Under Article 1 of Federal Decree-Law No. 33 of 2021, your basic wage is the wage stated in your employment contract, without allowances or benefits in kind. Your "wage" (often called total or gross salary) is the basic wage plus cash allowances and benefits in kind, such as housing or transport. Gratuity, unused leave paid when you leave and overtime are calculated on basic wage. Pay while on leave, sick pay, notice pay and arbitrary dismissal compensation use the full wage. Knowing which applies lets you check a payslip or final settlement line by line.
Who this guide is for
This guide is for private-sector employees and HR staff in mainland UAE and non-financial free zones under Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (the Labour Law). It does not repeat the detailed calculations covered elsewhere. For gratuity, see our gratuity worked examples. For overtime, see UAE overtime pay. For leave paid out on exit, see unused annual leave and final settlement. DIFC and ADGM employees, domestic workers and government employees have separate rules.
What do "basic wage" and "wage" mean in the law?
Article 1 gives two definitions. The official Arabic text prevails over translations.
| Term | Definition in Article 1 | Everyday name |
|---|---|---|
| Basic wage (الأجر الأساسي) | The wage stated in the employment contract, paid monthly, weekly, daily, hourly or by piece, excluding any allowances or benefits in kind | Basic salary |
| Wage (الأجر) | The basic wage plus cash allowances and benefits in kind given under the contract or the law | Total, gross or full salary |
Article 1 adds that the wage may include benefits in kind treated as part of the wage, allowances for effort or risk, cost-of-living allowances, and commission on sales or profits.
Is there a minimum percentage for basic salary? The Labour Law does not set a minimum share of the package that must be basic, and we found no official rule fixing one. If someone quotes a percentage as law, ask for the official source.
Which entitlements use basic wage and which use total wage?
| Entitlement | Pay basis in the law | Where it comes from |
|---|---|---|
| End-of-service gratuity | Last basic wage | Article 51(2) and (5) |
| Gratuity ceiling | Two years' wage (basic plus allowances) | Article 51(6) |
| Pay while on annual leave | Full wage | Article 29(1) and (6) |
| Unused leave paid when you leave | Basic wage | Article 29(9); Cabinet Resolution No. 1 of 2022, Article 19(2) |
| Overtime hours | Hourly pay calculated on basic wage, plus 25% or 50% | Article 19(2) and (3) |
| Work on a rest day or public holiday | That day's pay, plus at least 50% of the basic wage for the day | Article 19(4); Article 28(2) |
| Sick leave | Full wage for 15 days, half wage for the next 30 days | Article 31(3) |
| Maternity leave | Full wage for 45 days, half wage for 15 days | Article 30(1) |
| Notice pay in place of notice | Last wage received | Article 43(3) and (4) |
| Arbitrary dismissal compensation | Up to three months' wage, on the last wage | Article 47(2) |
| Work injury pay during treatment | Full wage for up to six months, then half wage for up to six more months | Article 37(2)(b) |
| Death from work injury | 24 months' basic wage, minimum AED 18,000, maximum AED 200,000 | Article 37(3) |
Two points need care. Cash in place of leave while you are still employed follows the wage you receive when the leave falls due under Article 19(1) of Cabinet Resolution No. 1 of 2022, while the UAE Government portal describes unused leave as paid on basic salary, so agree the basis in writing. For the gratuity ceiling, no official source we found explains how the Ministry of Human Resources and Emiratisation (MoHRE) or the courts apply it, so confirm with MoHRE if it affects you. Your contract or company policy can always pay more (Article 65).
A worked example (hypothetical)
Assume a basic wage of AED 6,000, a housing allowance of AED 2,500 and a transport allowance of AED 500. The total wage is AED 9,000. The law does not give a daily-rate formula for monthly-paid workers. This example divides by 30 because Article 67 treats a month as 30 days. It is an illustration, not an official method.
- Daily basic rate: AED 6,000 ÷ 30 = AED 200.
- Gratuity after four years: 4 × 21 days = 84 days. 84 × AED 200 = AED 16,800.
- Ten unused leave days paid on exit: 10 × AED 200 = AED 2,000.
- One ordinary overtime hour, on an 8-hour day: AED 200 ÷ 8 = AED 25. AED 25 × 1.25 = AED 31.25.
- Notice not given by the employer, 30-day notice period: one month's last wage = AED 9,000.
