Minimum Wage in UAE? What you need to know in 2024

UAE federal law does not have a comprehensive law guiding minimum wage. As such, determining how much to pay employees can be tricky if you want to do business in the UAE. Luckily, most regions provide a framework to help determine the appropriate minimum wage. In this article, we provide a breakdown of the UAE’s minimum wage regulations, wage definitions, average wage patterns, and wage negotiation strategies when interacting with employees in the UAE.

What is the Minimum Wage in UAE?

UAE does not have a federally mandated minimum wage. This means employers have no legally enforceable requirement to pay their employees a certain minimum amount per hour or month. However, the UAE Ministry of Human Resources and Emiratisation (MoHRE) requires salaries to cater to the basic needs of employees.

As such, it has established minimum salary guidelines for specific categories of employees. These guidelines are not legally binding but serve as a benchmark for employers to ensure their employees receive fair compensation. In 2013, the MoHRE introduced three salary tiers for different types of workers:

1. University graduates: AED 12,000 ($3,267) per month
2. Skilled technicians: AED 7,000 ($1,905) per month
3. Skilled laborers: AED 5,000 ($1,361) per month for those with a secondary school certificate

These minimum salary guidelines apply to both UAE nationals and expatriates working in the UAE. Employers should adhere to these guidelines to ensure compliance with labor regulations and promote fair labor practices. However, it is essential to note that these guidelines serve as a minimum benchmark, and employers are free to offer higher salaries based on the employee’s skills, experience, and market demand.

While the absence of a federally mandated minimum wage provides employers with flexibility in setting salaries, the MoHRE’s guidelines have played a significant role in establishing a baseline level of compensation for specific categories of workers. These guidelines have helped protect vulnerable workers from exploitation, ensuring they receive a fair wage.

Determining a minimum wage is a complex process that involves considering various factors, including the cost of living, economic conditions, labor market dynamics, and global competitiveness. In the UAE, the MoHRE’s decision to establish minimum salary guidelines for specific categories of workers reflects a balanced approach that seeks to protect workers’ rights while maintaining the country’s economic attractiveness.

The UAE’s approach to minimum wage regulations is unique in that it relies on voluntary compliance with MoHRE guidelines rather than a federally mandated minimum wage. This approach provides employers with flexibility while setting a baseline compensation level for specific categories of workers. The MoHRE’s guidelines have played a positive role in promoting fair labor practices and protecting the rights of vulnerable workers in the UAE.

What Does Wage Mean?

Wages are typically paid for manual or unskilled labor, usually hourly or daily. This idea aligns with the minimum wage guidelines established by the UAE Ministry of Human Resources and Emiratisation (MoHRE), which apply to unskilled laborers and skilled technicians. Here are a few characteristics of wages:

1. Payment Frequency: Employers often pay hourly or daily wages, reflecting the nature of the work.
2. Type of Work: Wages are generally associated with manual or unskilled labor, such as construction, manufacturing, or service industry jobs.
3. Skill Level: Employers typically offer wages to employees who do not require specialized skills or qualifications. 

In the context of minimum wages in the UAE, the MoHRE’s guidelines focus on ensuring that workers in unskilled or semi-skilled positions receive fair and adequate compensation. These guidelines protect vulnerable workers from exploitation, demonstrating a commitment to promoting fair labor practices.

What is the Average Wage in the UAE?

A range of factors, such as location, profession, and experience, characterize the average wage in the UAE. The average compensation varies across the UAE’s seven emirates, with higher salaries typically found in major cities like Dubai and Abu Dhabi. However, more information on wages is necessary, making the average salary an indicator of how generously employers reimburse workers in the UAE. The UAE offers relatively high wages and salaries compared to other countries. Below are practical examples;

Average Salary by Location:

●      Dubai: AED 35,000 ($9,525) per month

●      Abu Dhabi: AED 30,000 ($8,170) per month

●      Sharjah: AED 25,000 ($6,805) per month

Average Salary by Profession:

●      Engineers: AED 50,000 ($13,610) per month

●      Doctors: AED 40,000 ($10,888) per month

●      Teachers: AED 20,000 ($5,444) per month

How to Negotiate Wages as an Employer

Negotiating wages with employees can be a delicate process, but ensuring employer satisfaction and employee fairness is essential. Here are a few tips for effective wage negotiation:

1. Conduct market research: Before entering negotiations, it is crucial to understand the prevailing wage rates for similar positions in the industry and geographic location.
2. Consider the employee’s experience and skills: The wage negotiation process should consider the employee’s experience, qualifications, and skillset.
3. Be transparent: Communicate the company’s salary range and the rationale behind the proposed wage.
4. Be prepared to compromise: Negotiation is a two-way street, and employers may need flexibility in their wage offer to reach a mutually agreeable arrangement.
5. Maintain a professional and respectful tone: Treat the negotiation process professionally and respectfully to foster positive employee relations. 

