What is basic salary?

Basic wage and full wage

Article 1 of Federal Decree-Law No. 33 of 2021 defines the basic wage as the wage in the contract paid for the work, on a monthly, weekly, daily, hourly or piecework basis, not including other allowances or benefits in kind. The “wage” is the basic wage plus the cash allowances and benefits in kind the contract or the law gives the worker.

A salary of AED 12,000 a month might be AED 7,000 basic plus allowances for housing and transport. Both numbers are on the contract, and which one a calculation uses changes the result considerably.

What is worked out on basic salary

Three entitlements run on the basic wage. The end-of-service gratuity is calculated on the last basic wage. Overtime is paid at the hourly rate of the basic wage plus at least 25%, or at least 50% between 10 pm and 4 am. And leave not taken when a worker leaves is paid out on the basic wage.

Notice is different: pay in lieu of notice is worked out on the last wage the worker received, allowances included. Mixing the two up is a common source of disputed final settlements — the final settlement calculator keeps each line’s basis visible.

Keeping the basic figure separate in Ledgr

In Ledgr a salary structure breaks pay into components, so the basic can be its own component rather than a share of one gross number. A statutory scheme can then be charged on chosen components — the basic alone, or the basic with housing — instead of the whole gross.