Dubai: Signed a contract without paying attention to your salary breakdown? Employers in the UAE often provide a detailed breakdown of the salary that an employee will receive, which includes the basic salary along with allowances for housing, transport and communication. This is clearly mentioned in the employment contract that is signed by both the parties, and submitted to the Ministry of Human Resources and Emiratisation (MOHRE).
In the past few days, several Gulf News readers have written in with their queries regarding the salary breakdown offered by their employers, specifically with regards to their basic salary being a small percentage of their total take home package.
So, what is a ‘basic salary’ and how does it affect your overall benefits as an employee? And what can you do to renegotiate a low basic salary? Read on to find out.
Basic salary and total salary
According to the UAE government’s official website, u.ae, there is no minimum salary stipulated in the UAE Labour Law. However, it broadly mentions that salaries must cover basic needs of the employees.
The UAE Labour Law does not provide any guidelines on the percentage of the basic salary to be paid by the employer. So, it is at the discretion of the company to decide this percentage and the employee may negotiate, accept or decline.
Why does a basic salary matter?
If your total salary is to your liking, but the basic salary is low, does it really matter? Yes, according to the legal experts Gulf News spoke with.
“On the short term, having a lower basic salary will have very little or no recognisable effects on you. However, in the long run it will have a lot of effect on the amount of the end-of-service benefits you will earn at the time you terminate your employment relationship. The calculations of the gratuity amount to be paid is basically connected to the basic salary and not to the gross salary,” Ahmed Elnaggar, Managing Partner at Elnaggar and Partners said.
Apart from the gratuity, the basic salary also determines the amount of allowance you get for your annual leaves. This is why it is important to read your employment contract before signing it, to ensure you are aware of the remuneration you will receive, according to Mohamed Gamal, Legal Adviser at Kaden Boriss Legal Consultants Dubai.
“One of the rights of an employee is to know the contents of the contract before signing and giving approval to it. Therefore, the worker must carefully investigate all its clauses before signing the contract, so that he does not waive his right to know what has been agreed upon. Employment is a relationship that requires the consent of the two parties to what will be agreed upon, and each of them has the right to object before approval,” Gamal said.
The worker must carefully investigate all its clauses before signing the contract, so that he does not waive his right to know what has been agreed upon.
– Mohamed Gamal, Legal Adviser at Kaden Boriss Legal Consultants Dubai
Can I renegotiate a low basic salary?
The good news is that even if you do have a low basic salary, you have the opportunity to restructure the salary breakdown.
“Asking your employer to restructure your salary is a matter of negotiation, you should choose the right time to do that and there is no better time to negotiate a contract than being a valuable employee in the first place,” Elnaggar said.
Asking your employer to restructure your salary is a matter of negotiation, you should choose the right time to do that and there is no better time to negotiate a contract than being a valuable employee in the first place.
– Ahmed Elnaggar, Managing Partner at Elnaggar and Partners
“Negotiating with your current employer is a possibility. In many cases when employees are valuable to the company and their presence is essential for the business to run – because of their productivity or their experience – their employers tend to raise their salaries or give promotions that entail a higher income. This is when the employee has the best chance to set the terms right for themselves. Negotiating contract renewals, or negotiating a higher work position or higher responsibility is always in the favour of the employee, which usually comes when the employer is keen to retain such valuable human resource,” he added.
So, if your appraisal is on the cards and you are offered a salary bump, speak to your manager or your human resources department to request for the increase to be included in the basic salary. This is also beneficial because the gratuity calculations, as per the UAE Labour Law, consider the last drawn basic salary of the employee.
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