Quick AnswerOvertime calculation UAE 2026: basic hourly wage +25%, or +50% at night or on rest days, capped at 2 hours a day. Formula and worked examples.
Overtime calculation in the UAE follows a clear statutory formula, yet it is one of the most common sources of payroll error and MOHRE complaints. The rule is straightforward once you know it: overtime is paid at your normal hourly wage plus 25%, and that premium rises to 50% for hours worked at night, between 22:00 and 04:00, or on your weekly rest day. Overtime is capped at two hours a day in ordinary circumstances. On a basic salary of AED 6,000 a month, a single normal overtime hour is worth about AED 31.25, and a night or rest-day hour about AED 37.50.
These rates come from Federal Decree-Law No. 33 of 2021, and getting the maths right protects both employees, who should be paid every dirham they are owed, and employers, who must avoid the penalties and disputes that flow from underpayment. This guide walks through the exact formula, the difference between the 25% and 50% rates, the working-hour limits, several worked examples, and the payroll, gratuity and tax mechanics that surround overtime in 2026.
How Is Overtime Calculated in the UAE in 2026?
In the UAE, overtime is paid at your normal hourly wage plus 25%, rising to plus 50% for hours worked between 22:00 and 04:00 or on a rest day. Overtime is capped at 2 hours per day. To calculate it, divide your basic monthly salary by 30, then by 8, to get an hourly rate, then apply the 1.25 or 1.5 multiplier under Federal Decree-Law No. 33 of 2021.
The formula rests on converting a monthly salary into an hourly rate and then applying the correct premium. The standard method divides the basic monthly wage by 30 to get a daily rate, then by 8, the standard working day, to get an hourly rate. From there you multiply by 1.25 for normal overtime or 1.5 for night and rest-day overtime. The table below shows the rates and the resulting hourly pay on a basic salary of AED 6,000 a month, where the base hourly rate is AED 25.
| Overtime type | When it applies | Rate | Hourly pay on AED 6,000 basic |
|---|---|---|---|
| Normal overtime | Extra hours during the day | Basic hourly + 25% | AED 31.25 |
| Night overtime | Hours between 22:00 and 04:00 | Basic hourly + 50% | AED 37.50 |
| Rest-day work | On the weekly rest day | Basic hourly + 50% or day off in lieu | AED 37.50 |
| Daily cap | Maximum overtime per day | 2 hours | Up to AED 62.50β75.00 |
These figures make the system tangible: the same extra hour is worth 20% more when it falls at night or on a rest day, which is precisely why accurate time records matter.
The Overtime Formula Step by Step
Let us break the calculation into clear steps so it can be applied to any salary. Step one: identify the basic monthly wage, this is the figure the overtime calculation is built on, not necessarily the full package including allowances. Step two: divide the basic monthly wage by 30 to obtain a daily wage. Step three: divide that daily wage by 8, the standard number of working hours in a day, to obtain the basic hourly wage.
Step four: apply the correct multiplier. For ordinary overtime the multiplier is 1.25, reflecting the basic hourly wage plus a 25% premium. For overtime worked at night, in the window between 22:00 and 04:00, or on the weekly rest day, the multiplier is 1.5, reflecting the basic hourly wage plus a 50% premium. Step five: multiply the resulting overtime hourly rate by the number of qualifying overtime hours worked.
A worked illustration ties it together. Take a basic salary of AED 9,000 a month. Daily wage is AED 300 (9,000 Γ· 30). Hourly wage is AED 37.50 (300 Γ· 8). A normal overtime hour is AED 46.88 (37.50 Γ 1.25). A night or rest-day overtime hour is AED 56.25 (37.50 Γ 1.5). If this employee works two normal overtime hours, they are owed AED 93.75 for that day. The arithmetic never changes, only the inputs do, which is why a payroll system that captures the basic wage and the exact hours will always produce the right answer, while manual guesswork produces disputes.
Normal Overtime (+25%) vs Night and Rest-Day Overtime (+50%)
The single most important distinction in UAE overtime is between the 25% premium and the 50% premium, because applying the wrong one systematically underpays or overpays staff. The 25% premium is the default for overtime worked outside the special windows, typically extra hours tacked onto a normal working day. The 50% premium applies in two situations: any overtime hours worked between 22:00 and 04:00, and work performed on the employee's designated weekly rest day.
The logic is that unsocial hours, late nights and rest days, carry a higher price because they cost the employee more in lost sleep and lost personal time. This means the timing of the hour, not just its existence, determines the rate. An hour worked at 20:00 attracts the 25% premium, while the same hour worked at 23:00 attracts 50%. For roles that routinely span the evening, such as hospitality or logistics, this boundary at 22:00 has real financial weight and must be tracked precisely.
