How a UAE salary is structured
When you get a job offer in the UAE, the headline number is usually the "total" or "gross" monthly salary. But your contract almost always splits that total into parts. The most common parts are:
- Basic salary – the core wage written in the contract.
- Housing allowance – money to help pay rent, unless the employer gives you free accommodation.
- Transport allowance – for travel to work, unless company transport is provided.
- Other allowances – such as phone, food, education, or a general "other" or "special" allowance.
Two people with the same total salary can end up with very different benefits, just because their basic salary is different. That is the main reason to understand your breakdown. This UAE salary calculator lets you enter your gross pay and the percentages from your contract, and it shows the amount of each part and what it means for you.
Why employers split the salary
Splitting the package is normal practice, not a trick. Allowances let employers show clearly what part of your pay is meant for rent or travel. But because the law links key benefits to basic salary, the split has real money effects. Always read the salary section of your offer letter and your MOHRE contract, and make sure both show the same figures.
There is no rule in the law that says basic must be a certain percentage. In the market, basic is often around 40% to 60% of the total. Some employers keep basic low to reduce the cost of gratuity and overtime. If you have a choice during an offer negotiation, a higher basic share is usually better for you over the long term.
The legal basis
The main law is Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, the UAE Labour Law for the private sector, with its Executive Regulations in Cabinet Resolution No. 1 of 2022. Article 1 of the Decree-Law gives two key definitions:
- Basic wage: the wage set in the employment contract, paid monthly, weekly, daily, hourly or by piece, not including allowances or in-kind benefits.
- Wage: the basic wage plus the cash allowances and in-kind benefits given under the contract or the law.
Different articles use one or the other. For example, Article 19 (overtime) and Article 51 (end of service gratuity) use the basic wage, while Article 29 says annual leave is taken with the full wage. Article 25 sets the rules on deductions from wages.
Other laws affect take-home pay:
- Federal Decree-Law No. 57 of 2023 on pensions and social security, managed by the General Pension and Social Security Authority (GPSSA), which applies to UAE nationals.
- Federal Decree-Law No. 13 of 2022 on unemployment insurance, the Involuntary Loss of Employment (ILOE) scheme.
What each salary component affects
This table is the heart of the page. It shows which part of your salary is used for each benefit under the UAE Labour Law.
| Benefit | Salary used | Law |
|---|---|---|
| End of service gratuity | Last basic salary | Article 51 |
| Overtime pay | Basic salary (hourly) | Article 19 |
| Pay while on annual leave | Full wage (basic + allowances) | Article 29 |
| Unused leave paid at end of service | Basic salary | Article 29(9) |
| Public holiday work premium | Normal wage + 50% of basic | Article 28 |
| Sick leave pay (first 15 days full, next 30 half) | Wage | Article 31 |
| ILOE premium category and compensation | Basic salary | Decree-Law 13/2022 |
| Pension (UAE nationals) | Contribution salary per contract, within limits | Decree-Law 57/2023 |
So if your basic salary is AED 5,000 out of AED 10,000, your gratuity and overtime are based on AED 5,000, not AED 10,000. If you want to see what that means in money, use our UAE Gratuity Calculator and UAE Overtime Calculator. For leave pay, see the UAE Leave Salary Calculator.
Formulas used by this calculator
Salary split
Housing = Gross × Housing %
Transport = Gross × Transport %
Other allowances = Gross − Basic − Housing − Transport
Daily and hourly wage
Daily gross wage = Gross ÷ 30
Hourly basic wage = Daily basic wage ÷ Normal daily hours
The Labour Law treats a month as 30 days when counting periods, and most UAE employers use 30 days to find a daily rate. Some use annual pay ÷ 365, which gives a slightly lower daily figure. The difference is small.
