Highlights
- Overtime calculation in UAE is calculated with extra pay: 25% for regular hours and 50% for night shifts between 10 PM and 4 AM.
- Standard UAE working hours are 8 hours per day, or 48 hours per week; however, during Ramadan, employees work only 6 hours per day.
- Employees who work on rest days or public holidays receive additional pay or a compensatory day off as per UAE law.
- Employers must follow specific rules: overtime cannot exceed 2 hours daily, employees working 5 hours or more are entitled to breaks, and some exemptions apply.
- HR software, such as Pasimo, helps track and calculate overtime accurately while ensuring compliance with the UAE Labour Law.
Accurately handling overtime calculation in UAE is essential for any company’s payroll process. The UAE Labour Law defines clear rules for calculating overtime pay, but applying these rules can sometimes be challenging for employers. Fortunately, using HR software in UAE or payroll management software can simplify the process, reduce mistakes, and save time. This article explains the main rules for overtime calculation in UAE and offers practical guidance to help businesses handle overtime accurately and stay fully compliant.
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What Is Overtime Calculation in UAE as per Labour Law?
Overtime refers to the additional hours an employee works beyond the standard working hours. According to the UAE Labour Law, this additional work must be paid at a higher rate to protect employees' rights. Employers, including those using an employer of record, must attach to these regulations to ensure compliance and accurate payroll processing.
Standard UAE Working Hours as per Labour Law
UAE Labour Law, under Decree No. 33 of 2021, Article 17, defines standard working hours:
- Normal working hours: 8 hours per day or 48 hours per week.
- Extended working hours: For specific sectors, such as trade, hotels, and cafeteria security, working hours can extend up to 9 hours per day.
How to Calculate Overtime in the UAE?
Overtime calculation in UAE is an essential part of payroll management. Under the UAE Labour Law, overtime pay calculation in UAE is generally based on the employee’s basic pay. The standard formula for normal overtime is:
Basic Salary × 12 ÷ 365 ÷ 8 × Total Overtime Hours × 1.25 = Total Overtime Pay
Overtime worked between 10 PM to 4 AM is paid at a higher rate, increasing by 50%. Employers can use the performance suite to simplify these calculations, ensuring accurate payments and compliance with UAE Labour Law while saving time and avoiding mistakes.
What Are the Types of Overtime?
Overtime happens when employees work beyond standard hours, and knowing its types helps ensure accurate pay and compliance. Overtime is generally divided into two main types:
- Force Majeure Overtime: This happens when urgent situations or unexpected damages necessitate prompt action to prevent losses or address issues.
- Structural Overtime: This applies to additional work that arises from regular business demands, such as peak periods or unforeseen operational tasks.
Most countries’ labour laws cap the number of extra hours employees can work each week. These rules generally apply to structural overtime, whereas force majeure overtime is not limited due to its urgent nature. Using tools like Pasimo helps companies simplify workflows and manage both types of overtime effectively and accurately.
What Is the Formula for Overtime Calculation in UAE?
The overtime calculation in UAE follows specific laws outlined in Articles 67-72 of the UAE Labour Law. To calculate overtime accurately, you need to consider a few key factors:
- Employee’s Basic Salary
- Number of Overtime Hours
- Overtime Type (Normal, Fridays, or Public Holidays)
With these factors in mind, the next step is to apply the right formula depending on the situation. Using HR technology can simplify this process, making overtime calculations faster, more accurate, and easier to manage.
Calculate Your Pay for Work on a Rest Day
In the UAE, when employees work on their designated rest day, they are entitled to extra pay. Depending on whether the employer or the employee requested the work, as well as the number of hours worked, the compensation can vary accordingly.
Using On-site or HR management tools like Pasimo helps track these hours accurately, calculate pay automatically, and ensure compliance with UAE Labour Law.
Rest Day Pay:
| Work Situation | For up to half your normal hours | For more than half / beyond normal hours |
| Employer’s Request | 1 day’s salary | 2 days’ salary + overtime pay |
| Employee’s Request | Half a day’s salary | 1 day’s salary + overtime pay |
Overtime Calculation in UAE on a Normal Working Day
Employees who work beyond their regular hours are entitled to their standard wage plus 25% extra for overtime. This forms the basis of overtime pay calculation in UAE for regular working days.
