For someone who works in the industries, that overtime pay can be something so sweet yet be coming in a package with bitter experiences for some people. In matters of life and work alike, it is necessary to draw a line and to set a boundary and not let others trample all over it. In order to draw a line, you do have to be aware of the line though.
in the UAE. Being able to calculate your overtime is a skill needed by both employees and employers in UAE. Knowing how to calculate overtime correctly is a sure way to know that you are being fairly compensated as a worker for your extra hours of work.
The process of calculating your overtime involves understanding the labour laws of the UAE. Understanding UAE labour laws will provide you with clear guidelines on the process of overtime calculations.
Things involving math and calculations can sometimes feel intimidating. Even more so when the threat of legal non-compliance looms at large. You should be able to steer away from legal troubles, and get your legal rights and your fair pay. Calculations, however intimidating, should not hinder you from knowing your rights and your overtime pay.
Emiratisation Hub has brought this guide just for you. In this article, we aim to guide you through the whole process of calculating overtime in Dubai, UAE. This guide will benefit both the employees and the employers as they can understand their worker rights and be sure that they have been legally compliant.
Importance Of Understanding Overtime Calculations
It is essential for you to understand the importance of overtime calculations since it is one of the most significant aspects of the UAE employment law. It is not just about knowing the numbers. It is about understanding the principles behind them.
Budget Better
Calculating overtime is a great resource to budget better. With it:-
- employers accurately forecast labor costs
- employees expect their potential earnings
- transparency leads to a more harmonious workplace
- any uncertainties or potential disputes are eliminated
Improved Negotiations
Understanding how to calculate overtime in the UAE can also be valuable in negotiations
Avoid Errors
The calculation of overtime in the UAE is not something uncomplicated. It comprises of various factors such as:
- type of work
- the timing of the work
- the employee’s wage
Having a clear understanding of how to calculate overtime in UAE can help you easily avoid errors as the UAE designed these overtime laws to protect workers.
Standard Working Hours In Dubai
Definition of Standard Working Hours
In UAE, standard working hours are:
- eight hours per day
- forty-eight hours per week
The hours vary based on the job nature and industry. Knowing standard working hours is imperative because overtime is any work performed over these hours. This is the first step in your calculation of UAE overtime.
Some exceptions given by UAE Labour Law are:
- In industries like health care or hospitality, standard working hours are longer
- standard hours are reduced during Ramadan
Legal Limits on Working Hours
Legal limits on working hours set by UAE Labour law:
- maximum eight working hours per day
- forty-eight hours per week
- these hours might be extended depending on the industry or job role
Types Of Overtime In Dubai
There are different types of overtime in Dubai. These types of overtime in Dubai are:
- Regular Overtime
- Holiday Overtime
- Late-Night Overtime
Regular Overtime
It is work done beyond standard hours on regular days.
For calculating regular overtime in UAE, you:-
- divide the basic salary of an employee by the total working hours in a month
- you have their hourly wage
- multiply the hourly wage with 1.25 and numbers of extra hours
- You find out their overtime pay
Holiday Overtime
Any work performed on public holidays qualifies for holiday overtime pay; 1/5 times the hourly wage. It is calculated this way:
- divide basic salary by total working hours of the month
- the answer is the hourly wage
- multiply hourly wage with 1.5 and number of extra hours worked on a holiday
- You have the number for the employee’s holiday overtime pay
Late-Night Overtime
Its features are:
- Work performed between 9 pm and 4 am
- Late night overtime is 1.5 times the normal hourly wage
To calculate this compensation:
- Multiply the employee’s hourly wage with 1.5 and the number of extra hours worked late at night for overtime
Process To Calculate Overtime In UAE
Step-by-Step Calculation Procedure
Calculating overtime in the UAE involves you following a series of steps that the UAE Labor Law governs. Here is a step-by-step guide on how to compute overtime in UAE:
- Identifying basic salary
- Determining the number of extra hours worked
- calculating the hourly wage
- Applying overtime rate
- Calculating the overtime pay
Identify the Basic Salary
Identify the fixed amount of money an employee receives.
Determine the Number of Extra Hours Worked
You determine the number of extra hours worked beyond the standard working hours.
Calculate the Hourly Wage
Do this by dividing the basic salary by the total working hours in a month.
Apply the Overtime Rate
Apply the overtime rate to the hourly wage to calculate the overtime pay:
- it is usually 1.25 times the normal wage for regular overtime
- 5 times for holiday
- 5 for late-night overtime
Calculate the Overtime Pay
Multiply the number of extra hours worked by the overtime rate to get the overtime pay.
Scenarios
- Example 1
An employee with a basic salary of AED 5000 works 2 extra hours in a day. To calculate the regular overtime pay:
- Calculate the hourly wage:
AED 5000 / (8 hours/day * 26 days/month)
AED 24.04/hour is the answer - Calculate the overtime pay:
2 hours * AED 24.04/hour * 1.25 (overtime rate)
The answer is AED 60.10
- Example 2
An employee works on a public holiday who has a basic salary of AED 5000. He works work 3 extra hours. To calculate the holiday overtime pay:
- Calculate the hourly wage:
AED 5000 / (8 hours/day * 26 days/month) = AED 24.04/hour - Calculate the overtime pay:
3 hours * AED 24.04/hour * 1.5 (overtime rate) = AED 108.18
Conclusion
Planning and budgeting becomes easier and so does negotiation when one knows how to calculate their overtime pay. It’s a good thing to know:
- how much you have worked overtime
- your compensation for it
Informed employees make for better compensated employees.
The correct calculation is a skill that benefits by promoting fairness, transparency, compliance, and awareness. We hope we have been successful in brushing all your worries away about your overtime compensation.
Do not hesitate to hit us up!
