What should you know about overtime calculation in UAE?

Overtime calculation in UAE is a common practice in companies to pay employees for this working time. However, there are laws to make these calculations and thus guarantee the rights of workers in the Emirates. In the same way, with this law, the aim is to pay the employee fairly for the hours of work addition to the regular ones.

In this article, you will see the important aspects of workers who work overtime and the laws that protect them. Moreover, you will learn how to do the calculations to properly complete payments on your company in UAE.

Overtime calculation in UAE as Per Labor Law

Overtime is the time the employee works outside of normal working hours. Likewise, they receive a payment for these overtime hours that the employer will have to make through the overtime calculation in UAE. However, overtime work does not necessarily mean that the employee will receive payment.

Thus, to understand the difference, you can include the overtime that a worker may have worked voluntarily. However, you may not qualify for overtime pay in certain particular cases. Therefore, under current labor laws, employees will have their rights protected as follows:

• Article 17-1 of Federal Decree-Law No. 33 of 2021 of the New Employment Law on the Regulation of Labor Relations in the private sector. In this decree, the law establishes that the maximum working day is 8 hours a day or 48 hours a week.
• Article 17-2. This establishes that the cabinet may increase daily working hours according to prior agreement with the Ministry or any interested entity. However, this is only for certain types of workers or economic sectors. Likewise, concerning rest periods and schedules, it will be prohibited for some categories of employees.

Similarly, overtime will not apply to the following jobs:

• Administrative Supervision Functions
• Senior positions
• Warship crews and Navy employees

How is Overtime Calculated in Payroll Under UAE Law?

For employers, there are some obligations imposed by law that they must comply with towards their employees. However, it will depend on the contract or job position, labor covetousness, housing, and sick leave, among others. Below are some provisions to take into account when doing the UAE overtime calculation online:

• An employee is entitled to receive overtime compensation for any work performed after normal working hours. However, this will be possible as long as you are not in a managerial position.
• The time spent traveling by an employee to his or her residence or vice versa is not counted as a working day. Nevertheless, there are exceptions as established by the so-called Executive Regulations herein. Furthermore, it will not apply to all job profiles so they can agree with employers whether it will be convenient or not.
• Employees will not be able to work for two consecutive days of rest unless they are day laborers.
• If the employee is full-time, the employer cannot force the worker to work overtime beyond the hours established by the contract. However, if the employee wishes to do so, he or she may agree with his or her employer.
• When the employee wants to do a job remotely, within or outside the Emirates with the permission of the employer. At this point, you will be able to specify the number of hours of work you will do.

What to Do in Case of Disagreements?

The labor law states that the employee may receive between 25% and 50% of the usual salary for the hours of additional work. However, some exceptions and factors vary, such as the worker’s position, the day and time, and the nature of the work. Likewise, a worker will not be able to claim an overtime calculation in UAE MOHRE if he or she is not in the categories authorized by him.

Also, if there is any disagreement with some established regulations and the employer’s obligations, they may contact MOHRE. Therefore, it will be the Ministry of Human Resources and Emiratization that will decide if the worker is a candidate to receive payment for their overtime hours worked.

Also, there is something you can do if your employer does not pay the overtime according to the Labor Law and its executive regulations. In this case, you can explain your problem to the MOHRE advice center at the number 04 665 9999.

Rules Related to the Working Hours in the UAE

To carry out a correct overtime calculation in UAE, it is also necessary to know the rules that regulate working hours. Next, we will show you what these key rules are that you must know to defend your rights:

• Federal Decree-Law No. 33 in Article 17, about the regulations of labor laws, establishes working hours at 8 hours per day or 48 hours per week.
• The working day may be increased or decreased depending on the economic sector or the categories of the worker.
• The time used by the employee for travel is not considered part of the work schedule unless it falls within certain categories.
• If the employee works for several employers at the same time, they may not require the employee to work overtime outside of that applied in the contract. Unless the employee is the one who decides and leaves it in writing.
• If the employee requests to work remotely either in another region of the Emirates or anywhere else in the world. In this case, it is the employer who will have a particular schedule.
• An employee will have the right to have several breaks if he has worked for 5 continuous hours. Furthermore, breaks cannot be less than 1 hour and will not be included in the UAE overtime calculation.