Rest-day work carries an extra nuance: the employer can either pay the 50% premium or grant a compensatory day off in lieu. The choice is the employer's, but it must be honoured, an employee made to work their rest day cannot simply be given nothing. Where a compensatory day is granted, the record should show it clearly so there is no later dispute about whether the rest day was ever repaid. Clean records of which hours fell into which category are the difference between smooth payroll and a MOHRE claim.
Standard Working Hours, Ramadan and the 2-Hour Cap
Overtime only makes sense against the backdrop of standard hours. Under Federal Decree-Law No. 33 of 2021, standard working time is eight hours a day or 48 hours a week, though some sectors and senior roles operate different arrangements. Hours worked beyond this standard, at the employer's request, are what trigger overtime pay. The daily overtime cap is two hours, meaning an employee should not routinely be pushed beyond ten working hours in a day except in specific, urgent circumstances the law recognises.
Ramadan brings a well-known adjustment: standard daily working hours are reduced by two hours during the holy month. This reduction applies to the working day itself; work required beyond the reduced Ramadan hours can attract overtime under the normal rules. Employers should reconfigure schedules for Ramadan rather than quietly expecting the same output in fewer paid hours, and payroll should reflect the shorter standard day when assessing what counts as overtime.
The two-hour cap exists to protect health and safety, chronic long hours cause fatigue and error. It is not a licence to work everyone two extra hours every day as a matter of routine; overtime is meant to be occasional and compensated, not a permanent extension of the working day. Employers who find themselves relying on daily maximum overtime should usually be hiring more staff, and MOHRE's framework is designed to nudge businesses in that direction. You can review the official working-hours and overtime rules through the MOHRE portal.
Worked Examples: Calculating Overtime Pay
Concrete examples cement the method. Example one: a warehouse worker on a basic salary of AED 4,500 a month works two overtime hours during the day. Daily wage is AED 150, hourly wage is AED 18.75, and the normal overtime rate is AED 23.44 an hour. Two hours earn AED 46.88 for the day. Over a month with ten such overtime days, that is around AED 468.80 in overtime.
Example two: a hotel receptionist on a basic salary of AED 7,200 a month works from 20:00 to midnight on a busy night, two of those hours falling after 22:00. Hourly wage is AED 30. The two evening hours before 22:00 attract the 25% rate (AED 37.50 each), and the two hours after 22:00 attract the 50% night rate (AED 45 each). That single shift's overtime is AED 165. The split at 22:00 clearly matters.
Example three: a technician on a basic salary of AED 6,000 is asked to work his rest day for eight hours. His hourly wage is AED 25, and the rest-day rate is AED 37.50 an hour, so eight hours earn AED 300, unless the employer instead grants a full compensatory day off. These examples show the same formula flexing to different salaries and situations. The employer's job is to record the basic wage, the exact hours, and the category of each hour, then let the formula do the rest. The employee's job is to keep their own note of hours worked, so any discrepancy can be raised with evidence.
Who Is Entitled to Overtime, and Who Is Exempt
Not every employee is entitled to overtime pay. The labour law recognises that certain senior, supervisory or executive roles, where the person effectively manages their own time and represents the employer's authority, can be exempt from statutory overtime. Where this applies, it should be stated clearly in the employment contract so both sides understand that long hours are part of the remunerated seniority rather than a source of hourly claims.
For the large majority of employees, though, the overtime rules apply in full. Rank-and-file staff, technicians, receptionists, drivers, warehouse and site workers, and most administrative employees are entitled to the 25% and 50% premiums when they work beyond standard hours at the employer's request. Attempting to label an ordinary employee as "exempt" simply to avoid paying overtime is a common and risky shortcut; if challenged, MOHRE looks at the true nature of the role, not the label on the contract.
The safest approach for employers is honesty and documentation. Genuinely senior roles can be structured with an all-inclusive package and a clear exemption; everyone else should have overtime tracked and paid. Blurring the line invites disputes and back-pay claims that dwarf the overtime that would have been paid in the first place. Clarity at the contract stage, defining hours, exemptions and how the basic wage is calculated, prevents almost all of these arguments.
Overtime, WPS, Gratuity and Tax
Overtime is a wage, and like all wages it must be paid through the Wages Protection System (WPS). That means overtime earned in a pay period should appear in the WPS transfer for that period, reaching the employee's registered account on time. Paying overtime late, in cash off the books, or not at all are all payroll breaches that a MOHRE complaint can surface, and they undermine the very compliance the WPS system is designed to guarantee.
For gratuity, the key point is that end-of-service gratuity is calculated on the basic wage, not on overtime earnings. Gratuity accrues at 21 days' basic pay per year for the first five years and 30 days per year thereafter. So while overtime boosts monthly take-home pay, it does not inflate the eventual gratuity, an important expectation to set with staff who work heavy overtime and assume it feeds their end-of-service payout.
