Employee Termination in UAE (2026 Labour Law Guide): Rights, Notice Period & Compensation

Employee Termination in UAE, overtime is calculated as is the case around the world, but before calculating overtime, companies need to know some important principles of UAE labor law.

To pay overtime, it is first important to know how many hours an employee can work. According to UAE law, if an organization has more than 50% of employees, then that organization is required to comply with working hours, employee rights, benefits, health and safety regulations.

Overtime work in the UAE can sometimes seem difficult because of its specific requirements, but it is easier than it seems. Generally, an employee works 40 hours a week or 8 hours a day. If more work is done, the extra time is called overtime and is paid extra.

What is overtime?

When an employee works more than their scheduled hours, it is called overtime. According to labor law, the extra time is paid in excess of the normal hours. Overtime payment may also be made according to the company’s payroll policy.This overtime law is based on Article 17. According to this law, work done after the stipulated time is considered overtime and additional payment is mandatory.

In shops, hotels, and hotels, employees can work up to nine hours a day. If they work more than that, it is called overtime. According to the law, the company must pay more in compensation for the extra time.Overtime is meant to ensure that employees get the right amount of time and are not allowed to abuse their authority.

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How to Calculate Overtime in UAE?

According to labor laws, if you work more than the stipulated time, then the overtime pay is calculated based on whether or not your regular salary is paid. Overtime pay is deducted from this basis and this method is used to determine the time payment.

• Start with the yearly pay.
• Divide by 365 to find your daily pay, then again by 8 for your hourly rate.
• Multiply by the total hours you worked extra and then by 1.25.
• This is your pay period. If you work from 10 am to 4 am, Imran, you get more than 50% of your money.

What Are Different Types of Overtime?

• This occurs when a sudden emergency situation arises and urgent action is necessary to prevent or repair major damage.
• This happens when work suddenly increases or problems arise during work, which causes employees to work on personal time.
• This is a pre-determined additional work. In this situation, the employee is usually paid an additional 25% on top of the basic salary.
• Short-time work: Most employers set a certain number of hours of overtime per week for employees, especially for structured overtime, but this limit often does not apply to force majeure overtime due to emergencies.

Read More: Basic Salary in UAE Explained (2026): Difference Between Basic, Gross & Net Salary

UAE Overtime Calculation Formula

Articles 17 to 72 of the Labor Law describe the method of calculating overtime. These laws include some important points:

• Employee’s Basic Salary
• Number of Overtime Hours
• Overtime Formula Type (Normal / Fridays / Other Public Holidays)
• Under various circumstances, let’s explore the specifics of overtime calculation in the UAE.

Overtime Calculation on a Regular Working Day

If an employee works overtime, he is paid an additional 25 percent of his normal salary, meaning the more overtime he works, the more he earns.An employee who works overtime receives an additional percentage in addition to the normal hourly rate. This means that for each overtime hour, the employee receives a payment equal to 25 times their salary.

For example, if the demand for overtime was strong, the company would be paid 125 dirhams per hour. It is necessary for the company to calculate the overtime share according to the employee’s basic salary. Usually, it was not included in the calculation of increments or bonuses to avoid violating labor laws or any disputes.

Formula for Overtime Calculation

Wage Per Day: Basic Salary × 12/365

Normal Hour Payment: Per Day Wage ÷ 8

Overtime Payment: Number of overtime hours × Per Hour × 1.25

Example of Overtime Calculation in UAE:

Suppose an employee’s basic salary is 3200 dirhams and he works 3 hours less in a month. The overtime hijab is calculated based on this basic salary.

Wage Per Day: (3,200 × 12) / 365 = AED 105.20

Per Normal Hour Payment: 105.20 ÷ 8 = AED 13.15

Per Hour Overtime: 13.15 + 13.15 × 25% = 16.43

Total Overtime Pay: 100 × 16.43 = AED 1,643

Total Monthly Salary: Basic Salary + Overtime Pay = AED 3,200 + AED 1,643 = AED 4,843

The compensation for overtime between 10 PM and 4 AM is average pay plus 50%.