Key Rules Related to Working Overtime in the UAE

There are certain rules for calculating overtime in UAE MOHRE as you can see below:

• Employers can impose overtime on their employees, as long as it does not exceed 2 hours a day.
• When a worker must work longer than usual hours, he or she will have the right to receive additional payment. Also, the compensation will be equal to a few days of normal work plus 25% extra and could increase if they work between 10 pm and 4 am. Furthermore, the exception to this rule applies to workers whose workday is in shifts.
• If the employee works on his or her day off, it will apply as overtime and the employer must provide a substitute day off or compensation. Likewise, said compensation will be 50% additional to the corresponding salary per day.
• When the employee exceeds 5 overtime hours, the employer will allow him or her to rest for no less than 1 hour.
• The time to travel to the workplace of the employees or the hours spent eating will not apply as overtime. Nor any hour of rest granted between overtime hours of work.
• As said before, the regular working day is 8 hours a day but for Ramadan, employees will work for only 6 hours a day.
• The employer must not force its employees to work overtime unless they agree in the employment contract. However, it is common for this kind of contract to include a clause stating the conditions for working extra hours. Thus, if the employer requests it, the worker should work extra hours due to the demands of a business.

Moreover, the UAE overtime calculation online will not apply in some cases. For example, if you have a higher position or if you are an administrative employee, on warships or with maritime work.

How to Calculate Overtime in UAE on a Normal Day?

The overtime calculation in UAE on a normal day will depend on the type of work of the employee. Hence, if payment for overtime is viable, the compensation will be the basic salary plus 25% of this for the overtime time. You can see below an example of this calculation:

• Basic Salary X 12/365 = daily salary
• Salary per day/8=Salary per hour
• The total of overtime hours will be =Number of overtime hours X Salary per hour X 1.25

However, if the employee worked these hours between 9 pm and 4 am, the employer will have to pay 1 extra hour equal to regular hours. Added to this is a 50% increase in your salary for extra hours worked. Below is an example of this calculation:

• Basic Salary X 12/365 = daily salary
• Salary per day/8=Salary per hour
• The amount of overtime is =Number of overtime hours X Salary per hour X 1.5

UAE Overtime Calculation for Friday

If the employee must work on a Friday, it will be seen as overtime, for which the employer will provide compensation. Likewise, compensation may be granting another day off or receiving your normal salary plus an additional 50%. However, the employer cannot force the worker to work two Fridays in a row.

However, this would be possible if the worker earns a daily salary. Below you can see an example of the calculation on these occasions:

• Basic Salary X 12/365 = daily salary
• Salary per day/8=Salary per hour
• The amount of overtime is = Number of overtime hours X Hourly wage X 1.5 or one additional day off

Formula that business must use to calculate overtime for public holidays

To do the overtime calculation in UAE for holidays, you can apply the following formula:

• Base salary x 12/365/8 x Total overtime x 1.5 = Total overtime pay

Additionally, the employer will give the worker 1 day off but if it is not possible to do so, he will pay compensation of 150% of the usual salary. For example, if an employee earns a salary of AED 3650 and works about 8 hours of overtime, the calculation would be like this:

• Multiply AED 3650 x 12, then divide by 365/8, then multiplies it by 8 x 1.5 = 180

Also, if the employer does not give a discount, the worker will receive a 150% bonus compensation. Generally, the calculation will be as follows:

• Multiply AED 3650 x 12, then divide by 365/8, then multiplies it by 8 x 2.5 = 300

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

For public holidays, and overtime calculation in UAE as per labour law under Article 18 you will be entitled to full or partial payment. It is also applicable if the worker works during vacation time. Therefore, in both, the employer will give compensatory leave equal to the days and a 50% bonus.

However, if you do not receive payment for vacation days, the employer will pay a bonus equal to 150%. See an example of this calculation below:

• Basic Salary X 12/365 = daily salary
• Salary per day/8=salary per hour
• Overtime = Number of overtime hours X Hourly wage X 1.5 plus one day of compensatory rest

Incorrect formulas to calculate overtime

To do the overtime calculation in UAE, it is necessary to take into account the provisions of the labor law UAE. Likewise, many employers do comply with them but others do not and, consequently, could receive legal sanctions. Generally, companies use the following formula that is consistent with the law:

• Daily salary Basic salary/30 days
• Basic Salary Per Hour/ 30 days/ 8 hours

On the other hand, some employers use formulas that do not work for calculating overtime in the UAE nor are they in line with labor law. If the employer does this calculation using the wrong methods, it can break the law and receive punishment. Below, look carefully at those formulas to calculate overtime that do not comply with the law:

• Daily wage x 12/365 or hourly wage Basic Wage x 12/365/8 hours

Consequently, knowing how to do the overtime calculation in UAE to pay overtime will protect the rights of the worker. Therefore, it is important to negotiate and make fair decisions for your employees to pay them fairly for their overtime. Also, fair pay results in more productive employees.

If you want to know more, contact us and we will give you more information on this and other topics related to working hours in the UAE.