Overtime Calculation in UAE Formula
- Daily Wage = Basic Salary × 12 ÷ 365
- Hourly Rate = Daily Wage ÷ 8
- Overtime Pay = Hourly Rate × 1.25 × Overtime Hours
Example:
If an employee earns AED 3,200 per month and works 100 overtime hours:
- Daily Wage = (3,200 × 12) ÷ 365 = AED 105.20
- Hourly Rate = 105.20 ÷ 8 = AED 13.15
- Overtime Rate per Hour = 13.15 × 1.25 = AED 16.43
- Total Overtime Pay = 100 × 16.43 = AED 1,643
- Total Monthly Salary = 3,200 + 1,643 = AED 4,843
Night Overtime Calculation (10:00 PM – 4:00 AM)
Overtime worked between 10:00 PM and 4:00 AM is paid at a 50% higher rate, except for shift-based employees.
Formulas:
- Hourly Rate = Daily Wage ÷ 8
- Overtime Pay = Hourly Rate × 1.5 × Overtime Hours
Night Overtime Example:
For the same employee working 100 hours at night:
- Hourly Rate = 105 ÷ 8 = AED 13.12
- Overtime Rate per Hour = 13.12 × 1.5 = AED 19.68
- Total Overtime Pay = 100 × 19.68 = AED 1,968
- Total Monthly Salary = 3,200 + 1,968 = AED 5,168
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Overtime Calculation in UAE on a Public Holiday
In the UAE, employees working on a public holiday are entitled to extra pay or compensatory leave as per Article 81 of the UAE Labour Law. Employers can either provide a day off with a bonus of 50% of the daily wage or pay 150% of the regular salary if leave is not given.
Overtime Pay Formula
Total Overtime Pay = (Basic Salary × 12 ÷ 365 ÷ 8) × Total Overtime Hours × 1.5 + 1 day compensatory leave
Example:
For an employee with a monthly salary of AED 3,200 working 8 hours on a public holiday:
- Overtime Pay = 3,200 × 12 ÷ 365 ÷ 8 × 8 × 1.5 = AED 157 (plus 1 day off)
If the employer does not provide compensatory leave, the pay increases to 150%:
- Overtime Pay = 3,200 × 12 ÷ 365 ÷ 8 × 8 × 2.5 = AED 263
Essential Overtime Calculation in UAE Rules as per Local Labour Law
Just like official working hours, overtime in the UAE is governed by specific rules that employers must follow to ensure fair compensation. Key points include:
- Employers can request overtime, but it must not exceed 2 hours per day.
- Overtime beyond regular hours is paid at the normal wage plus 25%, increasing to 50% for work between 10 PM and 4 AM. This does not apply to shift-based employees.
- If employees work on their off days, employers must provide a compensatory day off or pay an additional 50% of the daily wage.
- Employees working continuous overtime for five or more hours are entitled to at least a one-hour break, which is not counted as overtime.
- Regular working hours are 8 hours per day, but during Ramadan, they are reduced to 6 hours.
- Employees should not work more than two consecutive weekend days, except for day workers.
- Certain positions, such as senior and administrative supervisors, may be exempt from overtime rules. Likewise, employees on maternity or paternity leave, night-shift workers, and those in the marine industries may have specific exemptions.
- Travel time to and from work, as well as breaks for food and rest, are not included in overtime calculations.
Summary
Accurate overtime calculation in UAE ensures employees are fairly paid for extra hours while keeping businesses compliant with labor laws. Platforms like Pasimo help automate tracking, calculate pay accurately, and manage overtime efficiently. These solutions simplify handling regular hours, night shifts, rest days, and public holidays, saving time and supporting smooth payroll operations for businesses of all sizes.
FAQs
How to Calculate Overtime in UAE?
Overtime in UAE is based on the employee’s basic salary. Normal overtime is paid at 1.25× the hourly rate, while work between 10 PM and 4 AM is paid at 1.5×.
How to Calculate Overtime Salary in UAE?
First, determine the daily wage: Basic Salary × 12 ÷ 365. Then divide by 8 for the hourly rate. Multiply by overtime hours and the appropriate rate (1.25 for normal, 1.5 for night shifts).
How Is Overtime Calculated in UAE Labour Law?
UAE Labour Law sets standard working hours at 8 per day or 48 per week. Overtime beyond these hours must be paid extra. Night shifts, public holidays, and rest days have higher rates. Using platforms like Pasimo can help manage hours and calculate payments accurately.
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