How to Calculate Overtime Pay in the UAE
Overtime in the UAE is not optional generosity from your employer — it is a legal right with specific formulas and mandatory premium rates. Federal Decree-Law No. 33 of 2021 sets clear rules: work beyond standard hours must be compensated at rates ranging from 125% to 150% of your normal hourly pay, depending on when the overtime occurs.
Yet overtime disputes remain common at MOHRE (Ministry of Human Resources and Emiratisation). Employers miscalculate rates, use wrong salary bases, or simply fail to pay overtime at all. Employees accept incorrect payments because they do not know how to verify the math. Both sides lose when overtime calculations go wrong.
This guide provides the exact overtime formulas with worked AED examples, covers every overtime scenario under UAE law, and shows you how to verify your overtime payments are correct.
UAE Overtime Rules Under Federal Decree-Law No. 33 of 2021
Standard Working Hours
Before calculating overtime, you need to know what counts as regular working hours:
| Category | Daily Hours | Weekly Hours | Notes |
|---|---|---|---|
| Standard | 8 hours | 48 hours | 6-day workweek |
| Ramadan | 6 hours | 36 hours | Reduced hours, same pay |
| Certain sectors | Varies | Varies | Hospitality, security may differ |
Any work beyond these standard hours is overtime and must be compensated at premium rates.
Who Is Eligible for Overtime
Not everyone qualifies for overtime pay:
| Employee Type | Eligible? | Notes |
|---|---|---|
| Regular employees | Yes | All non-management staff |
| Workers paid hourly | Yes | Calculated per hour |
| Management/Supervisory | Possibly not | If their role involves supervisory authority |
| Part-time employees | Yes | Beyond contracted hours |
Senior management and certain supervisory roles may be exempt from overtime provisions. However, the exemption is narrow and employers cannot simply label all employees as "management" to avoid overtime payments.
Maximum Overtime Hours
Under UAE law:
- Overtime cannot exceed 2 hours per day (standard maximum)
- Exceptions exist for preventing accidents, handling urgent repairs, or managing unexpected workload surges
- Employees cannot be forced to work overtime regularly without proper justification
The Overtime Pay Formula
Understanding overtime formulas is essential for accurate pay calculation under UAE Labour Law
Step 1: Calculate Hourly Rate
Hourly rate = Basic monthly salary ÷ 30 ÷ 8
Note: Overtime is calculated on basic salary only — not total package.
Step 2: Apply the Overtime Premium
| Overtime Type | Rate | Multiplier |
|---|---|---|
| Regular weekday overtime | 125% of hourly rate | × 1.25 |
| Night overtime (10 PM - 4 AM) | 150% of hourly rate | × 1.50 |
| Friday work | 150% of hourly rate OR day off in lieu | × 1.50 |
| Public holiday work | 150% of hourly rate OR day off in lieu | × 1.50 |
Step 3: Calculate Total Overtime Pay
Total overtime pay = Overtime hourly rate × Number of overtime hours
Worked Examples
Example 1: Regular Weekday Overtime
Employee profile:
- Basic salary: AED 8,000/month
- Total package: AED 13,000/month
- Overtime: 15 hours regular weekday overtime this month
Calculation:
- Hourly rate: AED 8,000 ÷ 30 ÷ 8 = AED 33.33/hour
- Overtime rate (125%): AED 33.33 × 1.25 = AED 41.67/hour
- Total overtime pay: AED 41.67 × 15 = AED 625.00
Monthly salary with overtime: AED 13,000 + AED 625 = AED 13,625
Example 2: Night Overtime
Employee profile:
- Basic salary: AED 6,000/month
- Overtime: 10 hours night work (between 10 PM and 4 AM)
Calculation:
- Hourly rate: AED 6,000 ÷ 30 ÷ 8 = AED 25.00/hour
- Night overtime rate (150%): AED 25.00 × 1.50 = AED 37.50/hour
- Total overtime pay: AED 37.50 × 10 = AED 375.00
Example 3: Friday Work
Employee profile:
- Basic salary: AED 10,000/month
- Worked: Full 8-hour Friday shift
Calculation (if paid, not given day off):
- Hourly rate: AED 10,000 ÷ 30 ÷ 8 = AED 41.67/hour
- Friday rate (150%): AED 41.67 × 1.50 = AED 62.50/hour
- Total Friday pay: AED 62.50 × 8 = AED 500.00
Alternatively, the employer can provide a substitute day off plus 50% premium for the hours worked.
