Basic salary UAE is the single most important figure on your contract. It decides statutory pay-outs such as end-of-service gratuity, leave encashment, overtime and job-loss insurance. Every worker and employer needs to know what belongs in “basic” and what is an allowance.
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Definition under UAE law
- The basic salary is the fixed amount written in your employment contract for the work you do. It excludes housing, transport, performance bonuses and other allowances unless the contract says otherwise.
- Employers commonly show a larger gross package. But statutory calculations usually use the basic salary figure, not the gross total.
Wage Protection and compliance
The UAE enforces electronic wage transfers through a Wage Protection System. Employers must pay salaries through approved banks and payroll channels. This system helps labour authorities check that basic wages and other dues are paid on time. If wages aren’t paid correctly, the WPS flags the employer for follow-up.
The four main benefits tied to basic salary
1) End-of-service gratuity
If you complete at least one year of service, your gratuity is calculated on your last basic salary. The common formula is: 21 days’ basic pay for each year for the first five years, then 30 days’ basic pay for each additional year. Contracts or company policies may vary, but the law treats the basic salary as the reference point.
2) Annual leave encashment and leave pay
When you’re paid for accrued or untaken leave, the calculation uses basic salary. That means a low basic and high allowances can reduce the cash you get when you leave. Always check how leave pay is defined in your contract.
3) Overtime and working hours pay
Where overtime rules apply, the base for overtime calculations is usually the basic salary (or the hourly rate derived from it), not allowances. That affects extra pay for late shifts, weekends or public holiday work.
4) Job-loss support
Under the Involuntary Loss of Employment (ILOE) scheme and related safety nets, payouts and eligibility are tied to the basic salary. Approved job-loss assistance commonly references a percentage of basic pay for a limited period. Check eligibility rules before relying on this support.
Minimum wage update for Emiratis
The Ministry of Human Resources and Emiratisation (MoHRE) raised the private-sector minimum wage for UAE nationals to AED 6,000 per month, effective 1 January 2026. Firms that employed Emiratis before that date have until 30 June 2026 to update salaries. This step is part of a phased Emiratisation plan and affects employers’ payrolls and compliance checks.
What employers should do now?
- Review Emirati staff contracts and adjust basic salary lines where needed.
- Update WPS payroll feeds so the new basic salary appears in electronic records.
- Expect labour authorities to check compliance and to apply penalties for missed deadlines.
Practical checklist for employees
- Does your contract state a basic salary separately from allowances? If not, ask for a clear breakdown.
- Compare basic vs gross: a competitive gross pay may hide a low basic.
- Ask HR how gratuity, leave pay and overtime are calculated. Get it in writing.
- Keep payslips and WPS bank transaction records — they’re key evidence if a dispute arises.
- If you’re Emirati, confirm your employer has updated your basic to meet the AED 6,000 requirement (if applicable).
Practical checklist for employers
- Declare the basic salary clearly in all employment contracts.
- Pay through WPS and ensure the basic salary shows in the bank feed.
- For Emirati staff, adjust payroll to meet the MoHRE deadline. Keep documentary proof of changes.
