Table of Contents
Frequently Asked Questions
How much extra do employers pay for working beyond normal hours in the UAE?
Under Federal Decree-Law No. 33 of 2021, ordinary overtime is paid at the normal hourly wage plus at least 25% of that wage. On an hourly wage of AED 25, this gives AED 31.25 for each overtime hour. The premium is paid with the monthly wage.
What is the maximum number of overtime hours allowed per day?
Overtime cannot exceed two hours a day under the labour law's limits. An employer cannot remove this cap through a contract clause or an informal arrangement. Teams that regularly work longer days need additional headcount rather than extended overtime.
Is night work paid at a higher rate than daytime overtime?
Yes. Work between 10pm and 4am carries a premium of at least 50% on the hourly wage, compared with 25% for ordinary overtime. On a base of AED 25 an hour, night overtime is AED 37.50 an hour.
Which salary figure is used to work out the hourly overtime rate?
The calculation uses basic salary, not allowances, unless the contract defines wages differently. Divide monthly basic salary by 30 days, then by daily working hours. A basic salary of AED 6,000 and an eight-hour day gives an hourly wage of AED 25.
Can an employer give time off instead of paying for extra hours?
In most cases the employer must pay the overtime premium rather than offer time off. Substitute days apply only where the law provides for them, such as work on a rest day. Informal offsetting against other benefits does not replace payment.
Must overtime pay appear in the monthly payroll record?
Yes. Overtime should be paid with the monthly wage and shown in payroll records, supported by signed timesheets. Where the Wage Protection System applies, payroll should match the amounts actually paid. Missing records weaken an employer's position in a wage claim.
How should a Meydan Free Zone company document overtime terms?
A Meydan Free Zone company should write overtime terms into each employment contract, including the wage definition, the premium rates and the approval process. Through mAccounting, Meydan Free Zone offers payroll support, including bookkeeping and payroll records.
Topic Summary
This Guide Explains What Overtime Pay in the UAE Covers
Overtime pay in the UAE is extra compensation owed to private-sector employees who work beyond their normal hours. Federal Decree-Law No. 33 of 2021 sets the premium rate on basic salary. Employers must record the hours and pay the premium with wages, not offset it informally.
Overtime Pay in the UAE: Rates and Legal Limits
Overtime Pay in the UAE: Rates and Legal Limits
How Overtime Pay Is Calculated
Overtime is calculated in three steps: find the hourly wage from basic salary, add the legal premium, then multiply by the hours worked. The calculation uses basic salary, not allowances, unless the contract defines wages differently.
How Overtime Applies to a Meydan Free Zone Company
Meydan Free Zone companies should not assume mainland MOHRE processes apply automatically. Federal labour law principles still inform good practice, and employment terms sit in the contract. Meydan Free Zone provides residency visas through mResidency and payroll support through mAccounting.
Payroll Records, Payment and Compliance Risks
Employers should keep timesheets, pay overtime with the monthly wage and match payroll to contract terms. Unrecorded overtime is a common source of wage claims. Where disputes escalate further, missing records usually weaken the employer's position.
Planning Overtime in Your Staffing Budget
Overtime should be budgeted as a recurring cost, not a surprise. Compare hiring an extra employee against paying premiums, and set approval rules that keep extra hours within legal limits and the monthly payroll plan.
Conclusion
Overtime pay in the UAE follows fixed premiums and daily limits, and the calculation is simple once basic salary and hours are recorded. Execution matters more than theory: accurate timesheets, clear contract terms and consistent payroll prevent most claims.
Overtime Pay in the UAE: Rates, Limits and How It Is Calculated
In the UAE, overtime is a payroll line that grows quietly. Founders in Dubai often assume a fixed salary covers every extra hour. Then they find they need to reconcile timesheets, premium rates and legal caps that apply regardless of what the contract says.
This guide explains what overtime pay in the UAE covers, the rates and limits under Federal Decree-Law No. 33 of 2021, and how to calculate it. It also helps you compare your options before applying for your business license with Meydan Free Zone and hiring staff.
What Overtime Pay in the UAE Covers
Overtime pay in the UAE is extra compensation owed to private-sector employees who work beyond their normal hours. Federal Decree-Law No. 33 of 2021 sets the premium rate on basic salary. Employers must record the hours and pay the premium with wages, not offset it informally.
Legal Basis for Overtime
Private-sector employment is governed by Federal Decree-Law No. 33 of 2021 and its executive regulations. Normal working hours are eight a day and 48 a week. Anything beyond the agreed hours is overtime.
Say a trading company asks a sales coordinator to stay late for a customs deadline. Those extra hours count as overtime, and a fixed monthly salary does not absorb them.
Who Is and Is Not Covered
The law covers most private-sector employees on a contract. An office administrator on a monthly wage is entitled to overtime pay. A shareholder-director who draws no wage has no wage to base a premium on, so the question rarely arises.
