A short guide to calculate overtime as per the UAE Labor Law.

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This short guide helps you to calculate overtime for the employees of a UAE Company correctly. The guide explains the legal provisions and the arithmetical formula for computing the amount.

The UAE Law:

Articles 65, 67 to 72 and 74 of the Federal Law No., (8) of 1980 provide rules regarding overtime work and payment for such OT work in private sector.

What is overtime according to The UAE Labor Law?

  1. A week is the base unit to determine working hours,
  2. Friday is the regular paid weekly holiday,
  3. The maximum number of working hours per week is 48,
  4. Generally, the maximum number of working hours per day is eight,
  5. As an exception,the maximum number of working hours per day can be nine for employees in businesses such as commercial establishments and hotels or employees who perform roles such as security etc. However, the extra hour must be deducted on another day.
  6. Time taken to commute from residence to work location is not included in working hours. This obviously implies that such time is not considered for overtime calculation.

Accordingly, overtime is any work done above the base limit of 48 hours per week and qualifies for extra remuneration in addition to regular pay.

Who is eligible?

According to the Article 72, the following categories of employees are not eligible for overtime.

Senior managers, supervisors (people holding authority over other employees)

Ship crews and seamen (as they are employed under special service conditions)

By implication, all other categories of employees are eligible for overtime pay.

Small note – Article 72 specifically mentions that port workers handling cargo and similar works are eligible for overtime pay.

Formula to calculate overtime pay per hour (except National Holidays):

Since, overtime is calculated based on additional hours that an employee works extra; you need first to calculate the normal salary per hour.

The formula for calculating per hour pay is this:

Multiply the gross salary per month by 12 and divide the amount by 365. This will give the salary per day. Divide this 8 to ascertain the salary per hour.

In other words,

Per day salary = (Gross salary per month x 12)/12

Per hour salary = Per day salary/8

Overtime on days other than Fridays:

Once you calculate the “Per hour salary” it is easy to compute the amount for Overtime.

Overtime amount when additional work is done

Between 4 am and 9 pm – “Per hour salary” x 1.25 x number of OT hours

Between 9 pm and 4 am – “Per hour salary” x 1.50 x number of OT hours

Work done on Fridays:

If an employee works on a Friday,

He is eligible for a compensatory day off on another day during the week

Or

He is eligible for overtime equal to “Per hour salary” x 1.50 x number of OT hours

Further, employees may not be assigned work on more than two consecutive Fridays.

Work done on public holidays:

Article 74 specifies public holidays as follows.

One day for Hijra New Year,  Christian New Year, Birthday of the Prophet, Ascension Day, National Day

Two days for Eid Al Fitr,

Three days for Eid Al Adha and Waqfa day

If an employee works on a public holiday due to exigencies of work, he is entitled to

Either one-day compensatory off with full pay,

Or,

Extra remuneration @ “Per hour salary” x 1.50 x number of extra hours worked.

Disclaimer: This guide is provided only for information purposes. While it gives you basic outline regarding overtime rules in the UAE, please do not rely upon it as legal advice. You may please ascertain the latest rules from The UAE Ministry of Human Resources and Emiratisation (MOHRE) by click these two links:

http://www.mohre.gov.ae/en/laws-legislation/labour-law.aspx

http://www.mohre.gov.ae/

For a detailed guidance on overtime and Payroll Services in line with the UAE Wage Protection System, we welcome you to contact our HR Consultants .

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