What is my basic salary? Is it a minimum wage?
There is no provision for minimum wages in the UAE Federal Labour Law, nor has the Emirate of Dubai instituted any such law. Your basic salary is a negotiated rate stipulated in your labour contract. This amount is important because it is the basis of your end-of-service gratuity pay. When you receive salary increases, it is to your best interest to make sure you receive a formal notice of the increase, i.e. in writing, and that the Department of Labour is duly notified.
Small and medium enterprises (SMEs) in Dubai offer similar wages for comparative positions, i.e., office secretaries for small businesses are normally granted a compensation package within an expected range. More established organizations, such as multinational corporations (MNCs) with offshore locations in Dubai negotiate salaries within their company’s pre-existing scales.
What points must I remember in salary negotiations?
As stated several times in this website, there is no minimum wage law in the UAE and salary is a negotiated price between you and your prospective employer. Report to an interview prepared to haggle. Haggling is a huge part of UAE salary negotiation and you’d do well to get used to it. Learn how to sell yourself effectively and convincingly. Do your research to get a feel of the going rates. However, keep in mind that what you’d finally get depends on what the employer perceives to be your value to the company.
When haggling, remember that the salary rate stipulated in your contract holds throughout the term of that particular contract. Increases in salary rates are not guaranteed. Dubai employers do not give 13th- month cheques or annual increases as is the case in countries where minimum wage laws exist.
What makes up a basic salary/compensation package in Dubai and the UAE?
Here are items that the law mandates to be included in an employee’s compensation package include the following:
- Basic salary
- 30-day annual paid leave (21 for the first year)
- Government medical insurance (some companies provide private insurance coverage after probationary period).
- Recruitment and visa-processing fees and other associated costs. Some employers may attempt to have you agree to have these costs deducted from your pay so beware. Note however, that repatriation costs may be legally taken off of your final pay, especially if you abscond or fail to complete your contract term.
- Gratuity pay
- Return flight to your home country at the end of your contract.
What other benefits or perks may be negotiated?
- Relocation assistance
- Private medical insurance
- Annual return tickets
- Accommodation and transportation allowances
- Vehicle allowance
- Mobile phone allowance
- Furnishing (for accommodation) allowance
- Food allowance
There are other benefit types that could be negotiated. Some employers provide some of these additional perks, but rarely would an employer grant you everything you want. However, don’t be afraid to ask and haggle. Haggling is a huge part of the local culture. Negotiation is a skill you’d do well to acquire soon.
What is Gratuity Pay?
Gratuity or end-of-service benefit is the equivalent of severance pay in other countries. It is given as an end-of service benefit to employees who successfully complete their contracts. As there are no provisions for pension contributions for expatriate employees in the UAE, gratuity pay is mandatory. It serves as further encouragement to employees to stay with their employers until the expiration of their contracts.
How do I get entitled to gratuity pay?
- If your employment is lawfully terminated, you’re not entitled to any gratuity pay. (Click here for grounds for dismissal).
- If you are working on a limited contract, successful completion of the term entitles you to gratuity upon expiration;
- If you are working on an unlimited contract, you must complete
|But less than
|To be entitled to gratuity pay
How is my gratuity pay calculated?
Gratuity pay is based on your last or most recent basic salary per records appearing in the Department of Labour. This figure is clearly marked as basic salary in your labour contract and does not include allowances and benefits, as those are clearly designated as such.
Your gratuity pay is equivalent to your 21-day pay for each year of service for the first 5 years and 30-day pay for every year thereafter. For convenience, assume a 30-day month for calculation.
21/30 of your monthly pay, multiplied by the number of years you have served your employer, for the first five years; plus
30/30 of your monthly pay, multiplied by, the number of years you have served your employer minus five years.
Illustration: Assume the following
Monthly basic salary per records: AED 10,000
Number of years worked with present employer: 10
Gratuity Pay = (21/30 x AED 10,000 x 5) + (30/30 x AED 10,000 x (10-5))
= AED 35,000 + AED 50,000
= AED 85,000
Is there a limit to the amount a dedicated employee can receive as gratuity pay?
Yes, there is. The total gratuity pay an employee receives should not exceed the equivalent of a 24-month (two years) pay. In the above example, the maximum amount the employee may receive is AED 240, 000 (24 x AED 10,000). This means that if the employee above has served for 25 years or more, he only gets AED 240,000 in gratuity pay.
Illustration: Assume the following:
Monthly basic salary per records: AED 10,000
Number of years worked with present employer: 30
Gratuity Pay Computation = (21/30 x AED 10,000 x 5) + (30/30 x AED 10,000 x (30-5))
= AED 35,000 + AED 250,000
= AED 285,000
Actual Gratuity Pay (amount the employee receives): AED 240,000