UAE Salary Deductions Guide: Legal Rules and Limits
Complete guide to legal salary deductions in UAE including permitted deductions, limits (50% maximum), employee consent requirements, and prohibited deductions under labor law.
Quick Summary: Complete guide to legal salary deductions in UAE including permitted deductions, limits (50% maximum), employee consent requirements, and prohibited deductions under labor law.
UAE law strictly regulates salary deductions to protect employee rights. Employers may only deduct from wages in specific circumstances with proper documentation. The Federal Decree-Law No. 33 of 2021 governs all deduction rules.
Key principle: Deductions generally cannot exceed 50% of salary, and most require employee consent.
| Aspect | Details |
|---|---|
| Income Tax | None (0%) |
| Social Security | GCC nationals only |
| Maximum Deduction | Generally not more than 50% |
| Employee Consent | Required for most deductions |
| Legal Basis | Federal Decree-Law 33/2021 |
Legal Framework
What Law Allows
Under UAE Labor Law, employers may only deduct from wages in specific circumstances:
| Permitted Deduction | Requirement |
|---|---|
| Employer damages | Court order or employee consent |
| Loan repayment | Employee agreement |
| Social security | GCC nationals only |
| Court judgments | As ordered |
| Pension (DIFC/ADGM) | As per scheme rules |
What Law Prohibits
| Prohibited Deduction | Consequence |
|---|---|
| Arbitrary deductions | Employee can claim |
| Fines without warning | Illegal |
| Unexplained deductions | MOHRE complaint |
| Exceeding 50% | Violation |
No Income Tax Deduction
UAE Tax Status
| Tax Type | Rate |
|---|---|
| Personal income tax | 0% |
| Salary tax | 0% |
| Bonus tax | 0% |
| Commission tax | 0% |
Benefit
UAE employees receive their gross salary as net (minus only authorized deductions). This is one of the major advantages of working in the UAE.
Loan Repayment Deductions
Requirements
| Requirement | Details |
|---|---|
| Written agreement | Must have signed loan agreement |
| Employee consent | Explicit consent for deduction |
| Clear terms | Repayment schedule specified |
| Maximum limit | Per agreement, within 50% rule |
Types of Loans
| Loan Type | Common Practice |
|---|---|
| Salary advance | Recovered in 1-3 months |
| Personal loan | Interest-free from employer |
| Housing loan | Longer term |
| Emergency loan | Short-term |
Best Practice: Always use written loan agreements with clear terms, signed by both parties, specifying exact deduction amounts and schedule.
Absence Deductions
Unpaid Leave Deductions
| Type | Deduction |
|---|---|
| Unauthorized absence | Daily rate × days |
| Unpaid leave | As agreed |
| Leave without pay | Pro-rata salary |
Calculation
Daily Rate = Monthly Salary ÷ 30Absence Deduction = Daily Rate × Days Absent
Example:
- Monthly salary: AED 15,000
- Daily rate: AED 500
- Absent 3 days (unauthorized): AED 1,500 deduction
Documentation Required
| Document | Purpose |
|---|---|
| Attendance record | Proof of absence |
| Warning (if applicable) | Due process |
| Leave records | Compare balances |
Deduction Limits
General Rule
| Limit | Application |
|---|---|
| 50% maximum | General guideline |
| Living wage | Must leave sufficient |
| Essential expenses | Consider needs |
Calculating Maximum
Maximum Deduction = Gross Salary × 50%Minimum Take-Home = Gross Salary - Maximum Deduction
Example:
- Gross salary: AED 10,000
- Maximum deduction: AED 5,000
- Minimum take-home: AED 5,000
Priority of Deductions
| Priority | Deduction Type |
|---|---|
| 1 | Court-ordered (alimony, etc.) |
| 2 | Social security (if applicable) |
| 3 | Loan repayments |
| 4 | Other authorized |
Prohibited Deductions
Cannot Deduct For
| Item | Status |
|---|---|
| Recruitment costs | Employer's expense |
| Visa costs | Employer's expense |
| Equipment depreciation | Normal wear |
| Training (generally) | See below |
| Administrative costs | Company expense |
| Arbitrary fines | Not permitted |
Training Cost Recovery
| Situation | Deductible? |
|---|---|
| Normal job training | No |
| Specialized training with bond | Only if agreed |
| Resignation within bond period | Per agreement only |
| Termination by employer | No |
Important: Employers cannot deduct visa costs, recruitment fees, or similar administrative expenses from employee salary. These are the employer's responsibility.
End of Service Deductions
What Can Be Deducted from Final Settlement
| Deduction | Allowed? |
|---|---|
| Outstanding loans | Yes (from gratuity) |
| Proven damages | With consent/court order |
| Unreturned items | With documentation |
| Notice period | If not served |
Process
| Step | Action |
|---|---|
| 1 | Calculate total dues |
| 2 | Calculate authorized deductions |
| 3 | Net final settlement |
| 4 | Written statement |
| 5 | Employee acknowledgment |
Dispute Resolution
If employee disagrees with deductions:
- Raise with HR and request itemization
- Provide evidence for dispute
- Seek internal resolution
- File MOHRE complaint if unresolved
Frequently Asked Questions
Manage Deductions Compliantly
NeuralHR tracks all salary deductions, ensures proper documentation, and maintains audit trails for compliance.
Was this guide helpful?
NeuralHR Team
VerifiedUAE HR Compliance Experts
Our team of HR professionals and legal experts specializes in UAE labor law compliance, with extensive experience helping businesses navigate MOHRE regulations, Emiratisation requirements, and workforce management in the UAE and GCC region.
Related Guides
UAE Payroll Processing Guide: Monthly Cycle and WPS Compliance
Complete guide to UAE payroll processing including monthly cycle, WPS compliance, SIF file preparation, salary calculations, and MOHRE requirements for employers.
UAE Final Settlement Guide 2025: Complete Calculation Reference
Complete guide to UAE final settlement calculation. Includes gratuity, unused leave, notice period, deductions, payment timeline, and examples under UAE Labor Law 2025.
UAE WPS Compliance Guide 2025: Wage Protection System
Complete guide to UAE Wage Protection System (WPS) compliance. Includes registration, SIF files, payment deadlines, penalties, and employer requirements under MOHRE regulations.
Social Security Deductions
For UAE/GCC Nationals Only
UAE Nationals - GPSSA
DIFC Employee Contributions (DEWS)