Regardless of whether or not you receive Full Monthly Remuneration, the only amount paid to you when your employment ends is the Base Salary. For most private sector employers (i.e., where employees work), the Base Salary, in conjunction with any other allowances, determines the amount of End-of-Service Gratuity, Unused Leave, and Unemployment Benefits; Dubai and Abu Dhabi financial free zones also establish a minimum Base Salary for those who work in free zones. Therefore, it’s important to consider all aspects of Base Salary versus Allowances in the UAE rather than simply looking at the dollar amounts on a payslip.
All information below is based upon federal law, as implemented through its regulations, the insurance policy rules, and the regulations governing free-trade zones. All data provided is accurate as of September 2026. This information addresses the rule only, not legal or financial recommendations; therefore, you must verify your individual situation with the Ministry of Human Resources and Emiratisation (MOHRE) or an Accredited Employment Attorney within UAE. Lastly, there are five checks you should complete before signing. First, however, it’s important to understand that there are two distinct terms under the Law in relation to payment.
What UAE Labour Law Means by Basic Salary (and How It Differs From Your Total Wage)
The offer is made up of an AED 6,000 basic amount along with an allowance of AED 4,000 for an overall payment of AED 10,000 monthly. The way that these amounts are split does not change what gets credited into your account. The way it is split will change how the law calculates.
The federal decree-law defines the following two terms separately. The term Basic Wage refers to the wage that has been defined in your employment contract and does not include other benefits and allowances; whereas the term Wage represents the combination of your Basic Wage and any allowances and benefits provided to you by the terms of your employment contract and/or the Federal Law and could also include a percentage of sales/profits or cost of living allowances.
Every month, you will be paid a full Wage in accordance with the provisions of this Implementing Regulation. Employers who are registered with the MOHRE must follow these provisions and must make sure to make payments on time, under the WPS (Wage Protection System). When the law refers to Basic Wage, all of the allowances would not factor into this calculation, and when the law uses the term Wage then all Cash Allowances and Benefits in kind will be included in that definition of wages. This is the difference in terminology that will be responsible for most other distinctions that will appear below.
These definitions include all private-sector employers and employees regulated by the MOHRE as at the date of this publication: September 2026. Federal and local government employees, armed forces, police and security personnel, domestic workers are all excluded from this law. The Dubai International Financial Centre and the Abu Dhabi Global Market have their own Employment Laws. The definition of Basic Wages does not provide for the amount of basic wages. The question remains; what determines the Size of Basic Wages?
Is There a Legal Basic Salary Percentage in the UAE?
By federal labour law, as of September 2026, a basic wage has been defined with no minimum percentage stipulated for the basic wage within a pay package (i.e. 40%, 50%, or 60% basic wage, is a matter of contract). There are two financial free zones with different rules: the DIFC and ADGM where at least half of an employee’s pay must be based on a basic wage.
The contradiction is evident in actual conversations. A Reddit thread in June 2026 had one comment that stated, “Your basic salary may not be below 50% of your total payment.” Other commenters in that thread stated they had seen salaries of 30% or less than 20% considered a basic salary. Both statements are correct because the 50% requirement applies only within the two financial free zones.
Section 61 of the Employment Regulations (ADGM) defines the calculation for gratuity based on the following: Employees must have at least 50% of their wages as their basic wage. The daily rate in ADGM is calculated on a 365-day year. The law firm Addleshaw Goddard in DIFC states that the monthly wage must have a basic wage not less than 50%.
For contracts signed outside of the financial free zones, having a low basic salary will not violate Federal Laws in every case. A better question actually is what rights you will lose with the cost of a low basic salary.
Which Entitlements Use Basic Salary and Which Use Your Full Wage
Below is a version of this content that maintains a generalised approach but still provides a breakdown of how all entitlements under MOHRE are calculated based on the laws that were set out in 2026 and verify their application in each private employment sector.
