HQ: Floor 8 & 9, City Tower 2, Sheikh Zayed Road, Dubai, UAE

HQ: Floor 8 & 9, City Tower 2, Sheikh Zayed Road, Dubai, UAE

overtime calculation in uae

What should you know about overtime calculation in the UAE?

Getting on a professional journey in the UAE comes with the necessity of understanding the intricacies of overtime calculation. Whether you are an employer striving for compliance or an employee seeking to comprehend your rights, this exploration into overtime calculation in UAE aims to demystify the process and equip you with the knowledge needed to navigate the dynamic realm of employment in the country.

In this article, we delve into the essential aspects of overtime calculation in UAE, shedding light on the regulations and guidelines that govern this crucial facet of employment. As the working landscape continues to evolve, both employers and employees must prioritize becoming well-versed in how overtime is computed. From legal frameworks to practical considerations, we navigate through the nuances, offering a comprehensive guide that ensures clarity on overtime hours, rates, and the procedures involved.

What does the UAE law state about the overtime calculation in UAE

overtime calculation in uae

The UAE Labor Law meticulously outlines the regulations governing overtime calculation in UAE. This helps ensuring a fair and standardized approach for both employers and employees. The law defines overtime as any work performed beyond the regular working hours, and it should not exceed eight hours per day or 48 hours per week.

  • Overtime Rates: The law stipulates that overtime is compensated at a rate higher than the regular hourly wage. For regular working days, the overtime rate is 125% of the basic hourly wage. Moreover, for official holidays or rest days, it increases to 150%.
  • Maximum Overtime Hours: The labor law sets a limit on the maximum number of overtime hours an employee can work. Unless the work is deemed crucial, employers should not allow overtime to exceed two hours per day. They will also have the possibility of extending it to four hours.
  • Overtime Calculation Formula: Overtime calculation involves a straightforward formula: Overtime Pay = (Basic Salary ÷ Total Working Hours in a Month) × Overtime Hours × Overtime Rate.
  • Permission Requirement: Employers are obligated to seek the employee’s consent before assigning overtime work, unless it is necessary to prevent substantial loss, serious accident, or the completion of unfinished work.
  • Record-Keeping: Employers are required to maintain accurate records of overtime hours worked by employees. They must also detail the dates, hours, and reasons for overtime.

Understanding the overtime calculation in UAE labour law is essential for everyone to ensure compliance and fairness in the workplace. To uphold the rights of their workforce, employers must adhere to these regulations. Furthermore, employees should be aware of their entitlements and the conditions under which overtime calculation in UAE is done. This clarity also helps fostering a harmonious work environment.

Key rules related to the working hours in the UAE

Navigating the working hours landscape in the UAE requires a comprehensive understanding of key rules. This particularly concerns overtime calculation in UAE labour law. Moreover, this legal framework establishes standard working hours should not surpass eight hours per day or 48 hours per week. It helps providing a foundational guideline for employment across various sectors.

Crucially, the law introduces the concept of overtime, applicable when employees exceed their regular working hours. Overtime calculation in UAE follows a precise formula, ensuring fair compensation. For regular working days, the law mandates an overtime rate of 125% of the basic hourly wage. Furthermore, on official holidays or rest days, this rate increases to 150%. This meticulous approach to overtime rates reflects the commitment to equitable compensation for additional work.

The maximum allowable overtime pay calculation in UAE hours are a crucial aspect of overtime regulation. These hours are usually capped at two per day, with exceptions occurring when work is deemed crucial, permitting an extension to a maximum of four hours. This nuanced approach recognizes the varying demands of different industries and ensures flexibility while maintaining employee welfare.

Employers play a pivotal role in upholding these regulations, requiring them to seek employee consent before assigning overtime—except in cases preventing substantial loss, addressing serious accidents, or completing unfinished work. Accurate record-keeping is of utmost importance, and employers must maintain precise records of overtime hours, including dates, hours worked, and the reasons necessitating overtime.