Overtime Pay in the UAE: Rates and Legal Limits
Standard overtime is paid at the normal hourly wage plus at least 25% of that wage. Work between 10pm and 4am carries a premium of at least 50%. Overtime cannot exceed two hours a day under the labour law.
Standard and Night Rates
- Ordinary overtime: hourly wage plus at least 25%.
- Night work, 10pm to 4am: hourly wage plus at least 50%.
- Example: a warehouse operative whose evening shift runs past 10pm moves onto the higher rate for those hours.
Overtime Rates and Worked Examples
| Feature | Type of Work | Premium and Example Rate |
|---|---|---|
| Ordinary overtime | Extra hours outside the night window | 25% premium, AED 31.25 an hour on an AED 25 base |
| Night overtime | Work between 10pm and 4am | 50% premium, AED 37.50 an hour |
| Daily limit | Extra hours on any working day | Two hours a day maximum |
| Calculation base | Hourly wage | Basic salary, not allowances |
| Payment timing | Any overtime worked in the month | Paid with that month's wages |
Daily Limits on Extra Hours
The two-hour daily cap applies to every employee. A project team asked to work ten-hour days for a month sits at the limit, and a contract clause cannot waive it.
Rest Days and Public Holidays
Work on a rest day needs a substitute day or payment with a premium. Public holiday work follows separate compensation rules, covered in this guide to public holidays in the UAE. A retail business trading through a national holiday should plan for this cost in advance.
How Overtime Pay Is Calculated
Overtime is calculated in three steps: find the hourly wage from basic salary, add the legal premium, then multiply by the hours worked. The calculation uses basic salary, not allowances, unless the contract defines wages differently.
Step 1: Establish the Hourly Wage
- Divide monthly basic salary by 30, then by daily working hours.
- Example: AED 6,000 / 30 / 8 = AED 25 an hour.
- Check this against the wage definition in the contract.
Step 2: Apply the Premium
- Ordinary overtime: AED 25 plus 25% = AED 31.25.
- Night overtime: AED 25 plus 50% = AED 37.50.
Step 3: Multiply by Hours Worked
- Two night hours: 2 x AED 37.50 = AED 75.
- Ten ordinary hours: 10 x AED 31.25 = AED 312.50.
- Round consistently, keep the timesheet, and pay the total in the same month's payroll.
How Overtime Applies to a Meydan Free Zone Company
Overtime rules under Federal Decree-Law No. 33 of 2021 apply to Meydan Free Zone employers, and the details should be written into each employment contract. Meydan Free Zone provides residency visas through mResidency and payroll support through mAccounting.
Jurisdiction and Contract Terms
For a Meydan Free Zone trading company drafting its first employment contract, write overtime terms explicitly: the rates, the night window, the daily cap and the approval process.
Payroll Support Through mAccounting
mAccounting covers bookkeeping, VAT, Corporate Tax and payroll. mResidency handles residency visas, Emirates ID and medical insurance. A founder can outsource monthly overtime calculations as a recurring cost.
Payroll Records, Payment and Compliance Risks
Employers should keep timesheets, pay overtime with the monthly wage and match payroll to contract terms. Unrecorded overtime is a common source of wage claims. Where disputes escalate further, missing records usually weaken the employer's position.
Timesheets and Wage Records
- Record the start, finish and approval of extra hours.
- A logistics firm can use weekly signed timesheets.
- Align payroll with the Wage Protection System where it applies.
Claims and Dispute Exposure
Say a worker disputes three months of late hours after leaving a small agency. Records decide the outcome. Without them, the employer has little to counter the claim. See how labour disputes in Dubai are resolved.
Planning Overtime in Your Staffing Budget
Overtime should be budgeted as a recurring cost, not a surprise. Compare hiring an extra employee against paying premiums, and set approval rules that keep extra hours within legal limits and the monthly payroll plan.
Overtime Versus Additional Headcount
Illustratively, a team averaging 20 overtime hours a month at AED 31.25 an hour costs AED 625. That is far below a new salary plus visa costs. But consistent overtime near the two-hour daily limit signals you need another hire.
Approval Rules That Control Cost
- Require written pre-approval from a manager.
- Attach a manager sign-off sheet to payroll.
- Review totals every month to keep costs in check.
- Reflect the rules in the contract or handbook.
Conclusion
Overtime pay in the UAE follows fixed premiums and daily limits, and the calculation is simple once basic salary and hours are recorded. Execution matters more than theory: accurate timesheets, clear contract terms and consistent payroll prevent most claims.
Before applying for your business license with Meydan Free Zone, decide how many staff you need, draft overtime terms into each contract, and set up payroll records, using mAccounting if you want the work handled.
