UAE Labour Law Section 5 - Payment of Wages

Full text of Article 5 of the UAE Labour Law

  • Gulf News
  • Published: 19:00 July 11, 2013

V. PAYMENT OF WAGES

1. What constitutes wage according to the Law?

Wages according to the Law, has been defined as follows:

"Remuneration paid to the employee in return for his services under a labour contract, whether in cash or in kind; annually, monthly, weekly, daily, hourly, on a piece-rate, productivity linked. "Wage" include cost of living allowances, incentives in recognition of honesty or efficiency, provided that these incentives have been specified in the labour contract or in the establishment's internal rules and regulations, have become customary or if the employees of that establishment have come to regard such incentives as part of the wages as opposed to a donation.

2. What is the difference between "Wages" and "Basic Wage"?

"Basic Wage" is the wage specified in the labour contract and as agreed between the parties for the term of the contract. Allowances of whatever nature are not included in the basic wage. Therefore, accommodation, housing, transport and travel allowances will not be included in the basic wage.

Basic wage is significant in the calculation of end-of-service gratuity, which is determined on the basis of the last drawn basic wage and not on the basis of the total wage. Allowances will not form part of the basis for this calculation.

3. Does the Law prescribe a minimum wage?

No minimum wage has been prescribed under the UAE Labour Law. However, an employee with a monthly salary of less than Dhs. 4,000.00 will not be able to sponsor a resident visa for his spouse. This is a labour regulation and does not form part the labour law.

4. How are wages to be paid?

Wages may be paid on a monthly, weekly, or on a daily basis. The parties may mutually agree on the manner in which wages would be paid or remitted. It may be paid in the UAE or elsewhere.

5. In what currency are wages to be paid?

Wages may be paid in any currency, in UAE Dirhams or any other currency. The parties may agree on the actual currency. Neither the Labour law nor any other law of the United Arab Emirates restricts repatriation or transfer of monies.

6. Does the law require evidence of payment of wages?

In the case of any dispute, the employer would be required to prove that the employee had been paid his wages along with such allowances as applicable. Such evidence must be in writing. However, the employee can prove non-payment of wages by any means stated in the law of evidence. It is necessary that the employer maintains adequate record and books recording payment of wages and allowances.