| Entitlement | What the rule multiplies | Where the rule sits |
|---|---|---|
| End-of-service gratuity (non-UAE nationals, one year or more of service) | Last basic wage: 21 days per year for the first five years, 30 days per year after that, capped at two years’ wage | Decree-Law 33 of 2021, Article 51 |
| Unused annual leave paid when service ends | Basic salary | Cabinet Resolution 1 of 2022, Article 19(2) |
| Annual leave you actually take | Full pay | Decree-Law 33 of 2021, Article 29 |
| Leave cashed in during employment by agreement | The wage you earn when the leave falls due | Cabinet Resolution 1 of 2022, Article 19(1) |
| Overtime | Normal-hours pay calculated on basic wage, plus at least 25% (at least 50% between 10pm and 4am, except for shift workers) | Decree-Law 33 of 2021, Article 19 |
| Working a rest day or public holiday | That day’s wage plus at least 50% of the basic wage, or a substitute rest day | Articles 19(4) and 28(2) |
| Pay in lieu of notice | The worker’s “wage” for the notice period | Article 43(3) |
| Unemployment insurance (ILOE) payout and premium band | 60% of average basic salary over the last six months; category set by basic salary | ILOE policy terms |
| MOHRE Savings Scheme, if your employer enrolled you | 5.83% of monthly basic salary (under five years’ service) or 8.33% (over five years) | MOHRE via u.ae |
The pattern established by this mapping shows that the vast majority of payments after terminating employment (gratuities, accrued leave, insurance coverage) are calculated based on basic salary. However, all payments made to an employee while they are still actively employed and during periods of leave would also include payment based on the employee’s full-time remuneration package. The exception to this is that overtime pay would be calculated based on the employee’s basic salary rate regardless of whether the employee was working full-time or on leave. Additionally, additional information provided in the end-of-service guide through government portals indicates directly that any gratuity payment is excluded from consideration when calculating housing, transport, utility and furniture allowances.
One key area that many people do not realise is the difference between leave taken versus leave accrued and converted to cash at exit from a company. In addition to this, the Implementing Regulations allow the employer to only carry forward a maximum of 50 per cent of annual leave from one calendar year into the subsequent calendar year, and that the total number of days remaining upon termination will be paid out on the employee’s basic salary paid at the time of separation. Thus, the value of the same 30 days’ annual leave taken by an employee is reduced when they terminate versus having been paid as holiday wages.
One AED 10,000 Package at 40%, 50% and 60% Basic: What Changes
The figures below use the same AED 10,000 monthly package split three ways. The data is an example, not a quote, of any individual’s entitlement. The method takes one month as 30 days long, similar to that of federal law. Thus, under this method it is assumed that the basic salary remains at the same amount for every month.
| 40% basic | 50% basic | 60% basic | |
|---|---|---|---|
| Basic / allowances (AED) | 4,000 / 6,000 | 5,000 / 5,000 | 6,000 / 4,000 |
| Paid to you each month (AED) | 10,000 | 10,000 | 10,000 |
| Gratuity after 5 years (105 days of basic) | 14,000 | 17,500 | 21,000 |
| Gratuity after 10 years (255 days of basic) | 34,000 | 42,500 | 51,000 |
| 30 unused leave days paid at exit | 4,000 | 5,000 | 6,000 |
| Unemployment insurance per month, if eligible (60% of basic) | 2,400 | 3,000 | 3,600 |
The gratuity received based on the 60% split after 10 years would exceed the gratuity paid on a 40% split by AED 17,000, although the monthly payment amount was the same for both packages. These packages do not come as close to the two years’ wage cap for gratuity.
Insurance rates for the higher packages are of greater importance. According to the ILOE policy terms, an employee has an AED 16,000 or lower basic salary falls under the first category and will incur a premium of AED 5 per month with a monthly cap of AED 10,000. An employee with a basic salary above AED 16,000 is placed under the second category, incurring a monthly premium of AED 10 and a monthly cap of AED 20,000. VAT applies to all premiums that require this tax. Here is the same AED 30,000 package on two splits:
| AED 30,000 package | 50% basic (AED 15,000) | 60% basic (AED 18,000) |
|---|---|---|
| Insurance category | First | Second |
| Monthly premium | AED 5 | AED 10 |
| Monthly payout cap | AED 10,000 | AED 20,000 |
| 60% of basic, per month | AED 9,000 | AED 10,800 |
A payout is not automatic. The policy requires you to have a 12-month subscription period without a break of more than three months. You must also prove that the separation from service was for a reason other than resignation or disciplinary dismissal. In addition, you must submit your claim within 30 days of separation. Each claim will cover up to a three-month period.
How Housing and Other Allowances Are Treated
The general assumption is that housing will be provided through an allowance. Under federal law, Article 13 (4), the employer has three options regarding housing: to provide a suitable licensed accommodation; to provide a housing allowance; or to include housing within the wage. Therefore, if an employer includes a housing line within an offer, that is one option; however, it does not mean that it is the only option the employer has. There are also instances where an employer may provide accommodation without providing any housing allowance.
When determining the amount of a wage under the definition of “wage” and for purposes of determining a wage that is based upon the service agreement, as well as determining leave and pay in lieu of notice, the employer will count all allowances that have been specifically defined in the service agreement, such as housing or transportation, as part of the total wage. The total wage amount will not include housing allowance amounts that have been provided as redundancy, or any unused leave paid when an employee exits the company, or under a company insurance policy. Commissions also fall under the same rules as wages; the definition of “wage” includes the percentage of sales as an employee’s commission, not the commission itself.