Key rules related to working overtime in the UAE

Understanding the key rules related to working overtime in the UAE is paramount for both employers and employees. The overtime calculation in UAE as per labour law has clear guidelines, ensuring fairness and transparency in compensating additional work.

The UAE Labor Law defines overtime as any work performed beyond the regular working hours. Moreover, these these hours should not exceed eight hours per day or 48 hours per week. Overtime calculation in UAE as per labour law follows a structured approach, with rates specified based on the nature of the working day.

For regular working days, the law mandates an overtime rate of 125% of the basic hourly wage. However, on official holidays or rest days, this rate increases to 150%. All of this provides additional compensation for employees during times of increased workload.

The law establishes a maximum limit for overtime hours, typically not exceeding two hours per day. However, employers grant exceptions when they consider the work crucial, allowing for an extension to a maximum of four hours. This nuanced approach acknowledges the diverse demands of various industries while safeguarding the well-being of employees.

Employers play a crucial role in the overtime process. Before assigning overtime, they must seek the consent of employees, except in cases where it is necessary to prevent substantial loss, address serious accidents, or complete unfinished work. This ensures that employees have a say in their work hours, fostering a collaborative and respectful work environment.

Employers must mandatorily keep accurate records of overtime hours, including dates, hours worked, and the reasons necessitating overtime. This practice ensures compliance with overtime pay calculation in UAE regulations and provides a transparent record of additional hours worked.

How should companies in the UAE calculate overtime on a normal day?

In the UAE, companies must adhere to specific guidelines outlined by the Ministry of Human Resources and Emiratisation (MOHRE) when calculating overtime on a normal day. According to the UAE Labor Law, overtime is applicable when employees work beyond the regular eight hours per day or 48 hours per week.

To do overtime calculation in UAE MOHRE on a regular working day, companies employ a straightforward formula. To determine overtime pay, companies multiply the employee’s basic hourly wage by 1.25. This establishes the overtime rate at 125% of the regular hourly wage for each additional hour worked beyond the standard eight-hour workday.

For instance, if an employee earns a basic hourly wage of AED 20, the company would calculate the overtime rate as AED 25 per hour (AED 20 × 1.25). This calculation guarantees that employees receive increased compensation for the extra effort and time they dedicate to their work.

Companies must maintain meticulous records of employees’ overtime hours, including dates, hours, and reasons necessitating overtime. This record-keeping is crucial for both compliance with labor regulations and ensuring transparent and fair compensation practices.

By following the stipulated overtime calculation in UAE MOHRE guidelines, companies in the UAE can uphold legal standards. This helps fostering a work environment that values and compensates employees appropriately for their additional contributions on normal working days. This not only ensures compliance with labor regulations but also promotes fairness and transparency in employment practices.

Wrong formulas companies should not use

Companies in the UAE must be vigilant about avoiding incorrect formulas when doing overtime calculation in UAE new labour law. It is crucial to steer clear of erroneous methods to ensure accurate compensation for employees working beyond regular hours.

One common mistake companies should avoid is miscalculating the overtime rate. The correct overtime calculation in UAE new labour law formula entails multiplying the basic hourly wage by 1.25 to set the overtime rate at 125% of the regular hourly wage. Using a different multiplier or applying an arbitrary percentage can result in inaccurate compensation. This, furthermore, could lead to potential disputes and non-compliance with labor regulations.

Another error to avoid is neglecting to account for official holidays or rest days when determining the overtime rate. The law mandates a higher rate of 150% for overtime worked on such days. Failing to incorporate this provision in the calculation can result in underpayment and a violation of legal standards.

Additionally, companies must actively consider the maximum allowable overtime hours. They should ensure they do not exceed two hours per day unless the work is deemed crucial, allowing for an extension to a maximum of four hours. Ignoring these limits can lead to employee fatigue, compromising their well-being and contravening labor regulations.

