How to calculate overtime in the UAE: From basic salary
to the overtime line on the payslip.

What is the formula for overtime pay in the UAE?

Start from the basic salary in the contract. Allowances stay out, because Article 19 calculates overtime on the basic wage and Article 1 defines that wage as excluding allowances and benefits in kind. Then work through three steps. The figures below use a basic salary of AED 4,800.

What does overtime come to in a real month?

Take an employee on a total package of AED 7,000: AED 4,800 basic and AED 2,200 in allowances. This month they worked 12 ordinary overtime hours, 4 night hours and one full rest day of 8 hours, and took no day off in its place.

Had the same employee's rate been struck on the full AED 7,000, an ordinary overtime hour would come to about AED 36.46. The law does not require that. An employer can choose it, and it then costs about AED 11.46 more for each ordinary hour than the minimum rate.

How do you split overtime that crosses 10 pm?

Price each hour by when it falls. If the employee above stays from 9 pm to 11 pm, the first hour is ordinary overtime and the second is night overtime: AED 25 plus AED 30, or AED 55. The same split applies at the other end of the night.

Overtime from 3 am to 5 am is one hour at AED 30 and one at AED 25.

Article 19 excludes workers on shifts from the night rate. A shift worker in the same two-hour stretch, on the same basic, earns two hours at AED 25, or AED 50. So your attendance data has to show who is on shifts as well as when the hours fell.

How is a rest day worked out?

The employer has two options under Article 19: give another day off, or pay the day. Paid, it is the wage for that day on basic plus at least 50 per cent of the day's basic.

For our employee, that is AED 160 plus AED 80, or AED 240, the same figure as eight hours at AED 30. Choose one option for each rest day worked. An employee can't be told to work more than two rest days in a row, except day workers.

How is work on a public holiday paid?

Article 28 uses different words. The employee gets another day off for each holiday worked, or the wage for that day plus at least 50 per cent of the day's basic. The law's definition of wage includes cash allowances, so the first part can be larger than it is on a rest day.

On our AED 7,000 package, that is AED 233.33 plus AED 80, or AED 313.33.

How do the overtime limits affect the calculation?

• Two hours a day: an employer may not ask for more, except under the conditions in the Implementing Regulation
• 144 hours in three weeks: Article 19 applies this to total working hours
• A 48-hour week reaches 144 hours in three weeks on normal hours alone, so take advice on how the cap applies to a six-day team
• A 40-hour week reaches 120 hours in three weeks, which leaves 24 hours under the same cap

Article 19 treats time past normal hours as overtime. Going over a limit is a compliance problem to fix. It gives no reason to leave those hours off the payslip.

How does Ramadan change the calculation?

Private-sector hours drop by two a day in Ramadan, so a normal eight-hour day becomes six. If our employee works seven hours on a Ramadan day, one hour is past the normal day and earns AED 25. We keep the same hourly rate through the month, as the calculator does.

The working hours guide has the rest of the Ramadan rules.

Who is outside these overtime rules?

• Federal and local government staff, the armed forces, police and security, and domestic workers: the labour law does not apply to them
• Staff of a free zone with its own employment law: see the DIFC and ADGM guide for the two financial zones
• Shift workers: excluded from the night rate only, as above
• Categories excluded under Article 20: the law leaves this list to its Implementing Regulation, Cabinet Resolution No. 1 of 2022, so check that text against the person's role before leaving anyone off overtime

Part-time staff are a different case. Article 17 says an employer may not ask a worker outside the full-time pattern for more than the contract's hours without written consent.

How do you calculate UAE overtime in Excel?

Put monthly basic in B2, ordinary hours in C2, night hours in D2 and rest-day hours in E2. These three formulas give the pay for each. With the figures from our example, they return 300, 120 and 240.

• Ordinary overtime: =B2/30/8*1.25*C2
• Night overtime: =B2/30/8*1.5*D2
• Rest-day hours: =B2/30/8*1.5*E2
• Round each employee's total once at the end, so the payslip adds up

Which mistakes change the result?

• Using a basic salary from before a raise, because the contract and the payroll record have drifted apart
• Pricing a whole late stretch at one rate when part of it falls after 10 pm
• Applying the night rate to shift workers, or missing who moved onto shifts mid-month
• Giving a day off and paying the same rest day as well
• Counting overtime from hour eight during Ramadan
• Paying from a hand-kept sheet that doesn't match the attendance record and its corrections