Benefit indicators
Overtime hourly (10 pm–4 am) = Hourly basic × 1.50
Gratuity per year, first 5 years = Daily basic × 21
Gratuity per year after 5 years = Daily basic × 30
Take-home pay
Take-home pay: tax, pension and ILOE
No personal income tax
The UAE does not tax employment income. There is no personal income tax deducted from your salary, whether you are an expat or a UAE national. The UAE corporate tax introduced in 2023 applies to businesses, not to an employee's salary. VAT at 5% applies to many things you buy, but it is not taken from your payslip.
Pension contributions for UAE nationals
UAE nationals working in the private sector must be registered with a pension fund. Under Federal Decree-Law No. 57 of 2023, which applies to Emiratis who joined the GPSSA scheme from 31 October 2023:
- The employee pays 11% of the contribution salary.
- The employer pays 12.5% if the contribution salary is below AED 20,000 (the government adds 2.5%), or 15% for higher salaries.
- The contribution salary for the private sector is the salary stated in the contract, with a minimum of AED 3,000 and a maximum of AED 70,000 a month.
Emiratis registered before that date generally stay on the older rates (5% employee share) unless they chose to move. Abu Dhabi nationals are covered by the Abu Dhabi Pension Fund (ADPF) instead, which uses similar rates but a higher salary cap for new members. The exact contribution salary can include more than basic, so our calculator uses your gross salary as an estimate, limited to the minimum and maximum. Check your figures with GPSSA, ADPF or your HR.
GCC nationals working in the UAE are covered by their own country's pension system through the GCC extension arrangement. Their rates differ by country, so the calculator does not estimate them.
No pension deduction for expats
Expatriate workers in the private sector do not pay pension contributions. Instead, they receive an end of service gratuity when their job ends. Some employers, especially in DIFC and in some free zones, use workplace savings schemes instead of a traditional gratuity. Under the Labour Law there is also an optional alternative savings scheme approved by the Cabinet; if your employer uses one, the rules may differ.
ILOE unemployment insurance
Since 2023 most private sector and federal government employees, both Emiratis and expats, must subscribe to the ILOE scheme. It pays a portion of your basic salary for a short period if you lose your job for reasons other than resignation or disciplinary dismissal. The premiums are:
| Category | Basic salary | Premium (before VAT) | Maximum monthly compensation |
|---|---|---|---|
| Category A | AED 16,000 or less | AED 5 per month (AED 60 per year) | AED 10,000 |
| Category B | More than AED 16,000 | AED 10 per month (AED 120 per year) | AED 20,000 |
Compensation is 60% of the average basic salary of the six months before job loss, up to the cap, for up to three months per claim. You must have been subscribed for 12 consecutive months. Not subscribing can lead to a fine. Investors, domestic workers, temporary contract workers, those under 18, and retirees who took a new job are exempt.
Many people pay the premium for a full year or two years at once rather than monthly. In that case, select "Exclude" in the calculator, because nothing is taken from your monthly salary. Premiums are usually paid by the worker directly, not deducted by the employer, although some employers cover it as a benefit. Check the latest rules on the official ILOE portal or with MOHRE, as payment options have changed over time.
Worked examples
Example 1: Expat on AED 10,000
Anil earns AED 10,000 gross. His contract says basic 50%, housing 25%, transport 10%, other 15%. He pays ILOE monthly and has no loans.
- Basic: AED 5,000 · Housing: AED 2,500 · Transport: AED 1,000 · Other: AED 1,500
- Daily basic wage: 5,000 ÷ 30 = AED 166.67
- Hourly basic wage (8 h): AED 20.83 · Overtime hourly: AED 26.04 · Night overtime: AED 31.25
- Gratuity per year (first 5 years): 166.67 × 21 = AED 3,500.00
- Annual package: AED 120,000
- Deductions: ILOE AED 5.00 (plus VAT if billed)
- Take-home (before VAT on ILOE): AED 9,995.00
Example 2: Expat on AED 6,000 with a salary advance
Rosa earns AED 6,000 gross: basic 60%, housing 25%, transport 15%. She is repaying a company advance at AED 500 a month and pays ILOE monthly.
