Dubai: Got a job offer in the UAE? Congratulations! While it can be an exciting time and you may want to get started quickly on your new work assignment, it is important to check your employment contract in detail before signing on the dotted line.
One of the key elements of the work contract that need to be considered is the salary breakdown you receive.
UAE employers provide employees with a total take home salary, which is broken down into various categories, like basic salary, transport allowance, housing allowance and more.
A Gulf News reader wrote in, asking if the UAE Labour Law states how much the basic salary should be, compared to the total salary being paid to an employee.
She asked: “I recently received a job offer, after months of hunting for work. I really want to sign the contract, but when I received the salary break up, my basic salary is Dh1,200, while the total salary is Dh8,000. Can my basic salary be as low as 15 per cent of my total salary? I heard that there is a law that the basic cannot be less than 40 per cent of the total salary, can you please let me know if that is true? Please advise.”
Can my basic salary be as low as 15 per cent of my total salary?
What does the law say?
Gulf News spoke with legal experts in the UAE on whether there is a minimum percentage of the total package which should be provided in the basic salary.
According to Mohamed Gamal, Legal Adviser at Kaden Boriss Legal Consultants Dubai, there is no set percentage determined by law on how much the basic salary should be, compared to the total salary. However, it is important that the basic salary meet certain requirements.
“In the UAE Labour Law, the percentage of the basic salary needs to be determined from the total salary, but the matter [of how much] is left with the employer. However, two conditions need to be met, first of which is the worker's approval of the salary – basic and total – and secondly, that the salary is sufficient for the employee's basic needs,” Gamal said.
In the UAE Labour Law, the percentage of the basic salary needs to be determined from the total salary, but the matter [of how much] is left with the employer.
He reiterated on the importance of reading an employment contract carefully before signing it, to ensure that you are aware of the benefits you will receive and the obligations you are required to meet.
“The employee can also request for a copy of the work contract under his or her name on the system from one of the centres affiliated with the Ministry of Human Resources and Emiratisation, to make sure that the contract he or she has signed is the same contract attached to the system,” he added.
Why is basic salary important?
Gamal also spoke about how a low basic salary can affect several aspects of work life, not just the end-of-service benefits.
“With regard to the annual leave, any unused annual leave is calculated on the basic salary only, when you quit. Also, if you have an annual leave and are asked to work, you will receive a full salary for it in addition to the basic salary added to the housing allowance,” he said.
Also, your end-of-service gratuity is calculated based on the basic salary, if you complete one year of service or more. To find out how gratuity is calculated, based on your type of contract and service term, read our detailed guide here.
I already signed a contract with a low basic salary. What next?
Ahmed Elnaggar, Managing Partner at Elnaggar and Partners, also said that while some employees may sign a contract, because they are excited to get a new job, without reading it in detail, the basic salary can affect several aspects of work life, not just the end-of-service benefits.
“The moment when you are about to sign the employment contract is when such negotiations can take place. Not later on, after signing and agreeing to the terms. Raising a complaint makes it very hard to negotiate anything, because a complaint should be only about a default. If the employer is abiding by the contract rules, there is nothing to complain about,” Elnaggar said.
This also reduces the chances of successfully filing a complaint with the Labour Court, if after the end of your service, you wish to dispute a low gratuity based on the agreed-upon basic salary.
Try to re-negotiate the salary
However, even if you have signed the contract and only later found out that your basic salary is low, it is advisable to maintain a good relationship with your employer, according to Elnaggar, as it puts you in a better position to renegotiate the contract.
Asking your employer to restructure your salary is a matter of negotiation, you should choose the right time to do that and there is no better time to negotiate a contract than being a valuable employee in the first place.
If after a couple of years of high performance, you are due for appraisal and expect a salary bump, try to ensure that the increase is included as part of the basic salary.
“I would advise all future employees to understand the law and their obligations and labour rights before getting into the employment relationship. Asking your employer to restructure your salary is a matter of negotiation, you should choose the right time to do that and there is no better time to negotiate a contract than being a valuable employee in the first place,” Elnaggar said.
This is because gratuity is calculated based on the last basic salary drawn by the employee.