In a bid to ensure fairness and flexibility in the workplace, the United Arab Emirates (UAE) has introduced regulations that allow for various forms of salary payments, safeguarding the rights of both employers and employees. This move aligns with the UAE’s ongoing efforts to attract expatriates seeking a high standard of living, lucrative career prospects, and tax-free income.
The UAE’s Regulation of Labour Relations Law permits employers and employees to mutually agree on different forms of salary payment, enhancing the adaptability of the labor market to diverse work patterns. These arrangements, legally recognized by the Ministry of Human Resources and Emiratisation (MoHRE), encompass six distinct wage payment structures:
Monthly Wage: Employees receive monthly payments as per their contractual agreements, encompassing basic salaries, bonuses, and allowances.
Weekly Wage: Workers are compensated for their weekly labor, ensuring a steady cash flow and facilitating flexible wage management for employers.
Daily Wage: Employers remunerate workers for each day of service, often utilized for temporary or seasonal employment.
Hourly Wage: Compensation is calculated based on the hours worked, with rates determined by factors such as experience, skills, and job nature.
Commission-Based Wage: Common in sales and certain service sectors, employees receive income based on a percentage of sales or services rendered.
Piece-Rate Wage: Compensation is determined by the quantity of work completed or units produced.
Salary Payment Timeline
According to UAE law, salaries are due on the first day of the month following the end of the specified period in the employment contract. Employers who fail to pay within 15 days of the due date, unless otherwise agreed upon, are considered in default.
Payment Method
To streamline wage payments, the UAE government has instituted the Wage Protection System (WPS), mandating all MoHRE-registered employers to utilize the system for timely salary disbursement. Under the WPS, wages are transferred directly to employees’ bank accounts, ensuring a secure and efficient process.
Penalties for Non-Compliance
The government has imposed penalties on companies failing to adhere to payment deadlines. While the UAE Labour Law does not stipulate a minimum wage, it mandates that salaries must cover employees’ basic needs.
Upholding Labor Rights
By fostering a transparent and equitable wage payment framework, the UAE aims to uphold labor rights and sustain its position as a premier destination for international talent and innovation. These regulations not only protect the rights of workers but also provide employers with the flexibility to manage their workforce effectively, fostering a balanced and dynamic labor market.
