Overtime is a major part of employee compensation in many nations, including the UAE. Maintaining employee happiness and compliance requires businesses functioning in the UAE to adhere to the regulations governing overtime. The UAE Labor Law lays forth specific rules regarding overtime that are meant to protect workers’ rights while permitting companies to continue functioning efficiently. Here we talk about how to manage certain scenarios, such as overtime on public holidays, as well as exceptions to the rules and how overtime is defined and calculated under UAE law.

Understanding UAE Labor Law on Overtime

Federal Decree-Law No. 33 of 2021, which addresses a number of employment laws, including those pertaining to overtime, essentially governs the UAE Labor Law. Any work completed by an employee outside of their standard working hours is referred to as overtime. The law establishes precise guidelines to ensure that companies follow the law and that workers get just compensation for overtime.

Overtime Definition and Applicability

A basic workweek in the UAE is 48 hours a week, or 8 hours per day. Any time worked over this is considered overtime. The function played by the employee and the nature of the employment contract are two examples of the variables that affect how overtime is defined and applied.

For instance, one hour over the required eight hours per day would be considered overtime for a full-time employee who works nine hours per day. It’s crucial to remember that, unless an employee is exempt, overtime compensation is payable for all hours performed over the regular working schedule.

Exemptions and Exceptions

Not all employees in the UAE are qualified for overtime pay. Certain groups of workers, especially those in supervisory roles, might not be required to work overtime. The UAE Labor Law states that senior employees, including department leaders, managers, and decision-makers, might not be entitled to overtime pay.

Employees in sectors like aviation or maritime where the nature of the work necessitates long, irregular hours may be eligible for more exemptions. Employers and employees should carefully check their employment contracts to determine whether they are exempt from overtime regulations and when the restrictions apply.

Daily and Weekly Overtime Limits

Although there are legal limits on the amount of overtime that can be performed, employees are entitled to overtime pay. The maximum amount of overtime allowed by UAE labor law is two hours each day. This may be extended in exceptional circumstances, but only if the worker’s duty necessitates pressing duties that cannot wait. Furthermore, the total number of hours worked every three weeks, including overtime, must not exceed 144 hours.

Employees should not work more than 48 hours per week in a normal workweek when it comes to weekly overtime. Due to the potential consequences of non-compliance, employers must use caution to ensure that overtime does not violate these regulations.

Calculating Overtime Pay

Complying with UAE Labor Law requires an understanding of how overtime pay is calculated. The calculation of overtime varies according to the type of labor and the timing of the overtime. There are several accounting services Dubai and the UAE with efficient, reliable, and cost-effective offerings. You can partner with them, leave all these tasks, and focus on other core areas of our business.

Basic Overtime Rate

According to UAE labor law, the basic overtime rate is equal to 125% of an employee’s regular hourly pay. This is applicable to any overtime that is put in outside of the regular workday but not during late-night or public holiday hours.

Employers are required by law to give this extra pay to employees for overtime. An employee would be entitled to AED 125 for each hour of overtime worked within regular overtime hours, for instance, if their regular hourly rate is AED 100.

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Overtime Premium

There is a higher fee for overtime performed on public holidays and between 10:00 PM and 4:00 AM. According to the law, employees are allowed to get 150% of their regular hourly salary for these hours. Employees should be paid AED 150 per hour for work done on holidays or during late-night shifts, for instance, if the standard hourly wage is AED 100. Now, leave all these tasks to the best accounting and audit firms in Dubai and the UAE and experience the professional touch.

Calculate Overtime for Different Work Schedules

It can be a little more challenging to calculate overtime for different work schedules. For example, particular calculations can be required to ensure fairness for shift workers, part-timers, and staff with compressed work hours.

It is possible for shift workers to work irregular hours. When this happens, overtime is usually calculated by considering the number of hours worked over the prearranged timetable. For instance, the extra two hours would be regarded as overtime if a shift worker was hired for six hours but ended up working eight.

For part-time employees, overtime is calculated on any hours worked above their usual timetable. However, unless specifically stated in the employment contract, they might not be qualified for overtime if their working hours don’t go beyond the full-time standard of eight hours each day.

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Specific Scenarios and Considerations

Calculating overtime can get more complicated in some situations, such as on public holidays, during extended extra shifts, or when taking leave entitlements into account.

Overtime for Public Holidays

If an employee must work on a public holiday, they are entitled to overtime compensation. Employees working on public holidays are required by UAE Labor Law to be paid their regular salary plus a 150% overtime bonus. Employees may occasionally get a compensated day off in lieu of financial compensation. Although the employer makes this decision, the employee is legally entitled to this compensation.

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Overtime for Overtime

Employees may occasionally put in additional time on top of their already accrued overtime. Even if this doesn’t happen often, it’s essential to calculate “overtime on overtime” accurately. For these hours, employers maintain the same overtime compensation rate; however, they must ensure that the extra hours don’t exceed the daily or weekly legal overtime limits.

For example, if an employee works two hours of overtime and is then obliged to perform an additional hour of overtime, they are entitled to be paid for both the ordinary overtime (125% of hourly pay) and any overtime over 10:00 PM or on public holidays at the premium rate (150%). The best accounting services Dubai and the UAE are handling all of these computations with security. You can leave all these tasks to them and focus on other core areas of your business.

Overtime and Leave Entitlements

Overtime may also affect a worker’s right to leave. The UAE Labor Law states that working overtime does not directly impact the right to annual leave. Nevertheless, workers should be mindful that working excessive overtime might cause fatigue, which can negatively impact their well-being and work-life balance.

Unless specifically stated in the employment contract, employers are generally free to choose whether to reimburse overtime hours with additional leave. To prevent misconceptions, it’s crucial that all parties understand exactly how overtime affects leave benefits.

To Sum Up

Maintaining legal compliance and promoting a healthy work environment requires an understanding of how overtime is calculated in the UAE. There are several accounting services Dubai and the UAE you can choose for your business. Employers can ensure fair treatment of workers by abiding by the UAE Labor Law, and workers can get a better understanding of their rights and benefits.

The UAE Labor Law provides a comprehensive framework for managing overtime effectively and equitably, from figuring out basic overtime rates to understanding particular situations like extra on public holidays. Always make sure you have hired one of the best and most reliable accounting and audit firms in Dubai and the UAE. Talk to our industry specialists today!