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How To Calculate Overtime In the UAE

Apr 5, 2024 | Finance, Human Resources

Understanding the intricacies of overtime calculation in the UAE is crucial for employees and employers to ensure compliance with the country’s labour laws. The UAE Labour Law governs the remuneration for hours worked beyond the regular work schedule, with specific provisions covering various scenarios such as late-night duties, public holidays, and work during Ramadan.

We look into the legal framework detailing the standard working hours, eligibility for overtime pay, and the formulas used to have employers calculate overtime for the due compensation. It aims to equip workers with the knowledge to ascertain their rightful earnings and assist employers in fostering fair labour practices within their organisations. Whether you’re tackling planned or emergency overtime, navigating sector-specific regulations, or resolving disputes, we’re here to guide you through overtime policies in the UAE.

Overtime Laws in UAE

Overview of Labour Law Provisions

The UAE Labour Law regulates working hours and overtime pay in the United Arab Emirates. For private sector employees, the standard working hours are 8 hours per day or 48 hours per week. During the holy month of Ramadan, these hours are reduced by 2 hours daily.

The Labour Law allows for variations in daily working hours for specific economic sectors or categories of workers, as specified by the Executive Regulations of the Labour Law. Employers may ask employees to work overtime, which is capped at two additional hours per day.

Your total working hours, including overtime, should be 144 hours over average working days in three weeks. When you work beyond your regular hours, you’re entitled to your basic wage plus an extra 25% for the overtime period. If the overtime is worked between 10 pm and 4 am, or if you’re required to work on your designated off-day, the rate goes up to 50%.

Eligibility Criteria for Overtime Pay

Not all employees are eligible for overtime compensation. Certain positions, like senior and administrative supervisors, might be exempt from overtime pay. Also, employees in specific sectors, such as those working on naval ships or in marine industries, may not be entitled to overtime pay.

The Ministry of Human Resources and Emiratisation (MoHRE) offers guidance and resolves disputes regarding overtime eligibility. If your role does your maximum overtime hours and can’t fall under any exempted category as determined by MoHRE, you’re not entitled to claim overtime for additional hours worked.

Types of Overtime: Planned vs. Emergency

Overtime is categorised into planned and emergency types. Planned overtime occurs when employers anticipate the need for extra work hours and schedule them ahead of time. On the other hand, emergency overtime occurs due to unforeseen events that require you to work beyond your regular hours.

For planned overtime, you should get your basic wage plus at least 25% of that wage. In cases of emergency overtime, particularly when work is done between 10 pm and 4 am, or the employee works on your rest day, the compensation jumps to at least 50% of the basic wage. Remember, if you work continuous overtime for five or more hours, you must be given a break of at least one hour, which isn’t included in the overtime calculation.

The calculation of overtime pay is based on a formula that considers your primary salary, the number of overtime hours worked, and the applicable overtime rate (25% or 50%). For instance, the overtime calculation formula used for normal overtime is: “basic salary × 12/365/8 × total overtime hours × 1.25 = total overtime pay”. This formula is tweaked to increase the rate if overtime is performed during late-night hours.

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Regular Overtime Calculation

Defining Normal Working Hours

According to the Executive Regulations, certain roles or industries may have variations in their standard hours. Travel time to and from work is generally only included in these hours if specified by the regulations for particular job categories.

Overtime Rates During Weekdays

The law stipulates a premium for hours worked beyond the employee’s standard schedule. This premium is calculated using a specific formula to ensure fair compensation for the additional time worked.

Overtime Rates on Weekends

If duties extend into your scheduled days off, you’re either compensated with an alternative rest day or paid an increased rate.

The options for work on public holidays or paid rest days include an additional day off with a 50% wage increase or a normal day off without leave and a compensation of 150% of your basic wage.

Breaks for rest, meals, or prayers must be provided after five consecutive hours of work, totalling at least one call per hour, and are not included in the work hours.

The regulations specify that working overtime on consecutive weekends is generally not permitted, except for day workers. Certain roles, such as those in senior management or administrative supervision, may have different overtime regulations. Special considerations also apply to those on parental leave, night shift workers, or employees in specific industries like the maritime sector.

Calculation for Special Occasions

Overtime Pay During Public Holidays

Working on a public holiday and holidays such as Eid Al Fitr entitles you to additional remuneration.

You may receive a full day’s pay for a day off in lieu. The compensation for hours worked on these occasions is an extra 25% of your basic wage.

The remuneration is more generous if you work on your weekly rest day or during official holidays. You have the option of an extra day off or a pay increase to 150% of your basic salary.