Formula

Per Day Wage: Basic Salary × 12/365

Per Hour Payment: Wage Per Day ÷ 8

Overtime Remuneration: Number of overtime hours × Per Hour Payment × 1.5

Using the Same Salary Example for Night Shifts:

Wage Per Day: (3,200 × 12) / 365 = AED 105

Per Normal Hour Payment: 105 ÷ 8 = AED 13.12

Per Hour Overtime: 13.15 + 13.15 × 50% = AED 19.72

Total Overtime Pay: 100 × 19.72 = AED 1,972

Total Monthly Salary: Basic Salary + Overtime Pay = AED 3,200 + AED 1,972 = AED 5,172

Read More: How Sick Leave Salary is Calculated in UAE (2026 Complete Guide)

Overtime Calculation in UAE on Public Holidays

According to Article 81 of the Labor Law, if an employee works on a public holiday, he is given a compensatory leave and an additional half of his salary in return. If the company does not grant additional leave, then the employee is paid an additional 150 percent of his normal salary. Due to this law, in the UAE, employees who work on public holidays receive more pay than on normal days.

• The worker needs to get:
• A different day to relax instead, or
• Their usual pay plus extra – at least half more for the day they worked.

Suppose a person has a daughter who earns 200 dirhams. If he works on a public holiday, he can get 30 dirhams because he also gets extra money from his regular salary. If someone does not give him extra leave in return, he cannot get his salary. It is very important to calculate overtime correctly, especially in the case of the two holidays that he works for.

Short Formula:

Total Overtime Pay: Basic Salary × 12/365/8 × total overtime hours × 1.5 plus one compensatory day off.

Example Calculation for a Public Holiday With Eight Overtime Hours:

If compensatory leave is given: 3,200 × 12/365/8 × 8 × 1.5 = AED 157

If no compensatory leave is given: 3,200 × 12/365/8 × 8 × 2.5 = AED 263

Common Mistakes in Overtime Calculation

If you know the mistakes and use a strong roll salary calculation system, then the owner in the UAE can protect the rights of his employees by following his labor laws and overtime is also paid, so you can reduce the amount of work or legal problems or there are some things that have been given to take care of, so the owner can do the job properly for the company.

Incorrect Application of Overtime Rates

The company should not make sure that they are paid extra for homework time or that the tip is usually 25 percent. If they make a mistake, they can avoid paying employees more money and this could lead to labor violations anage your labor costs.

Calculating Overtime Based on Gross Salary Instead of Basic Salary

Overtime payment should be based on the employee’s regular salary. Do not follow this rule with additional bonuses and benefits. This can prevent the employer from making mistakes in paying overtime and avoid any problems or penalties.

Neglecting to Monitor Overtime Work

Some companies have to keep track of the overtime hours of their employees. If this is done correctly, employees receive correct and appropriate pay. If the payment is not made according to the government, employees may complain and sometimes problems may arise.

Lack of Clarity in Employment Contracts Regarding Overtime

In the stomach, the rules of time are not followed, and misunderstandings can certainly arise between this type of company about when and how time should be paid.

Overtime Calculation As Per UAE Labour Law

It was enough that companies can ask employees to work a maximum of 2,030 hours per day. The contracts provide for an additional 25 percent on top of the normal salary. If work is done between 10pm and 4am, an additional 50% is charged.For working on shorter days, 50 percent extra money is paid along with thesalary.

We work overtime hours in excess of the five we are required to work. We are given a six-hour break, which is not included in the overtime calculation. The normal hours of work are reduced. During Ramadan, these hours increase to six.

Some employees, such as senior supervisors and employees working night shifts on vacation, may also be exempt from the time rules. Sea duty and vacation break time are not counted in other time.

Read More: Sick Leave Rules in UAE (2026 Labour Law): Salary, Days & Employee Rights

Conclusion

There are certain principles in labor laws that every company must follow. These principles include respecting local people, their lifestyles, and cultures.

The UAE’s labor law is designed to create a cooperative environment with employees, making it mandatory to pay overtime. This article provides examples of formulas for calculating overtime and ways to avoid common mistakes.But calculating overtime yourself can sometimes be difficult for a company, or payroll software can be helpful. It automates the calculation of overtime and makes it easier for you to manage your labor costs.

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