On tax, the position is simple and favourable. The UAE levies no personal income tax on wages or overtime, a position administered by the Federal Tax Authority, so employees keep every dirham of their overtime. For the employer, overtime is a deductible staff cost when computing the 9% corporate tax on profits above AED 375,000, while profits up to AED 375,000 are taxed at 0%, a threshold set by the Ministry of Finance. Overtime is therefore a fully deductible, predictable cost, provided it is recorded and paid correctly through WPS.
A Full Monthly Overtime Example
Bringing the pieces together over a full month shows how overtime accumulates. Take Reyansh, a maintenance technician on a basic salary of AED 6,000 a month, giving a daily wage of AED 200 and a basic hourly wage of AED 25. Over one busy month he works overtime on twelve days: on eight of those days he does two daytime overtime hours, and on four of them he does two hours that fall after 22:00.
The eight daytime days generate 16 hours at the normal overtime rate of AED 31.25, totalling AED 500. The four night-shift days generate eight hours at the night rate of AED 37.50, totalling AED 300. His overtime for the month is therefore AED 800, paid on top of his AED 6,000 basic salary and processed through WPS in that month's transfer.
The example highlights two things employers must get right. First, the split between the 25% and 50% rates has to be tracked hour by hour, because lumping all overtime at the lower rate would underpay Reyansh by a meaningful margin over a year. Second, the overtime is additional to, and separate from, the basic salary that drives his gratuity; a heavy overtime month boosts his take-home pay but not his end-of-service accrual. Clear payslips that itemise basic pay and each category of overtime prevent the misunderstandings that otherwise fester into disputes.
Overtime on Public Holidays
Public holidays add another layer to overtime planning. Employees are entitled to official public holidays with pay, and where the nature of the business requires someone to work on a public holiday, that work is compensated on enhanced terms, typically a premium plus a compensatory day off, reflecting the value of a holiday given up. The precise treatment should be set out in the employment contract and applied consistently.
The principle mirrors rest-day work: an employee should never simply lose a public holiday without compensation. If the business genuinely needs cover on a holiday, the employer either grants a day off in lieu together with the appropriate premium, or otherwise compensates the employee as the contract and the law provide. Sectors that operate every day, hospitality, healthcare, security, logistics, plan for this as a routine part of rostering rather than an exception.
For employers, the safe approach is to define public-holiday working in the contract, communicate it clearly, and record both the hours worked and the compensatory time granted. As with all wages, any holiday premium flows through WPS. The cost of getting this right is modest and predictable; the cost of getting it wrong is a back-pay claim and a soured relationship with staff who feel their holidays were quietly taken from them.
Overtime Records and Timekeeping
Everything in overtime compliance ultimately rests on records. Because the pay owed depends on the exact hours worked and the category of each hour, day, night or rest day, an employer needs a reliable timekeeping system that captures start and finish times accurately. Biometric clocks, digital time sheets or supervised logs all work; guesswork and memory do not. Good records protect the employer in a dispute just as much as they protect the employee.
The discipline runs both ways. Employees who work overtime should keep their own note of the hours, because if a disagreement arises, contemporaneous personal records are powerful evidence. Employers should retain time and payroll records for a reasonable period so that any query, from an employee or from MOHRE, can be answered with documents rather than assertions. A business that can produce a clear, itemised history of hours and payments almost always resolves overtime questions quickly.
This is also where payroll systems earn their keep. A system that ingests verified hours, applies the correct multipliers automatically, and produces an itemised payslip removes the two biggest sources of error: miscalculating the hourly rate and misapplying the 25% or 50% premium. Investing in that infrastructure is far cheaper than the cumulative cost of manual mistakes, back-pay and disputes, and it turns overtime from a compliance risk into a routine, defensible process.
Overtime Across Free Zones and Mainland
Most UAE employers, whether on the mainland or in standard free zones, apply the federal labour law's overtime rules, so the 25% and 50% premiums and the two-hour daily cap are the common baseline across the great majority of businesses. A company operating in a mainstream free zone should not assume it is exempt; unless it sits in a financial free zone with its own employment law, the federal overtime framework governs its staff.
The exceptions are the financial free zones, the Dubai International Financial Centre and Abu Dhabi's ADGM, which operate their own employment regimes. Their treatment of working hours and additional pay can differ from the federal model, so an employer hiring into one of these zones should apply that zone's specific rules rather than copy-pasting a mainland overtime policy. Getting this right depends on knowing exactly which legal regime governs each employment relationship.
For founders building across multiple entities, the practical guidance is to map overtime obligations entity by entity at the setup stage. Decide which company employs which staff, confirm the governing employment law, and write overtime treatment into each contract accordingly. This is far easier to do at the beginning than to unpick later, and it avoids the unpleasant surprise of discovering, mid-dispute, that a policy designed for one jurisdiction was quietly applied in another where it does not fit.