Overtime in Continuous Operations & Shift Work

Employees in continuous operations and shift work have a distinct overtime compensation structure. The standard 50% increase for late-night work is not applicable to you.

Your employer can require up to two hours of overtime daily. You must be compensated with your basic wage plus a minimum 25% supplement.

Ramadan Working Hours Adjustments

The MoHRE and the Federal Authority for Government Human Resources (FAHR) mandate shorter workdays during Ramadan. Private and public sector employees work one hour less per hour of salary and two hours less per hour, respectively.

Overtime during this period is calculated on your basic salary with an additional 25% for daytime hours. For nighttime work, the rate increases to a minimum of 50%. These adjustments reflect the UAE’s commitment to cultural observance and fair compensation.

Overtime Policies for Different Sectors

Sector-Specific Overtime Regulations

The Cabinet, the Minister, and relevant entities can modify working hours for specific economic sectors or worker categories. This allows for the customisation of working times, breaks, and prohibited hours to suit the unique requirements of different industries and workers. Non-managerial employees are entitled to overtime compensation for hours worked beyond the standard limit.

Shift workers have a different overtime compensation structure; the standard 50% increase for late-night work does not apply.

Differences in Overtime Rules for Free Zones

Free zones in the UAE operate under their own employment laws, which may deviate from the federal Labour Law. Employment contracts within these zones are subject to the regulations of the respective free zone authority. As such, overtime regulations may differ across free zones, and employees must understand the laws governing their overtime compensation.

Exemptions and Special Cases

Exemptions from the standard working hour regulations include high-level positions such as chairpersons and board members and supervisory roles with the employer’s authority. Crew members of naval vessels and seafarers with unique service conditions are also exempt, along with workers in continuous shift operations, provided their average weekly hours do not exceed 56.

In case of disputes or uncertainties regarding overtime eligibility or calculations, employees can consult with MoHRE for clarification on key rules regarding their entitlement to overtime compensation under the existing regulations.

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Employee Rights and Complaint Procedures

Dispute Resolution Over Overtime Pay

If you find yourself in a dispute regarding overtime compensation, you can seek assistance from MoHRE. To initiate the process, you must file a request with the ministry, which will then work towards an amicable resolution. Should the matter remain unresolved after 14 days, it will be escalated to the judicial system. It’s imperative to maintain meticulous records of your overtime hours to support your case, as these details will be crucial for MoHRE to review the conflict and assess the evidence presented by both parties.

Role of Ministry of Human Resources & Emiratisation (MOHRE)

MoHRE’s responsibilities extend to resolving labour disagreements, aiming to address them amicably. In instances where the claim does not exceed AED 50,000 (USD 13,615) or when parties reach a mutual agreement, the ministry’s decision is enforceable as if it were a local court judgment. For claims exceeding AED 50,000 (USD 13,615) or in the absence of an agreement, MoHRE’s role is to facilitate mediation before referring the case to the courts. The ministry is also empowered to implement measures to prevent individual disputes from turning into collective labour unrest.

How to Properly Document Overtime

Documenting your overtime meticulously is essential for substantiating your entitlement to additional compensation. Record the extra hours worked, including dates and times, ensuring they correspond with the terms of your employment contract. This documentation becomes pivotal when presenting your case to MoHRE or in court. According to Article 10 of the UAE Labour Law, claims must be filed within one year from when the right arose. For claims not exceeding AED 100,000 (USD 27,230), neither you nor your heirs must pay judicial fees at any stage of the legal proceedings.

MoHRE’s ‘Labour Claims and Advisory Call Centre’ is available for consultation and support through their toll-free number. This resource is invaluable for navigating the complaint process and safeguarding your rights. With significant updates anticipated in January 2024, staying informed about MoHRE’s evolving procedures and resources is essential for all parties involved.

Mastering Overtime Compensation

Understanding the UAE’s Labour Law regarding overtime is vital for employees navigating their rights and employers seeking compliance. As you track your working hours and advocate for your fair compensation, remember that clear record-keeping and knowledge of the various labour laws are your best tools. Whether your overtime is planned or arises from unexpected emergencies, the regulations are designed to ensure you receive the additional pay you’re entitled to.

If any issues arise, remember that MoHRE will guide you through the resolution process. For every professional in the UAE, staying informed and prepared can turn calculating overtime into a well-compensated aspect of your work life without the unwanted overtime stresses. Keep this guide handy and approach overtime calculation with confidence.

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