In the fast-paced and competitive business environment of the UAE, overtime is more than just extra hours. It’s a regulated labor component governed by UAE Labour Law. Whether you’re an employer or an employee, understanding how to calculate overtime in the UAE helps ensure legal compliance and fair treatment.
What is Overtime Pay?
Overtime pay is the additional compensation paid to employees who work beyond the standard working hours. In the UAE, this is not optional—UAE labor laws make it mandatory for eligible workers to receive payment for extra hours.
Legal Framework for Overtime in the UAE
The UAE Labour Law (Federal Decree-Law No. 33 of 2021) outlines specific rules for overtime calculation. The law clearly defines:
- Standard working hours
- Overtime thresholds
- Rates of pay for overtime hours
- Categories of workers exempt from overtime
Understanding this legal foundation is crucial to stay compliant and avoid penalties.
Why Understanding Overtime Calculation is Important
If overtime is miscalculated or not paid at all:
- Employees may lose rightful earnings
- Employers risk penalties or legal disputes
- Business reputation can suffer
That’s why mastering UAE overtime laws and formulas is essential for HR teams and professionals.
Who is Eligible for Overtime in the UAE?
Generally, all non-managerial employees are entitled to overtime if they exceed the standard 8 or 9 working hours (depending on the sector). This includes:
- Private sector employees
- Retail workers
- Construction and labor staff
- Call center staff
Employees must be compensated in line with their basic salary plus applicable overtime rates.
Types of Employees Exempt from Overtime Pay
Not everyone qualifies. Certain professionals are excluded by law from overtime entitlements, including:
- Senior managerial staff
- Supervisory-level employees
- Employees authorized to act on behalf of the employer
Always check an employee’s contract and job role before assuming eligibility.
Standard Working Hours Under UAE Labor Law
According to UAE law:
- 8 hours per day or 48 hours per week is standard for most sectors
- 9 hours per day is allowed in commercial establishments, hotels, restaurants, and security services
Any hours beyond these are considered overtime and must be compensated.
When Does Overtime Begin?
Overtime starts after the regular working hours end. This is typically:
- After 8 or 9 hours of work
- Or on public holidays and official weekends
Employees working during annual leave, weekends, or Eid holidays are entitled to additional compensation or time off in lieu.
How to Calculate Daytime Overtime Pay
If an employee works extra hours during the day, they are entitled to:
- 125% of the basic hourly wage
So, if the hourly rate is AED 20, overtime pay would be:
AED 25/hour (20 x 1.25)
How to Calculate Nighttime Overtime Pay
If the overtime occurs between 10 PM and 4 AM, employees are entitled to:
- 150% of the basic hourly wage
Using the previous example:
AED 30/hour (20 x 1.5)
This rule aims to compensate the inconvenience of working night hours.
How to Calculate Overtime on Weekends and Holidays
When employees work on public holidays, Fridays, or official days off, they’re entitled to either:
- A full day of paid rest, or
- 150% pay in addition to their regular wage
Employers must document and justify this work under labour law compliance.
Formula for Overtime Calculation in the UAE
The standard overtime pay formula is:
Overtime Pay = Hourly Basic Wage × Overtime Rate × Number of Extra Hours
Where:
- Overtime Rate = 1.25 (for day) or 1.5 (for night/weekend)
- Hourly Wage = Monthly Salary ÷ 30 ÷ Working Hours Per Day
Examples of Overtime Calculations
Let’s say an employee earns AED 6,000 per month and works 10 extra hours in a week:
Hourly Wage = 6,000 ÷ 30 ÷ 8 = AED 25
Overtime Pay (day) = 25 x 1.25 x 10 = AED 312.50
Overtime Pay (night) = 25 x 1.5 x 10 = AED 375.00
These examples show how different time brackets affect the total payout.
What is the Maximum Overtime Allowed Per Day or Week?
