UAE Salary Structure Guide: Basic Salary, Allowances and Total Package
Complete guide to UAE salary structure including basic salary ratios, housing and transport allowances, gratuity impact, and WPS requirements for employers.
Quick Summary: Complete guide to UAE salary structure including basic salary ratios, housing and transport allowances, gratuity impact, and WPS requirements for employers.
UAE salaries typically consist of basic salary plus allowances. Understanding the structure is crucial because gratuity is calculated on basic salary only. This guide covers salary components, typical ratios, and their impact on benefits.
The UAE has no personal income tax, meaning gross salary equals net salary minus only authorized deductions.
| Aspect | Details |
|---|---|
| Basic Salary | Core fixed component (used for gratuity) |
| Gross Salary | Total before deductions |
| Net Salary | Take-home after deductions |
| Income Tax | None (0% personal income tax) |
| Typical Structure | 60% basic + 40% allowances |
Salary Components Overview
Typical Components
| Component | Description | Typical % |
|---|---|---|
| Basic Salary | Fixed core salary | 50-60% |
| Housing Allowance | Accommodation support | 25-30% |
| Transport Allowance | Travel expenses | 5-10% |
| Other Allowances | Various benefits | 5-15% |
Why Structure Matters
| Reason | Impact |
|---|---|
| Gratuity calculation | Based on basic salary only |
| Overtime calculation | Based on basic + fixed allowances |
| Leave salary | Based on gross salary |
| WPS compliance | Total must match bank transfer |
Basic Salary
Definition
The fixed, core component of salary:
- Does NOT include allowances
- Does NOT include bonuses
- Does NOT include commissions
- Used for gratuity calculation
Legal Importance
| Calculation | Base Used |
|---|---|
| End of service gratuity | Basic salary only |
| Overtime (basic rate) | Basic salary ÷ working hours |
| Pension (if applicable) | Basic salary |
Typical Basic Salary Ratios by Industry
| Industry | Basic % of Total |
|---|---|
| Banking/Finance | 50-60% |
| Technology | 55-65% |
| Construction | 60-70% |
| Hospitality | 50-60% |
| Retail | 55-65% |
Housing Allowance
Common Structures
| Type | Description |
|---|---|
| Cash allowance | Monthly amount added to salary |
| Company accommodation | Employer provides housing |
| Reimbursement | Actual rent reimbursed |
Typical Amounts
| Level | Monthly Range (AED) |
|---|---|
| Entry level | 2,000-4,000 |
| Mid-level | 4,000-8,000 |
| Senior | 8,000-15,000 |
| Executive | 15,000-30,000+ |
Transport Allowance
Common Structures
| Type | Description |
|---|---|
| Fixed allowance | Monthly cash amount |
| Company car | Vehicle provided |
| Car allowance | For own vehicle expenses |
| Fuel reimbursement | Actual fuel costs |
Typical Amounts
| Level | Monthly Range (AED) |
|---|---|
| Entry level | 500-1,000 |
| Mid-level | 1,000-2,500 |
| Senior | 2,500-5,000 |
| Executive | Company car or 5,000+ |
Salary Structure Examples
Entry-Level Employee (AED 7,500/month)
| Component | Amount (AED) | % |
|---|---|---|
| Basic Salary | 4,500 | 60% |
| Housing Allowance | 2,000 | 27% |
| Transport Allowance | 500 | 7% |
| Phone Allowance | 200 | 3% |
| Air Ticket (monthly) | 300 | 4% |
| Gross Salary | 7,500 | 100% |
Gratuity base: AED 4,500
Mid-Level Professional (AED 16,000/month)
| Component | Amount (AED) | % |
|---|---|---|
| Basic Salary | 9,000 | 56% |
| Housing Allowance | 4,500 | 28% |
| Transport Allowance | 1,500 | 9% |
| Phone Allowance | 300 | 2% |
| Air Ticket (monthly) | 700 | 4% |
| Gross Salary | 16,000 | 100% |
Gratuity base: AED 9,000
Senior Manager (AED 35,200/month)
| Component | Amount (AED) | % |
|---|---|---|
| Basic Salary | 18,000 | 51% |
| Housing Allowance | 10,000 | 29% |
| Transport Allowance | 4,000 | 11% |
| Phone Allowance | 500 | 1% |
| Education (monthly) | 2,000 | 6% |
| Air Ticket (monthly) | 700 | 2% |
| Gross Salary | 35,200 | 100% |
Gratuity base: AED 18,000
Impact on Gratuity
Why Basic Salary Matters
Gratuity is calculated on basic salary only:
Years 1-5: 21 days × basic salary ÷ 30 × years
Years 5+: 30 days × basic salary ÷ 30 × years
Comparison Example
Employee with 5 years service, same AED 20,000 total salary:
| Structure | Basic | Total | Gratuity |
|---|---|---|---|
| 60% basic | 12,000 | 20,000 | 42,000 |
| 50% basic | 10,000 | 20,000 | 35,000 |
| 40% basic | 8,000 | 20,000 | 28,000 |
Important: Same total salary but very different gratuity amounts. A higher basic salary percentage means higher end-of-service benefits.
Impact on Overtime
Overtime Base Calculation
Overtime is calculated on basic salary + fixed allowances:
Hourly rate = (Basic + Fixed Allowances) ÷ (Working days × Hours per day)Overtime rate = Hourly rate × 1.25 (normal) or 1.5 (night/holiday)
Example
| Component | Amount |
|---|---|
| Basic | 6,000 |
| Housing (fixed) | 2,500 |
| Transport (fixed) | 1,000 |
| Overtime base | 9,500 |
Hourly rate: 9,500 ÷ (22 × 8) = AED 54
Overtime rate: 54 × 1.25 = AED 67.50/hour
WPS Requirements
Salary Must Match
| Document | Must Match |
|---|---|
| Employment contract | Salary breakdown |
| Offer letter | Same figures |
| WPS payment | Total gross salary |
| Bank transfer | WPS amount |
SIF File Components
| Field | Content |
|---|---|
| Fixed salary | Basic + fixed allowances |
| Variable salary | Commissions, bonuses |
| Overtime | Calculated overtime |
| Deductions | Any deductions |
| Net salary | Amount transferred |
Free Zone Considerations
DIFC: DEWS contribution of 5.83% of salary (employer)
ADGM: 5% of salary to savings (gratuity alternative)
Other Free Zones: Generally follow federal law salary structure rules
Frequently Asked Questions
Manage Salary Structures Easily
NeuralHR helps you configure salary structures, calculate gratuity impact, and ensure WPS compliance automatically.
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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.
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