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Payroll Calculation in UAE
United Arab Emirates, here by called UAE, is a place where 90% population is expatriate as per World Population Review 2019. Majority of the companies hire employees from India, Pakistan, Philippines and other countries. Payroll Calculation is a repeated as well as tedious task for every company.
There are 3 type of payroll calculation in general.
1. Salary Calculations for White Collar Expatriates
2. Salary Calculations for Expatriate Workers (Gray Collar)
3. Salary Calculations for UAE Local Employees.
Explanation:
1. White collar employee’s salary calculations are very straight forward. As per UAE labor las, most of the employees have salary breakdown as Basic Salary, Accommodation and Transportation Allowances. So, it is same salary amount for office employees to get every month. For those, who are in under Sales Designation, may have sales commission as per their target achievement which is normally 20% of their sales target.
2. Salary calculation for Gray Collar Expatriate workers is not that simple here. They have Basic Salary, fixed housing allowance, transportation along with optional soft drink allowance. But their salary calculation becomes a bit complex when it comes to calculate their over time. They are obliged to work eight hours a day for their fixed salary, but for each extra hour they work, company pays them for each extra hour. Complexity does not stop here. In UAE, there is different overtime rate calculation for normal working days, weekends and public holidays.
Below are overtime Formulas in UAE to calculate One Hour Overtime Rate:
For normal working days: (Salary of Employee / 30 / 8) x 1.25 )
For Weekend days: (Salary of Employee / 30 / 8) x 1.5 )
For Public Holidays: (Salary of Employee / 30 / 8) x 2.25 )
3. For UAE Local Employees, salary is calculated in a different way. There is social security regime for UAE Nationals. UAE national employees have social security contributions, calculated at a rate of 17.5% of the employee's gross salary. Out of the 17.5%, 5% is payable by the employee and the remaining 12.5% is payable by the employers. It is the employer, who is responsible for withholding and remitting employee social security contributions to government department.
I hope that my explanation on Payroll Calculations in UAE will have some contribution to Wikipedia and help others have good understanding regarding this subject.