Example 4: Public Holiday Work
Employee profile:
- Basic salary: AED 12,000/month
- Worked: 10 hours on UAE National Day (public holiday)
Calculation:
- Hourly rate: AED 12,000 ÷ 30 ÷ 8 = AED 50.00/hour
- Regular 8 hours at 150%: AED 50.00 × 1.50 × 8 = AED 600.00
- 2 hours overtime on holiday at 150%: AED 50.00 × 1.50 × 2 = AED 150.00
- Total: AED 750.00
Example 5: Mixed Overtime Month
Employee profile:
- Basic salary: AED 9,000/month
- This month: 12 hours regular overtime + 6 hours night overtime + 8 hours Friday work
Calculation:
- Hourly rate: AED 9,000 ÷ 30 ÷ 8 = AED 37.50/hour
| Type | Rate | Hours | Pay (AED) |
|---|---|---|---|
| Regular (125%) | 46.88 | 12 | 562.50 |
| Night (150%) | 56.25 | 6 | 337.50 |
| Friday (150%) | 56.25 | 8 | 450.00 |
| Total overtime | 26 hours | 1,350.00 |
Monthly pay with overtime: AED 14,000 (total package) + AED 1,350 = AED 15,350
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Overtime Comparison by Salary Level
Here is what one hour of overtime is worth at different basic salary levels:
| Basic Salary (AED/month) | Hourly Rate (AED) | Weekday OT (125%) | Night/Friday OT (150%) |
|---|---|---|---|
| 3,000 | 12.50 | 15.63 | 18.75 |
| 5,000 | 20.83 | 26.04 | 31.25 |
| 8,000 | 33.33 | 41.67 | 50.00 |
| 10,000 | 41.67 | 52.08 | 62.50 |
| 12,000 | 50.00 | 62.50 | 75.00 |
| 15,000 | 62.50 | 78.13 | 93.75 |
| 20,000 | 83.33 | 104.17 | 125.00 |
Monthly Overtime Impact (20 Hours Regular Overtime)
| Basic Salary (AED) | Monthly OT Pay (AED) | % of Basic Salary |
|---|---|---|
| 5,000 | 521 | 10.4% |
| 8,000 | 833 | 10.4% |
| 10,000 | 1,042 | 10.4% |
| 15,000 | 1,563 | 10.4% |
Regular overtime adds approximately 10.4% to basic salary per 20 hours worked.
Ramadan Overtime Rules
During Ramadan, standard working hours are reduced by 2 hours per day (from 8 to 6 hours). Key overtime implications:
- Regular pay is unchanged — employees receive full salary for reduced hours
- Work beyond 6 hours during Ramadan counts as overtime
- Overtime rates apply as normal (125% for regular, 150% for night/Friday)
Example:
- Basic salary: AED 10,000/month
- Worked 8 hours during Ramadan (2 hours overtime)
- Overtime: AED 41.67 × 1.25 × 2 = AED 104.17 for the extra 2 hours
WPS and Overtime Documentation
Accurate overtime tracking and documentation is essential for WPS compliance and payroll management
Recording Overtime for WPS
The Wage Protection System (WPS) records total salary paid, including overtime. Employers must:
- Track overtime hours accurately
- Calculate overtime at the correct rates
- Include overtime in the WPS salary payment
- Maintain overtime records for at least 2 years
What Records to Keep
| Record | Purpose | Retention |
|---|---|---|
| Time sheets/attendance | Prove hours worked | 2 years |
| Overtime authorization | Show overtime was requested | 2 years |
| Payroll calculations | Verify correct rates applied | 2 years |
| WPS payment records | Total payment verification | 2 years |
Employee Verification
Check your pay slip each month:
- Verify overtime hours match your actual hours worked
- Confirm the hourly rate uses your basic salary (not total)
- Check that the correct premium (125% or 150%) was applied
- Ensure the overtime amount appears in your WPS payment
Common Overtime Calculation Mistakes
Mistake 1: Using Total Salary Instead of Basic
Overtime must be calculated on basic salary only. Using the total package inflates the calculation (good for employees but incorrect and costly for employers).
Wrong: AED 15,000 (total) ÷ 30 ÷ 8 = AED 62.50/hour Correct: AED 8,000 (basic) ÷ 30 ÷ 8 = AED 33.33/hour
Mistake 2: Not Paying the Premium
Some employers pay overtime at the regular hourly rate (100%) instead of the premium rate (125% or 150%). This underpays employees by 20-33%.
Mistake 3: Compensating Only with Time Off
For regular weekday overtime, employers cannot simply give time off instead of payment. The 125% premium must be paid. For Friday/holiday work, employers can offer a substitute day off, but must still pay the 50% premium for hours worked.
Mistake 4: Not Tracking Overtime Hours
Without accurate time records, employers cannot calculate overtime correctly and employees cannot dispute incorrect payments. Both sides should maintain overtime records.
Mistake 5: Classifying All Employees as "Management"
Exempt status must be legitimate. An employer cannot label a junior staff member as "management" simply to avoid overtime payments. MOHRE will examine the actual role and responsibilities in any dispute.
Overtime Impact on Other Benefits
Does Overtime Affect Gratuity?
No. Gratuity is calculated on basic salary only, regardless of how much overtime you earned during your employment. Overtime does not increase or decrease your gratuity entitlement.
Does Overtime Affect Leave Encashment?
No. Annual leave encashment is calculated on your regular daily rate. Overtime earnings do not factor into leave calculations.
Does Overtime Affect Bank Loans?
Possibly. Some banks consider regular overtime as part of income for loan eligibility, but they typically require 6-12 months of consistent overtime records. Variable overtime is usually excluded.
How SmallERP Manages Overtime
SmallERP automates overtime calculation, tracking, and payment for UAE businesses.
Automatic Rate Calculation
SmallERP calculates the correct overtime rate based on each employee's basic salary. No manual formula work — enter the hours, and SmallERP applies the right premium (125% or 150%) based on when the overtime occurred.
Time Tracking Integration
Link SmallERP to your time tracking or attendance system. Overtime hours are captured automatically, with the system distinguishing between regular, night, Friday, and holiday overtime.
WPS-Inclusive Payroll
Overtime is automatically included in WPS salary files, ensuring compliance with payment records and accurate employee payments.
Overtime Reports
Generate monthly and annual overtime reports by employee, department, or company-wide. Track overtime trends, manage costs, and ensure compliance.
Use the SmallERP Salary Calculator to model overtime scenarios.