The new UAE Labour law provides difference between Basic Wage and Full Wage. The importance of knowing about this difference as rights relating to end term service benefits and gratuity are being calculated on the basis of the wage provided to the employee.

However, to clear the confusion between basic wage and wage you can consider term “Basic Wage” as “Basic Salary” and “Wage” as “Salary”. This article will inform you about the rights mentioned under the UAE Labour Law in relation to the basic salary and full salary.

What is definition of Basic Wage as per new Labour Law?

Our Employment Lawyer in Dubai states that:

The wage stipulated in the employment contract, which is paid to the worker in consideration of his work under the employment contract, on a monthly,  weekly, daily, hourly or piecework basis, and which does not include any other allowances or benefits in-kind.

Thus, for the better understanding of the reader we have mentioned this definition in four points:

  • The basic wage is the one stipulated in the employment contract.
  • The basic wage is paid for the work executed under the employment contract.
  • The basic wage shall be disbursed on a monthly, weekly, daily, hourly or piecework basis.
  • The basic wage shall not include any other allowances or benefits in-kind which are only included in Salary.

What is the meaning of Wage or Salary as per new labour law 2022?

Our Employment Lawyer in Dubai states that:

The wage, in addition to the cash allowances  and benefits in-kind allocated to the worker under the employment contract or this Decree-Law, and which may include: benefits in-kind that the employer shall grant to the worker or their cash equivalent, if allocated as part of the wage in the employment contract or the establishment’s by-laws; the allowances that the worker is entitled to obtain in return for his effort, the risks he is exposed  to while performing his work or for any other reasons; or the allowances granted to meet the cost of living, a percentage of sales, or a percentage of the profits paid for what the worker markets, produces or collects.

Note: The wage shall include the basic wage as well as all cash allowances, in-kind benefits, allowances and percentages of sales, profits, marketing, and collection and can be termed as full wage or salary.

What does Basic Wage mean and whether it include any allowances or other in-kind benefits?

It means basic wage is the basic salary agreed upon between the employer and employee. Other allowances are added to the employment contract such as the housing allowance and the transportation allowance.

In case that the wage is only what was stated in the employment contract, the full wage shall be deemed as the basic salary, because there are no allowances or other benefits in kind.

The basic wage shall not include:

  • Allowances including housing allowance, transportation allowance, and other allowances.
  • Commissions on sales, collection, percentages of profits, percentages of sales, and other forms of remuneration.
  • Any benefits in-kind granted to the employee/worker, such as housing, cars, phones, etc.
  • Allowance in kind and benefits which are stipulated in the Implementing Regulations.

How to know your basic wage?

In order to know your basic wage you must review your employment contract with the Ministry of Labor or with the Free Zone Authority in cases wherein your company is situated in freezone, because it may differ from the one contained in the job offer, so it is preferable to review the original employment contract registered with the Ministry of Labor or the Free Zone and also by reviewing your salary statement sent to you periodically by the company.

Whether your increment in your salary can be counted in basic salary or other allowances?

The increase shall be fully deemed as a part of the basic wage, as it is assumed by Law if there is an increase in the basic wage unless the company distributes the increase to the allowances, or notifies you at the time of the increase of the distribution of the increase between the allowances and the basic, and unless the company’s bylaws regulates the mechanisms for distributing the increases between the basic wage and allowances.

Whether there is any specific rule or procedure for the adjusting the ratio between Basic Salary and Full Salary?

Our Employment Lawyer in Dubai states that:

The Law does not assume or impose a specific percentage for the distribution of wages on the basic wage and allowances. The basic wage may be the lowest possible value, regardless of the salary amount.

Determining the basic wage percentage in proportion to the salary shall be subject to the agreement of the employee with the employer. The percentage may be adjusted by agreement between both parties.

Generally, the common percentage is that the basic wage is 50% to 60% of the total wage.

Whether employer has discretion to deduct the basic wage?

The employer may not, in its own discretion, change the basic wage value, as the basic wage shall be adjusted by the approval of both parties.

May other payments be deemed as a part of the basic wage?

In general, no other payment may be deemed as a part of the basic wage.

What is the maximum limit of the basic wage?

There is no maximum limit of the basic wage, so the entire total salary may be basic wage.

Why shall I know my basic wage?

As some labor dues depend on the basic wage value, including:

  • End of service gratuity;
  • Calculation of overtime;
  • Remuneration for work during official holidays.

The detail information in relation to this topic is being provided by our lawyer in YouTube video you can watch our YouTube video and stay updated with all the information relating to Labour Laws in UAE.

How can we help you?

Nour Attorneys and Legal Consultant, provides you with one of the best Employment Lawyers in Dubai which are always ready to assist and represent you in every stage of the dispute, and are always inclined to protect your interest. Our lawyers are highly qualified and experienced enough with all the regulations relating to the new UAE labour laws.

Therefore, to avail the benefits of services provided by us you can contact us anytime without having a second opinion and our law firm is always ready to assist and help you in this regard.

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