The rules come from Federal Decree-Law No. 33 of 2021 on employment relations and its Executive Regulations. This guide sets out the overtime rates, a worked calculation, how leave and sick leave are paid, where attendance data goes wrong, and a checklist for each payroll run.
How is overtime calculated in the UAE?
On the basic wage, not the full salary. The law defines the basic wage as the contract wage excluding allowances, and overtime is paid as that hourly basic wage plus a premium.
| Situation | Minimum pay | Rule |
|---|---|---|
| Normal working hours | Contract wage | Up to 8 hours a day or 48 a week; 2 hours less a day in Ramadan |
| Overtime | Hourly basic wage plus at least 25% | Article 19(2) |
| Overtime between 10pm and 4am | Hourly basic wage plus at least 50% | Article 19(3); shift workers are excluded |
| Work on the weekly rest day | A substitute rest day, or the day's wage plus at least 50% of the basic wage | Article 19(4) |
| Work on a public holiday | A substitute day for each day worked, or the day's wage plus at least 50% of the basic wage | Article 28(2) |
There are also limits on how much overtime can be worked. Overtime may not exceed 2 hours a day, except to prevent serious loss or a serious accident, and total working hours may not exceed 144 every three weeks. A worker should not work more than five consecutive hours without a break of at least one hour.
The law does not set a formula for the hourly rate. Employers commonly use basic wage ÷ 30 ÷ 8, or basic wage × 12 ÷ 365 ÷ 8. Choose one, write it into your payroll policy and apply it to everyone. Some senior roles, such as supervisory staff who hold the employer's powers, are exempt from the working-hours limits; take advice before relying on that.
What does an overtime calculation look like? A worked example
A warehouse storekeeper in Dubai earns a basic wage of AED 3,600 and allowances of AED 1,400, so AED 5,000 a month. In October he worked 20 hours of ordinary overtime and 6 hours of overtime between 10pm and 4am. He is not a shift worker. The company's policy uses basic wage ÷ 30 ÷ 8.
| Correct: on basic wage | Common error: on full salary | |
|---|---|---|
| Monthly base | AED 3,600 | AED 5,000 |
| Hourly rate (÷ 30 ÷ 8) | AED 15.00 | AED 20.83 |
| Ordinary overtime: 20 hours × 125% | AED 375.00 | AED 520.83 |
| Night overtime: 6 hours × 150% | AED 135.00 | AED 187.50 |
| Overtime for October | AED 510.00 | AED 708.33 |
Paying more than the legal minimum is allowed, and some contracts deliberately calculate overtime on the full salary. The error is doing it by accident, inconsistently: AED 198 a month for one employee becomes a large sum across a workforce, and a precedent that is hard to reverse.
The opposite error is worse. Missing the night hours, or paying them at 125%, underpays the employee and can lead to a complaint. With the other hourly formula, basic wage × 12 ÷ 365 ÷ 8, the same month comes to about AED 503. Either is defensible if it is written down and applied consistently.
How are annual leave and sick leave paid?
Each type of leave has its own entitlement and pay rule, and payroll has to know which one applies to each day off.
| Leave | Entitlement | Pay |
|---|---|---|
| Annual leave | 30 days a year; 2 days a month between 6 months and 1 year of service | The wage during leave; unused leave paid out on termination at the basic wage |
| Sick leave | Up to 90 days a year after probation | 15 days full pay, 30 days half pay, 45 days unpaid; none paid during probation |
| Maternity leave | 60 days | 45 days full pay, 15 days half pay |
| Parental leave | 5 working days within 6 months of the birth | Full pay |
| Bereavement | 5 days for a spouse; 3 days for a parent, child, sibling, grandchild or grandparent | Full pay |
| Study leave | 10 working days a year for exams, after 2 years' service | Full pay |
| Unpaid leave | With the employer's approval | None |
Three points cause most disputes. Carrying leave forward needs the employer's approval, and the regulations allow up to half the annual entitlement to be carried. Sick leave pay steps down after 15 and 45 days in a year, so payroll must count sick days across months, not month by month. And unused leave paid out at the end of service is calculated on the basic salary.
Absence is handled separately. No wage is due for days of unjustified absence, but absence is not one of the deductions the law lists, and total deductions from a salary are capped at 50% of the wage. Record unauthorised absence as unpaid days, not as a penalty deduction.
Where do attendance errors start?
In the gap between the time clock and payroll. Biometric devices record punches; payroll needs approved hours, classified correctly. Most errors happen in the translation.
- Shifts that cross midnight. A shift from 6pm to 3am is split across two dates, and the hours after 10pm are not flagged as night overtime.
- Missed punches. An employee forgets to punch out, the system records a 20-hour day or an absence, and nobody corrects it before payroll closes.
- Rest days and public holidays. The calendar in the attendance system doesn't match the company's rest days or the official holidays, so work on those days is paid as ordinary overtime.
- Ramadan hours. Normal hours fall by two a day, so overtime starts earlier. If the shift rules aren't changed, overtime is underpaid for a month.
- Unapproved overtime. Hours are paid because they were punched, not because a manager asked for them, or approved overtime is never entered.
- Leave not recorded. Approved leave isn't in the system, so the days appear as absence and are deducted.
- Device clocks out of sync. A device a few minutes slow turns punctual staff into late arrivals.
Each of these can be caught before payroll with an exceptions report: missed punches, days over 10 hours, work on rest days or holidays, and absences without leave.
Which payroll errors do overtime, leave and attendance cause?
| Error | Effect | Prevention |
|---|---|---|
| Overtime on full salary by accident | Overpayment and a hard-to-reverse precedent | Overtime formula on basic wage, written in the policy |
| Night hours paid at 125% | Underpayment; complaint risk | Flag hours between 10pm and 4am automatically, except for shift workers |
| Rest-day or holiday work paid as ordinary overtime | Underpayment | Company calendar with rest days and official holidays |
| Ramadan hours not applied | Overtime underpaid for the month | Ramadan shift rules set before the month starts |
| Sick leave paid in full beyond 15 days | Overpayment | Count sick days across the year |
| Approved leave recorded as absence | Wrong deduction; employee complaint | Leave approved in the same system attendance reads from |
| Unused leave paid out on full salary | Overpayment at end of service | Pay out on basic salary unless the contract says otherwise |
| Deductions above 50% of the wage | Breach of the law | Cap total deductions in payroll |
Checklist before each payroll run
What does HYP see in UAE payroll teams?
Overtime is where payroll and operations meet, and where most corrections come from. In the companies HYP works with, the typical pattern is a spreadsheet of hours from site supervisors, re-keyed into payroll at the end of the month, with night and rest-day hours lumped together as "overtime".
The teams with the fewest corrections connect attendance devices directly to the HR system, apply shift, rest-day, holiday and Ramadan rules automatically, and have managers approve exceptions during the month rather than in the last two days. Payroll then calculates from approved hours, not punches.
The errors also surface quickly once employees can see their own attendance and payslips; our guide to employee self-service covers what staff use. And any correction found after the payroll run usually means a revised WPS file; our guide to why WPS salary files get rejected covers that step. See how HYP connects attendance devices to payroll on our Time, Attendance & Employee Requests page.
Sources
- UAE Government portal: working hours and overtime (updated 12 August 2026)
- UAE Government portal: types of leave (updated 14 October 2026)
- Federal Decree-Law No. 33 of 2021 on the regulation of employment relations, with amendments (Articles 1, 17, 19, 25, 28 to 34)
- Cabinet Resolution No. 1 of 2022, Executive Regulations (Articles 15, 19 and 20)