A common topic of discussion regarding the legality of cutting allowances is whether an employer may reduce the allowances of its employees. In June 2025, there was a Reddit thread where a commenter stated that they had previously worked at a company where housing and travel were reduced. Another commenter said that reducing allowances was “as illegal as changing the basic” of an employee. Neither of these comments provides clarification regarding the rule.
Gulf News has reported that all changes to a contract, including salary, must be approved by the employee in writing and must be recorded in the Ministry of Human Resources and Emiratisation (MOHRE) systems to have legal standing. Because allowances are included in wages, all changes to these allowances must follow the same procedure as changes to salaries. Bonuses are not included in salary; each employer has its own written guidelines regarding bonuses. If there are disputes regarding a specific payment, they should be referred to MOHRE or a licensed attorney.
What to Check in Your Offer Letter and MOHRE Contract Before You Sign
The implementing regulation requires that the wage stated in all contracts be “including benefits & allowances”. Before you sign, run these five checks against both documents:
- The basic figure matches. Compare the basic salary on the company offer letter with the MOHRE job offer and contract. MOHRE works from the registered version.
- Every allowance appears as its own line. Check that housing, transport and any other allowance are listed with an amount, so you can see what counts toward the full wage.
- Housing is stated clearly. Look for provided accommodation, a housing allowance, or housing included in the wage, and confirm which one applies.
- You know what bonuses are based on. Ask whether any bonus or commission is calculated on basic or on total pay, and where that policy is written.
- You know which regime applies. Confirm whether the employer is regulated by MOHRE or sits in the DIFC or ADGM, and whether you’ll be enrolled in a savings scheme instead of the standard gratuity.
Mismatch on the initial pay is often not as extraordinary as it sounds. An example posted on Reddit in October 2025 by a flyer described being offered AED 22,000 by a company, but seeing AED 20,000 in MOHRE’s offer letter and on the contract. HR advised that the correct figure would be adjusted after arrival, and other users advised to accept anyway. MOHRE’s stance (in July 2026) is that any adjustment made after the initial pay is an amendment and will not take effect until you consent in writing and receive MOHRE’s approval. Therefore, what you see on your record at that time is what you are agreeing to.
In this case, two checks that you can run for yourself will assist with your decision. First, according to MOHRE’s worker information guide, a MOHRE-approved job offer contains a barcode serial number printed on it. You can verify the serial number through MOHRE’s call centre at the number 600590000, by visiting the MOHRE website or by using the MOHRE smart app. After you have joined the company, review your insurance category to make sure that it correlates with your registered basic salary, using the AED 16,000 threshold established above. If you continue to see discrepancies between the figures, contact MOHRE’s labour advisory line at 80084 for counselling regarding your available options.
Common mistakes to avoid
The biggest mistake people make is comparing offers based solely on the monthly total amount rather than the sum that will determine gratuity, unused vacation time paid upon leaving the company and the possibility of receiving unemployment benefits. A second common error is assuming that rules related to financial free zones (like the 50% minimum) will provide protection for a contract established under a different regime (such as a contract executed on the mainland). The third most common error is signing a registered contract that does not match the terms of the offer when the parties had agreed to make changes to the document in the future. To effectuate changes to an executed contract, documentation of the changes must be recorded with the Ministry of Human Resources and Emiratisation (MOHRE) through a formal amendment.
Frequently Asked Questions
I’m a UAE national. Does the split affect my gratuity the same way?
According to the government portal, providing end-of-service benefit payments for Emirati nationals employed by private companies are done in accordance with the Pensions & Social Security Law—not under either formula of 21 days or 30 days (as of September 2026). Payments for other basic-linked items (such as payment for unused leave upon the employee’s departure) also use the basic salary as the basis for calculation.
My employer enrolled me in the MOHRE Savings Scheme. Does my basic still matter?
Employers’ contributions are made at 5.83% of their employees’ base monthly salary prior to their five years of service and at 8.33% after five years of employment, as stated on the government website. Gratuity payments that were accrued prior to enrolment must first be settled under labour law.
If I resign, does unemployment insurance still pay out?
The ILOE Policy states that employees must show that the reason for leaving the job was not voluntary (i.e. resignation), and that the reason for terminating their employment is a disciplinary issue. Additionally, the employee must have a minimum of 12 consecutive months of subscription to this policy before they will qualify to receive any gratuity payment.
I work in the DIFC. Do I still get a gratuity?
Most DIFC employees will now receive a workplace savings plan (DEWS) in lieu of the gratuity that was previously paid to them until 1 February 2020. As stated in the Addleshaw Goddard report, the first five-year contributions (of 5.83% of the employee’s standard monthly salary) will continue, and 8.33% will be paid on all contributions thereafter.