How to Pay Wages to Your Employee

In the UAE, paying wages to employees involves a series of steps that comply with the Ministry of Human Resources and Emiratisation (MoHRE) regulations. Here’s a detailed breakdown:

1. Register with MoHRE: All employers in the UAE must register with the Ministry of Human Resources and Emiratisation.
2. Subscribe to the Wages Protection System (WPS): Employers must subscribe to the WPS, which ensures employees receive their wages in full and on time.
3. Open a Bank Account: If the employer still needs to get a bank account in the UAE, they must open one with an approved bank or agent.
4. Enter into a Wages Protection System (WPS) Agreement: The employer must enter a WPS agreement with the bank or agent.
5. Issue Salary Transfer Instructions: The employer issues salary transfer instructions to the bank or agent. Salaries should be transferred directly to an employee’s bank or financial institution within 15 days of the wage due date; otherwise, they are considered late.

This process ensures that employers pay salaries promptly and under UAE labor laws. It’s important to note that MoHRE does not process any transactions or deal with the owners of companies not registered with the WPS until they register in the system. Payment can be in Emirati Dirham, the national currency of the UAE, or any other currency if both parties in the employment contract agree upon it.

Managing Payroll with Bayzat

Bayzat’s Payroll System is a comprehensive solution that makes payroll management easy and efficient. It automates payroll, eliminating manual data entry and calculation errors. Here, you can spend less time on administrative tasks and more time growing your business.

But that’s not all. Bayzat’s Payroll System also offers a shift scheduler feature that is particularly useful for businesses with daily wage workers. This feature allows you to easily schedule shifts and ensure that your employees receive accurate payment for their work.

In addition, Bayzat’s Payroll System is fully compliant with UAE labor laws, giving you the certainty that your payroll processes align with legal requirements.

So why wait? Switch to Bayzat’s Payroll System today and experience the difference it can make in your payroll management. For more information, contact us today to step up your wage payment game! 

FAQs About Minimum Wage in UAE

Here are answers to some common questions about wages in the UAE:

What is the difference between wage and salary?

The type of work and payment frequency establish the primary distinction between wage and salary. Employers typically compensate manual or unskilled labor hourly or daily with wages, while professional or white-collar jobs receive monthly salaries.

What is a wage protection system?

A wage protection system (WPS) safeguards employees’ wages in case of employer insolvency or non-payment. It typically involves the mandatory electronic transfer of employee salaries through designated financial institutions, ensuring that workers receive due compensation if their employer faces financial difficulties.

What is the minimum wage in the UAE?

The UAE does not have a national minimum wage. However, the law mandates that employees’ salaries and wages should cover their basic needs.

Does the minimum wage in the UAE vary by industry or job role?

There is no minimum wage in the UAE, so it does not vary by industry or job role. However, there are minimum monthly salaries for certain professions.

Are there any exceptions to the minimum wage in the UAE?

Since there is no minimum wage in the UAE, there are no exceptions related to it. However, the new UAE labor law does not apply to employees and workers of the federal government and local government entities, armed forces employees, police and security, and domestic servants.

How does the minimum wage in the UAE compare to other countries?

The UAE does not have a national minimum wage, which is different from many other countries that have established a minimum wage.

What happens if employers in the UAE do not pay wages on time?

If employers do not pay their employees within the first 15 days after the due date, they default on paying the wage. Penalties for companies failing to pay salaries on the scheduled dates include stopping the employer from granting additional work permits and suspending their license to trade.

What resources are available for workers not receiving the minimum wage in the UAE?

Workers who feel underpaid can contact the UAE Ministry of Human Resources & Emiratisation (UAE MOHRE) to see if their employer may violate any of the Emirates’ employment laws.