- Basic: AED 3,600 · Housing: AED 1,500 · Transport: AED 900
- Daily basic: AED 120.00 · Hourly basic: AED 15.00
- Deductions: loan AED 500 + ILOE AED 5 = AED 505
- Take-home: AED 5,495.00
Example 3: UAE national on AED 40,000 (new scheme)
Fatima, an Emirati who joined GPSSA in 2024, earns AED 40,000 gross: basic 50%, housing 30%, transport 10%, other 10%.
- Basic: AED 20,000 · Housing: AED 12,000 · Transport: AED 4,000 · Other: AED 4,000
- Pension estimate: 11% × 40,000 = AED 4,400 (employer pays 15% on top, as her salary is above AED 20,000)
- ILOE: basic above AED 16,000, so AED 10 per month
- Take-home estimate: 40,000 − 4,400 − 10 = AED 35,590.00
If her contribution salary is defined differently in her contract, her pension amount will differ. The calculator caps the base at AED 70,000 for GPSSA.
Example 4: UAE national on AED 25,000, ILOE paid yearly
Khalid earns AED 25,000 gross: basic 60%, housing 25%, transport 5%. He pays ILOE once a year, so he excludes it.
- Basic: AED 15,000 · Hourly basic: AED 62.50
- Pension estimate: 11% × 25,000 = AED 2,750
- Take-home: AED 22,250.00
What can be deducted from your salary?
Article 25 of the Labour Law lists the only reasons an employer may deduct money from your wage. The main ones are:
- Recovery of a loan or advance, with your written consent and without interest.
- Recovery of money paid to you by mistake, up to 20% of the wage.
- Contributions required by law, such as pension.
- Provident fund or approved housing scheme contributions.
- Fines under the company's approved disciplinary rules, up to 5% of the wage.
- Court-ordered debts, generally up to a quarter of the wage.
- Damage to company property caused by your error, up to five days' wage per month.
The total of all deductions should not exceed 50% of the wage. The calculator will warn you if your deductions go above half of your gross salary.
Special cases
Free accommodation instead of housing allowance
If your employer provides a room or flat, you may get no housing allowance at all. In that case, set housing to 0% and increase "other" or basic as per your contract. Free housing does not change your gratuity, since that uses basic salary only.
Part-time and flexible contracts
The new law allows part-time, temporary and flexible work. Your salary and benefits are usually pro-rated to your hours. Enter your actual monthly pay and normal daily hours.
Probation
Probation can be up to six months, and your salary during probation is the salary in your contract. Some rights, such as paid annual leave, only begin after a minimum period of service. See our UAE Notice Period Calculator for probation and notice rules.
DIFC and ADGM
The DIFC and ADGM have their own employment laws. In the DIFC, for example, employers pay into the DEWS savings plan instead of a traditional gratuity. If you work there, your salary breakdown still matters, but benefits follow those laws.
Domestic workers
Domestic workers are covered by Federal Decree-Law No. 9 of 2022, not the general Labour Law. They are exempt from ILOE. Their salary usually has no housing allowance because accommodation is provided.
Commission and bonuses
Commission, bonuses and overtime are not part of basic salary. They do not increase your gratuity unless your contract says so.
Common mistakes
- Comparing jobs on gross salary only. Compare the basic salary too, because it drives your gratuity and overtime.
- Assuming allowances count for gratuity. They don't. Only basic salary counts.
- Expecting tax to be deducted. There is no personal income tax. If something is deducted, ask what it is.
- Forgetting ILOE. Missing the subscription can lead to a fine. Check your status on the official ILOE channels.
- Accepting unexplained deductions. Each deduction must fall under Article 25. Ask for a written explanation.
- Percentages adding up to more than 100%. Basic, housing and transport together cannot exceed your gross. The calculator checks this.
If your salary is late or wrong
Most private sector employers pay through the Wage Protection System (WPS), so salary payments are tracked by MOHRE. If your salary is late, lower than your contract, or has deductions you did not agree to, raise it with HR first in writing.