Employees in the UAE may not work more than:
- 2 hours of overtime per day
- And 144 hours over three weeks
Beyond this, employer approvals and ministry permissions are mandatory.
How Employers Should Handle Overtime Approvals
To manage overtime responsibly, employers should:
- Maintain written approvals
- Record exact clock-in and clock-out hours
- Provide clear overtime policy in contracts
Transparent communication protects both parties.
Employee Rights Related to Overtime Pay
Employees have the right to:
- Be informed about their overtime entitlements
- Refuse excessive overtime if it affects health or safety
- File a complaint for unpaid hours
These rights are protected by the Ministry of Human Resources and Emiratisation (MOHRE).
Penalties for Non-Compliance with Overtime Law
Employers who fail to:
- Pay proper overtime compensation
- Misclassify job roles to avoid payment
- Force overtime without legal basis
… may face:
- Hefty fines
- Blacklist status
- Lawsuits
Compliance is a must, not a choice.
Impact of Overtime on Annual Leaves and End-of-Service Benefits
Overtime does not count towards:
- Annual leave pay
- Gratuity calculation
Only basic salary and standard working hours are considered for these.
Payroll Systems and Overtime Recordkeeping in UAE
To ensure proper overtime tracking, businesses must use:
- HRMS systems
- Digital attendance logs
- Timesheet software
This reduces payroll errors and supports legal compliance.
Best Practices for Employers to Manage Overtime Efficiently
Smart businesses adopt:
- Rotational shifts
- Work-from-home allowances
- Cap overtime through policy enforcement
Overtime must be an exception, not a norm.
How to Raise a Complaint if Overtime is Unpaid
Employees can contact:
- MOHRE
- Use the Taw-seel service
- File a labour complaint online or via call
Claims are usually resolved within 30 days.
Industry-Specific Overtime Guidelines in the UAE
Different industries face different challenges and rules when it comes to overtime calculation.
Overtime Rules for Construction Workers
Often working in high-heat zones, workers are protected by:
- Midday break rules
- Overtime caps
- Safety-first scheduling
Overtime Rules for Hospitality & Retail Employees
In these sectors:
- Rotating shifts are common
- Peak seasons require higher overtime
- Compensation must follow night and holiday wage rules
Technology Tools for Accurate Overtime Calculation
Use tools like:
- SAP
- Zoho People
- Keka
- Bayzat
They offer automated calculations, compliance checks, and custom reports.
Importance of Employment Contracts in Defining Overtime Terms
Every employee contract should include:
- Working hour limits
- Overtime approval process
- Payment methods and frequency
This prevents future misunderstandings.
HR Strategies to Avoid Excessive Overtime
Companies can reduce overtime by:
- Hiring additional staff
- Using performance-based incentives
- Creating clear workload boundaries
This improves employee morale and reduces burnout.
Also Read: Company Formation in Dubai, UAE
Conclusion
Understanding how to calculate overtime in the UAE is a shared responsibility between employers and employees. With strict laws, defined formulas, and employee protection frameworks, the UAE ensures fair and timely compensation for all additional work.
To stay compliant, employers must document every step, use digital tools, and respect labour laws.
If you’re an employer or entrepreneur, working with HR consultants or payroll experts ensures you’re always in line with UAE employment regulations.
FAQs
Is overtime mandatory to pay in UAE?
Yes, employers must pay for eligible overtime hours as per UAE Labour Law unless the role is explicitly exempted.
How many hours is legal overtime in UAE per day?
Employees can work up to 2 hours of overtime per day, unless exceptional permission is granted.
Are overtime hours included in end-of-service gratuity?
No. Only the basic salary is used to calculate gratuity, not overtime earnings.
What happens if an employee refuses overtime?
If the overtime is excessive or not contractually required, the employee can legally refuse it.
Can employers offer time off instead of overtime pay?
Yes, but only if agreed in writing and within legal timeframes defined by MOHRE.
