UAE labour law for contractors: pay, overtime, leave and gratuity
Federal Decree-Law No. 33 of 2021 sets the pay rules every UAE contractor runs payroll by: 8-hour days, overtime at basic hourly wage plus at least 25%, night overtime at plus 50%, 30 days' annual leave after one year, and end-of-service gratuity of 21 then 30 days' basic wage per year, capped at two years' wage.
Why construction payroll is harder than most
A contractor's workforce is large, paid mostly on basic salary with allowances on top, and spread across sites with long days, night pours and rest-day work. Every one of those situations has a rule in the law, and each rule is priced on basic salary, not the full package. Getting the base wrong repeats the error across every worker, every month.
This guide sets out the rules that drive the numbers, with the article of the law each comes from, and links to a calculator for each one: the gratuity calculator, the overtime calculator and the annual leave calculator.
Working hours and overtime
Most private-sector workers work 8 hours a day or 48 hours a week, reduced by two hours a day during Ramadan. Overtime beyond normal hours is limited to two hours a day, and total working hours may not exceed 144 in any three weeks. Each overtime hour is paid at the basic hourly wage plus at least 25%. Between 10 pm and 4 am the premium is at least 50%, except for shift workers. Work on the weekly rest day earns another day off or the day's wage plus at least 50% of the basic wage. Use the overtime calculator to price a month.
| Rule | What the law requires | Article |
|---|---|---|
| Overtime | Basic hourly wage + at least 25%, no more than 2 hours a day | 19(1), 19(2) |
| Night overtime (10 pm to 4 am) | Basic hourly wage + at least 50%, shift workers excluded | 19(3) |
| Rest-day work | Another day off, or the day's wage + at least 50% of basic | 19(4) |
| Three-week cap | No more than 144 working hours in 3 weeks | 19(1) |
| Annual leave | 2 days a month from 6 months; 30 days a year after 1 year | 29(1) |
| Unused leave on exit | Paid, calculated on the basic wage | 29(9) |
| Gratuity | 21 days' basic per year for years 1-5, 30 days after; cap of 2 years' wage | 51(2), 51(6) |
| Final pay | All wages and entitlements within 14 days of the contract ending | 53 |
Annual leave
A worker earns two days of paid leave for each month once they pass six months, and at least 30 days a year after one year. If a public holiday falls during annual leave it counts as part of the leave, unless the contract gives more. Leave can be carried forward with the employer's approval, and the employer cannot stop a worker from taking leave that has built up for more than two years. Unused leave is paid when the job ends, calculated on the basic wage. The annual leave calculator works out the balance and its value.
End-of-service gratuity
A full-time foreign worker who completes one year of continuous service earns gratuity: 21 days' basic wage for each of the first five years and 30 days' for each year after, with part years in proportion and a ceiling of two years' wage. Unpaid absence is not counted as service. Since 2022 the amount no longer depends on whether the worker resigned or was dismissed. Emirati workers are covered by the pensions legislation instead. The gratuity calculator applies these rules and shows the working.
Paying wages through WPS
Wages must be paid on their due dates through the systems approved by the Ministry of Human Resources and Emiratisation, which for most private companies means the Wage Protection System. Each month the employer's bank or exchange house receives a salary information file listing every worker's pay. A contractor with hundreds of workers needs that file to come straight out of payroll, not be retyped.
How SupaJack Construct applies these rules
SupaJack Construct prices overtime on the hourly basic rate, pays it only inside a manager-approved authorisation, keeps annual leave as a ledger of entries, accrues gratuity monthly by project and produces the WPS salary file from the payroll run. The calculators on this site use the same formulas. See the modules, see how approvals work or sign in.
Questions people ask
Which law governs private-sector employment in the UAE?
Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationship, with its amendments and Implementing Regulation.
Are overtime and gratuity calculated on basic or total salary?
On basic salary. Allowances such as housing and transport are not part of the base.
What is the overtime rate in the UAE?
Basic hourly wage plus at least 25%, rising to at least 50% between 10 pm and 4 am for workers who are not on shifts.
How many overtime hours can a construction worker do?
No more than two hours a day, and total hours may not exceed 144 in three weeks.
What happens if a worker works on their rest day?
They get another day off, or the day's wage plus at least 50% of the basic wage.
How much annual leave does a worker get?
Two days a month after six months of service, and at least 30 days a year after one year.
How is gratuity worked out?
21 days' basic wage for each of the first five years and 30 days for each year after, capped at two years' wage.
Does resigning reduce gratuity?
No. The current law applies the same formula whether the worker resigns or is dismissed.
How quickly must final pay be made?
Within 14 days of the end of the contract.
What is WPS?
The Wage Protection System, through which private companies pay salaries using a salary information file sent to their bank or exchange house.
Do these rules apply to Emirati workers' gratuity?
No. Emirati workers receive end-of-service benefits under the pensions and social security legislation.
Sources
- Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationship (MOHRE, consolidated with amendments)
- Federal Decree-Law Regarding the Regulation of Employment Relationship (UAE Government portal copy)
- End of service benefits for workers in the private sector (u.ae)
- Working hours and overtime in the private sector (u.ae)
- Employment laws and regulations in the private sector (u.ae)
- Ministry of Human Resources and Emiratisation