What to Do If You Are Underpaid Overtime
When overtime is miscalculated or simply not paid, employees have a clear path to recover what they are owed, and the strength of any claim rests on records. The first move is to raise the shortfall directly with the employer, ideally in writing, setting out the hours worked and the rate that should have applied. Many underpayments are honest errors in applying the 25% or 50% premium and are corrected once flagged with the figures.
If the employer does not put it right, the employee can escalate to MOHRE, which handles wage and overtime disputes through its official channels, accessible via the MOHRE portal. Because overtime turns entirely on hours and rates, a personal log of the dates and times worked, alongside payslips and the contract, gives the claim the evidence it needs. The clearer the record, the faster the resolution.
For employers, the takeaway is that overtime disputes are almost always self-inflicted and preventable. Accurate timekeeping, correct application of the day, night and rest-day rates, payment through WPS, and itemised payslips together remove the ambiguity that breeds claims. It is far cheaper to pay overtime correctly the first time than to face back-pay demands and a MOHRE process later. Sound payroll is not just compliance; it is the foundation of the trust that keeps good staff.
Common Mistakes with Overtime Calculation in the UAE
- Calculating overtime on the full package instead of the basic wage, which distorts the hourly rate up or down.
- Applying the 25% rate to night hours between 22:00 and 04:00 that should attract the 50% premium.
- Failing to pay the rest-day premium, or to grant a compensatory day off in lieu, when staff work their weekly rest day.
- Routinely working staff the maximum two overtime hours every day instead of hiring, breaching the spirit of the cap.
- Forgetting to reduce standard hours by two during Ramadan, so overtime is miscalculated for the month.
- Mislabelling ordinary employees as exempt executives simply to avoid paying overtime they are legally owed.
- Paying overtime in cash off the books rather than through WPS, creating a payroll breach and a compliance gap.
- Telling staff overtime boosts gratuity, when gratuity is calculated on the basic wage and excludes overtime earnings.
Getting Payroll and Overtime Right with Noble Core
Overtime is where good intentions meet bad spreadsheets, and the cost of getting it wrong, back-pay, penalties and MOHRE disputes, far exceeds the cost of doing it properly. Noble Core helps founders build the structure that makes correct payroll effortless. Whether you are launching or scaling, our team handles your business setup in Dubai so your legal entity, licensing and workforce plans fit together, with payroll designed in from the start.
We then put the practical systems in place. That begins with a precise UAE labour contract that defines the basic wage, standard hours and any genuine overtime exemptions, removing the ambiguity that causes most disputes. We support you through MOHRE enquiry services for permits, working-hours queries and complaint handling, and we make sure every wage and overtime payment flows accurately and on time through the Wages Protection System (WPS). The result is payroll you can defend and a team that trusts its payslip. Book a free 20-minute consultation with Noble Core to review your overtime and payroll setup before your next pay run.
Talk to Our Experts
Noble Core helps UAE employers calculate overtime correctly, run compliant payroll and pay wages through WPS in line with MOHRE rules. Free 20-minute consultation.
Frequently Asked Questions
How is overtime calculated in the UAE?
Divide the basic monthly salary by 30, then by 8, for an hourly rate. Add 25% for normal overtime, or 50% for hours between 22:00 and 04:00 or on rest days.
What is the overtime rate in the UAE?
Normal overtime is the basic hourly wage plus 25%. Overtime at night (22:00-04:00) or on a weekly rest day is the basic hourly wage plus 50%.
How many overtime hours are allowed per day in the UAE?
Overtime is capped at two hours per day, except in specific urgent circumstances. Standard hours are eight per day or 48 per week under the labour law.
Is overtime calculated on basic salary or total salary?
Overtime is generally calculated on the basic wage, not the full package. Check your contract, because how allowances are defined affects the hourly rate used.
Do I get paid extra for working on my rest day?
Yes. Working on your weekly rest day earns the basic hourly wage plus 50%, or the employer must grant a compensatory day off in lieu of the premium.
Is overtime pay taxed in the UAE?
No. The UAE has no personal income tax on wages or overtime, a position administered by the Federal Tax Authority, so overtime pay is received in full.
Are managers entitled to overtime in the UAE?
Certain senior and supervisory roles can be exempt from overtime pay where the job’s nature justifies it. This should be reflected clearly in the employment contract.
How are working hours reduced during Ramadan?
Standard working hours are reduced by two hours per day during Ramadan. Work beyond the reduced hours can attract overtime under the normal rules.
What if my employer refuses to pay overtime?
Keep records of the extra hours worked, then raise the matter with the employer, and if unresolved, file a complaint through the MOHRE dispute channels.