What is the formula to calculate overtime in UAE?

overtime calculation in uae

The formula to overtime calculation in UAE is a straightforward and crucial aspect of adhering to labor regulations. As per the UAE Labor Law, overtime is applicable when employees surpass the standard eight hours per day or 48 hours per week. The prescribed formula ensures fair compensation for additional work.

To do overtime calculation in UAE, companies multiply the basic hourly wage by 1.25. This results in an overtime rate set at 125% of the employee’s regular hourly wage. For instance, if an employee earns a basic hourly wage of AED 20, the company would calculate the overtime rate as AED 25 per hour (AED 20 × 1.25). This meticulous calculation ensures that the company compensates employees at an increased rate for their extra effort and time devoted to work.

It is crucial to note that this formula is applicable to regular working days. For official holidays or rest days, the overtime rate increases to 150%, providing additional compensation during times of increased workload.

Implementing this formula ensures transparency and fairness in compensating employees for overtime work. Companies must diligently apply this calculation to uphold legal standards, foster a work environment that values accurate compensation, and align with the regulatory framework in the UAE. Understanding and applying the overtime calculation formula not only ensures compliance with labor regulations but also promotes equitable employment practices and employee well-being in the UAE.

How should employers calculate overtime if an employee works on Public Holiday?

When employees work on a public holiday, employers must do calculate overtime in adherence to the UAE Labor Law. The overtime calculation in UAE for public holidays is distinct from regular working days and involves an increased rate. This helps to ensure fair compensation for employees during these special circumstances.

According to the labor law, employers set the overtime rate for work on public holidays at 150% of the employee’s regular hourly wage. To compute this, employers use a simple formula: multiplying the basic hourly wage by 1.5. This results in the overtime rate being one and a half times the regular hourly wage.

For instance, if an employee earns a basic hourly wage of AED 20, the employer would calculate the overtime rate for work on a public holiday as AED 30 per hour (AED 20 × 1.5). This ensures that employees receive increased compensation for their dedication and service on public holidays.

Employers must be meticulous in applying this specific overtime calculation when employees work on public holidays. It helps upholding legal standards and demonstrating a commitment to fair and just compensation practices. This approach not only aligns with regulatory requirements but also fosters a work environment that values and respects employees’ contributions during special circumstances, contributing to a harmonious and compliant workplace in the UAE.

Conclusion

In conclusion, understanding the nuances of overtime calculation in UAE is essential for both employers and employees. Adhering to the prescribed formulas outlined in the labor law ensures fair compensation and compliance. This knowledge fosters a transparent and equitable work environment, aligning with regulatory standards and promoting a harmonious relationship between employers and employees in the UAE.

If you are interested in learning more about this and other related topics, you should check our insights. Moreover, if you want to know more about our services, just visit our contact section.

The Complete Guide for LLC Company Formation in Dubai

Connect Group is here to help you at every step of your business journey in the UAE with ease.

Connect Group Contact Our Experts

Need assistance? Feel free to share your concerns.

    GET IN TOUCH

    Relative Articles
    See more
    Visa services

    Need to Know About Jordan Visa for UAE Residents

    In light of the travel plans that UAE citizens have for Jordan, knowing the visa requirements is critical for a smooth and hassle-free travel. Certainly, it is essential to familiarize oneself with the Jordan visa for UAE residents, their types…

    April 8, 2024
    Read More
    Updates

    Medical Test Failed in UAE – A Complete Guide

    The medical test failed UAE can be frustrating. Living and working in this dynamic country can often be hampered by strict health screening requirements and the complexities of unexpected health conditions. For those determined to embark on an adventure in…

    April 5, 2024
    Read More
    Visa services

    Overview of The Oman Visa For UAE Residents

    For UAE residents, whether that be for an escape or a silent vacation, Oman is a pleasing and attractive option. The nation has unrivalled heritage, outstanding sceneries and the most accommodating culture are ingredients for the perfect destination. The Oman…

    April 2, 2024
    Read More