How to Calculate Overtime in UAE

How to Calculate Overtime Salary?

Overtime calculation is an essential part of payroll calculation. This article explains to you the formulas to calculate the overtime salary payable and formulas in effect as of not in UAE, however, it is advised that you read the UAE Labor Law by the Ministry of Labor to check latest rules and formulas. Read this article to know how to calculate overtime in uae.

Overtime Pay Calculation is based on main three factors:

1. Basic Salary of Employee

2. Number of Overtime Hours

3. OT Formula Type (Normal / Weekend / Public Holidays)

Calculations for One Hour Overtime Rate:

One hour Overtime rate is calculated based on a major parameter: Per day work hours. As per current rule, 8 hours are working hours for most of the businesses. There are two main ways to calculate one hour overtime rate: By Month or By Year.

One Hour OT Rate = ((Salary * 12) / 365) / 8

Description: Monthly Basic Salary multiplied by 12 months, divided by 365 days a year, divided by 8 hours.
Method 2 is absolutely perfect, however Method 1 is popular and in use widely.
Overtime payment compensation is different for Normal days as compare to working on Fridays or other public holidays.

Calculations for Normal Days Overtime Payment:

OT Payment = (One Hour OT Rate * 1.25) * Total OT Hours.

Example: [((Salary * 12) / 365) / 8) * 1.25] * OT Hours.

Calculations for Weekend Overtime Payment:

OT Payment = (One Hour OT Rate * 1.5) * Total OT Hours.

Example: [((Salary * 12) / 365) / 8) * 1.5] * OT Hours.

Calculations for Public Holidays Overtime Payment:

OT Payment = (One Hour OT Rate * 2.5) * Total OT Hours.

Example: [((Salary * 12) / 365) / 8) * 2.5] * OT Hours.

Note: This article is shared as a general guideline, use or apply with your own understanding and accountability.

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Frequently Asked Questions (FAQ)

Frequently asked questions about Overtime calculation in UAE.

Overtime is generally calculated using an employee's basic salary, not the gross salary. First, calculate the hourly basic wage, then apply the applicable overtime rate. Most overtime is paid at the normal hourly wage plus 25%, while overtime worked between 10:00 PM and 4:00 AM is generally paid at the normal hourly wage plus 50%, subject to UAE Labour Law provisions.

Under UAE Labor Law, overtime is calculated based on the employee's basic salary, not the total salary that includes allowances such as housing, transport, or other benefits.

The standard overtime rate is:

  • 125% of the normal hourly basic wage for regular overtime.
  • 150% of the normal hourly basic wage for overtime performed between 10:00 PM and 4:00 AM (except shift workers).
  • Employees required to work on their designated weekly rest day may receive a substitute day off or payment according to UAE Labour Law.

A commonly used formula is:

Hourly Basic Wage = (Basic Salary × 12) ÷ 365 ÷ 8

Regular Overtime Pay = Hourly Basic Wage × 1.25 × Overtime Hours

Night Overtime Pay = Hourly Basic Wage × 1.50 × Overtime Hours

Always verify the calculation against your employment contract and applicable labor regulations.

Not always. Certain categories of employees may be exempt under UAE Labor Law or its implementing regulations, such as some managerial or supervisory positions. Eligibility depends on the employee's role, contract, and applicable legal provisions.

In general, employers may require employees to work up to two additional hours per day, except in specific situations permitted by law. The total working hours must also comply with the limits prescribed under UAE Labor Law.

Yes. Modern UAE HR and Payroll Software can automatically calculate overtime based on basic salary, working hours, shift timings, company policies, and UAE Labor Law rules. Automation helps reduce payroll errors, saves time, and ensures accurate employee payments.

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