- A 30-day month at half sick pay: half of AED 9,000 = AED 4,500.
- Gratuity ceiling: two years' wage is 24 × AED 9,000 = AED 216,000. Two years' basic would be only AED 144,000.
With the same AED 9,000 split AED 4,500 basic and AED 4,500 allowances, step 2 falls to AED 12,600 and step 3 to AED 1,500, while step 5 is unchanged. The split matters as much as the total.
How to read your offer letter, contract and payslips
- Offer letter. MoHRE's "Know Your Rights" guide says your contract terms should match the job offer you signed, and tells workers to keep a copy.
- MoHRE contract. Article 22(1) requires the wage to be set in the contract, and Article 8(1) says one copy is handed to the worker. MoHRE's guide says you can also get a copy through MoHRE's website or a Tawjeeh centre.
- Payslips. Check that basic wage and each allowance are shown separately and match the contract.
- WPS and bank records. Since 1 June 2026, Ministerial Resolution No. 340 of 2026 makes the 1st of each month the due date for the previous month's wages. A bank credit shows one total, not the split. See our guide on the salary payment deadline and WPS.
- Proof. Article 8(2) lets a worker prove the contract and wage amount by any means of proof. If the contract does not set the wage, Article 22(1) says the competent court decides it.
Step by step
- Find your basic wage in writing. Take it from the MoHRE contract, not a verbal promise.
- List each allowance. Note whether it is paid in cash or in kind.
- Compare your documents. Offer letter, contract, payslips and increase letters should show the same split.
- Note when the basic changed. Gratuity uses your last basic wage.
- Match each entitlement to its basis. Use the table above.
- Show your working. Write the formula and divisor for each figure.
- Ask HR in writing. If a figure uses the wrong basis, ask for the employer's working.
- Get free advice. MoHRE's Labour Claims and Advisory Call Centre is on 80084, and MoHRE's guidance refers to complaints within 30 days of the breach.
Documents checklist
- Signed job offer letter
- MoHRE employment contract and any renewals
- Salary-increase or change letters
- Payslips showing basic wage and each allowance
- Bank statements showing salary credits
- Company handbook or allowance policy
- Your own calculations, with the divisor used
Common mistakes
- Using total salary for gratuity. Article 51 uses basic wage, so the estimate comes out too high.
- Using basic salary for notice pay. Article 43 uses the last wage received, which includes allowances.
- Assuming sick pay is basic only. Article 31 uses "wage", which the law defines to include allowances.
- Ignoring a low basic figure at the offer stage. The split affects gratuity, leave pay on exit and overtime for years.
- Relying on a verbal promise. Get any change to your wage confirmed in writing.
When to speak to a licensed lawyer
Most questions about the split are solved by comparing documents and asking MoHRE. Advice may help if your contract, offer letter and payslips disagree, if allowances seem relabelled to reduce your gratuity, or if a dispute has been referred to court. The free case check can help you set out the facts first, and CaseDaleel can introduce an independent licensed professional only if you choose.
Frequently asked questions
What is basic salary in the UAE?
It is the wage stated in your employment contract, excluding allowances and benefits in kind (Article 1 of Federal Decree-Law No. 33 of 2021).
What is the difference between basic salary and gross salary?
Gross or total salary is the "wage" in Article 1: basic wage plus cash allowances and benefits in kind.
Is gratuity calculated on basic or total salary?
On your last basic wage under Article 51, although the ceiling of two years' wage uses the total wage.
Is notice pay based on basic salary?
No, Article 43 bases notice pay on the last wage received, which includes allowances.
Is there a minimum percentage of basic salary in the UAE?
The Labour Law does not set one, and we found no official rule fixing a percentage.
How is a daily basic rate calculated?
The law sets no formula for monthly-paid workers; many people divide by 30 because Article 67 treats a month as 30 days, so check your contract.
Official sources
- UAE Legislation — Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (official Arabic text)
- UAE Legislation — Cabinet Resolution No. 1 of 2022 implementing the Labour Law (official Arabic text)
- UAE Government portal — End of service benefits for workers in the private sector
- UAE Government portal — Types of leave in the private sector
- MoHRE — Dear Worker: Know Your Rights guide (PDF)
- MoHRE — Ministerial Resolution No. 340 of 2026 concerning the Wage Protection System (PDF)
General information, not legal advice. CaseDaleel is not a law firm.