UAE Job Offer Guide: What Your Basic Salary Really Means — and Why it Matters More Than Your Total Pay

When you receive a private-sector job offer in the UAE, the contract typically shows a “total salary”. However, a closer look often reveals that the amount is divided into several components — primarily a basic salary and additional allowances such as housing or transport.

 

Understanding your basic salary, referred to as the “basic wage” under UAE Labour Law, is crucial because many employment benefits are calculated using this figure rather than your overall monthly pay.

 

What is a basic salary?

Under UAE Labour Law (Federal Decree-Law No. 33 of 2021), the basic wage is the amount specified in your employment contract as payment for the work you perform.

 

It represents only one part of your overall salary package. Employers commonly provide additional allowances, including housing, transport and other incentives.

 

Your total salary therefore consists of:

 

• Basic salary (basic wage)
• Allowances and benefits
  
  

The law states that allowances may be intended to help cover living expenses or may be performance-linked, such as a share of sales or profits.

How to find your basic salary


If you work in the UAE private sector, your basic salary will be clearly listed in your employment contract. The document usually provides a detailed breakdown showing:

• Basic salary
• Housing allowance
• Transport allowance
• Other benefits or incentives
  
  

If you do not have a copy of your contract, you can:

• Check your company’s HR portal
• Download the digital contract through the official MOHRE website or mobile app
  
  

Four key benefits tied to your basic salary

End-of-service gratuity


Gratuity, or severance pay, is payable when your employment ends, provided you have completed at least one year of continuous service.

Under Article 51 of the UAE Labour Law, gratuity for foreign full-time employees is calculated based on the basic wage:

• 21 days’ basic pay for each year during the first five years
• 30 days’ basic pay for each additional year
  
  

Any partial year worked is also included in the final calculation.

ILOE job loss insurance


The Involuntary Loss of Employment (ILOE) scheme provides financial support if you lose your job for reasons beyond your control and meet the eligibility criteria.

If approved, compensation can reach up to 60 per cent of your basic salary for a maximum of three months.

Overtime pay


Where employees are eligible for overtime, the additional payment is calculated using the basic salary — not the total salary including allowances.

Not all job categories qualify for overtime, depending on the role and contract terms.

Annual leave encashment


If you resign or your employment ends with unused annual leave remaining, you may be entitled to payment for those days. Under Cabinet Resolution No. 1 of 2022, Article 19(2), this amount is calculated based on the basic wage.

Why this matters before signing


Your total salary reflects your monthly earnings, but your basic salary determines several major financial entitlements — including gratuity, overtime, job loss insurance payouts and leave encashment.

Before accepting a UAE job offer, carefully review how your salary is structured. A lower basic salary with higher allowances may look attractive monthly but can significantly reduce your long-term benefits and final settlement.

 

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