministry of Human Resources and Emiratization).
- Step 2: Subscribe to the Wages Protection System (WPS): This system gives employees the guarantee of receiving their salaries on time and in full, so employers should subscribe to it as well.
- Step 3: 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.
- Step 4: Enter into a WPS agreement. The employer has to agree on a WPS agreement with the bank or agent.
- Step 5: 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 not part of the WPS. To do this, you have to register in the system. WPS salaries can be only in AED (dirhams), the national currency of the United Arab Emirates.
What is the Wage Protection System?
The Wage Protection System (WPS) is an electronic wage transfer system that allows institutions to process wage payments through exchange houses, banks, and financial institutions authorized to provide the service. This system, developed by the Central Bank of the UAE, enables the Ministry of Labor to create databases. It ensures that employers make timely salary payments and pay their employees in full.
The WPS applies to all institutions registered with the Ministry across various industries and sectors, benefiting different categories of workers. The following parties participate in this system:
- Workers: Any individual employed in the private sector for an agreed salary and holding a work card issued by the Ministry.
- Employers: Any person who owns a company or institution registered with the Ministry that employs one or more workers in exchange for a specified salary.
- Banks: Financial institutions where the employer holds an account to facilitate salary transfers through the WPS network.
- Agents: Entities such as exchange offices, banks, or financial institutions approved by the Central Bank of the UAE to process salary payments via the WPS. The Central Bank of the UAE regularly publishes updated lists of authorized agents.
Minimum wage regulations for delay in salary payment
A new legal provision has been introduced to address companies that fail to pay salaries on time. Under this law, Dubai courts can issue orders to freeze the assets of such companies, particularly those employing more than 100 workers.
This measure is part of efforts by management and labor courts to strengthen legal actions against employers, especially those withholding wages from large groups of employees. The primary goal is to safeguard the rights of workers across all sectors.
If a company delays paying salaries to a significant number of employees, those affected can file an online complaint with the relevant authority overseeing their employment contracts. This typically falls under the Labor Office of the Ministry of Human Resources and Emiratization (MoHRE).
The authority is responsible for reviewing the complaint and attempting to mediate an amicable resolution between the employer and the employees. If no agreement is reached, the case is escalated to the Labor Court for further action.
Conclusion
The UAE labor law does not specify a minimum wage, nor does it establish Dubai minimum wage for foreign workers. The pay is determined during the wage negotiation process between employers and employees. However, the law does state that salaries must be sufficient to meet the basic needs of employees.
The government has established minimum wages for skilled and unskilled workers. 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, including employment visas for foreigners. Additionally, employers must provide employees with transportation, lodging, and health insurance. Employees even have days off and paid vacations.
If you want to know more about mandatory minimum salary or minimum wage guidelines in the UAE, you can contact us. At Connect Group, you can count on professional advice from experts on UAE salaries.