If that does not work, you can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE) through the MOHRE app, the website mohre.gov.ae, MOHRE's 600 590000 number (call centre and WhatsApp), or an approved service centre such as Tawafuq. Under the law as amended in 2024, MOHRE can decide claims up to AED 50,000, and you generally have two years from the end of employment to bring a labour claim. When you leave, check your final pay with our UAE Final Settlement Calculator.
Keep copies of your contract, payslips and bank statements. They are your best evidence if the numbers do not match.
For pension questions, contact GPSSA or the Abu Dhabi Pension Fund. For ILOE subscription and claims, use the official ILOE portal or MOHRE.
Frequently asked questions
Is there income tax on salaries in the UAE?
No. The UAE does not charge personal income tax on employment salaries. The UAE corporate tax applies to businesses, not to the salary of an employee. Your take-home pay is reduced only by items such as pension contributions for nationals, loans, or other agreed deductions.
What percentage of salary should be basic in the UAE?
The law does not fix a percentage. Basic salary is whatever your contract states. In practice, many employers set basic at roughly 40% to 60% of the total package, with the rest paid as housing, transport and other allowances.
Why does basic salary matter so much in the UAE?
Because end of service gratuity, overtime pay and the cash value of unused leave at the end of service are all calculated on basic salary. A higher basic means higher benefits, even if the total package is the same.
How is daily wage calculated in the UAE?
The common method is monthly salary divided by 30. For benefits based on basic pay, such as gratuity, use basic salary divided by 30. Some employers use annual salary divided by 365, which gives a slightly lower figure.
Do expats pay pension contributions in the UAE?
Expatriate employees in the private sector do not pay into the federal pension scheme. Instead they receive end of service gratuity, or in some cases an employer savings scheme. Pension contributions apply to UAE nationals and, under separate GCC rules, to GCC nationals.
How much pension do UAE nationals pay from their salary?
Under Federal Decree-Law No. 57 of 2023, Emiratis who joined on or after 31 October 2023 pay 11% of their contribution salary, while those registered before that date generally pay 5% unless they opted into the new rate. The employer pays 12.5% to 15%, and the government adds 2.5% for lower salaries. Abu Dhabi nationals are covered by the Abu Dhabi Pension Fund.
How much is ILOE unemployment insurance in the UAE?
The basic ILOE premium is AED 5 per month for workers with basic salary up to AED 16,000 and AED 10 per month for those earning more, plus VAT. The worker pays it, not the employer, unless the employer chooses to cover it.
Can my employer deduct money from my salary?
Only in cases allowed by Article 25 of the Labour Law, such as recovering a loan with your written consent, legally required pension contributions, fines under approved rules, or court orders. Total deductions should not exceed 50% of your wage.
Is housing allowance included in gratuity?
No. UAE end of service gratuity is based on your last basic salary only. Housing, transport and other allowances are not included unless your contract gives you a better deal.
What is the minimum salary in the UAE?
For the private sector there is no single general minimum wage for all workers. The law allows the Cabinet to set minimum wages, and there are separate rules for Emiratis under Emiratisation programmes. Check MOHRE for current requirements in your category.
Disclaimer
This UAE salary calculator gives estimates only and is not legal, tax or financial advice. Pension contribution salary, ILOE billing and deduction rules can depend on your contract and change over time. Check with your employer, MOHRE, GPSSA or the ILOE portal for your exact figures.
Sources / references
Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (Articles 1, 19, 25, 28, 29, 31, 51); Cabinet Resolution No. 1 of 2022; Federal Decree-Law No. 57 of 2023 on Pensions and Social Security; Federal Decree-Law No. 13 of 2022 on Unemployment Insurance and Cabinet Resolution No. 97 of 2022; Ministry of Human Resources and Emiratisation; UAE Government Portal – GPSSA explanation of Federal Law No. 57 of 2023.