Payroll Process in Dubai Multi Commodities Centre (DMCC)
HLB UAE Payroll Team
Dubai Multi Commodities Centre (DMCC) was founded in 2002 by the Government of Dubai to provide the Physical, market and financial infrastructure required to establish a hub for global commodities trade. It is considered one of the flagship free zones of the United Arab Emirates.
In this blog we are trying to answer some of the commonly asked questions related to payroll process in DMCC.
- What is the frequency of making salary payments to employees in DMCC?
The law stipulates in Article 56 that employees engaged in yearly or monthly remuneration shall be paid at least once a month. All other employees shall receive their remuneration at least once every two weeks.
- Does DMCC have a minimum wage?
Employees at DMCC do not have a set minimum pay. Some nations, meanwhile, have established minimum salaries for their citizens working in the UAE, either through bilateral agreements or as a condition of visa clearance.
- What are the statutory pay components included in an employee’s salary?
The Law does not define the components that should make up an employee’s salary; there are no defined statutory components.
- Which are the common components of employee compensation?
The law does not define the components that should make up an employee’s salary; there are no statutory components. Commonly, employee compensation components include basic salary, house rent allowance, transport allowance and other allowances that may be defined from one employer to the other. The variable earnings and deductions components may include overtime, sales commission incentives, relocation allowances, vacation pay, mobile allowances and many more components that are payable to employees from one company to another.
- Which are the currencies that can be used in making salary payments in UAE? Can a salary be paid in a foreign currency?
The only accepted currency used in making salary payments in DMCC is the country’s national currency which is the AED.
- What is the maximum number of working hours per day?
An adult works eight (8) hours per day or forty-eight (48) hours per week (considering a six-day workweek). When an employer works a five (5) day work week, the total weekly working hours must not surpass 40 hours (i.e. 8 hours per day). Working hours may be raised to nine (9) hours per day at commercial businesses, hotels, restaurants, watchmen jobs, and similar operations. Working hours do not include travelling time required to the workplace. During Ramadan, working hours are reduced by two (2) hours each day. Working hours do not include recess times. Employees are not permitted to work continuously for more than five (5) hours without taking a break for rest, food, or prayer, with a total break of at least one (1) hour.
- What is the method of calculating overtime?
Overtime is any extra hours worked by an employee beyond the normal working hours. When situations necessitate an employee working longer than normal working hours, overtime is rewarded at normal salary plus at least a 25% increase in salary. If the overtime occurs between the hours of 9.00 p.m. and 4:00 a.m., the overtime is rewarded at the normal salary plus a 50 percent increase. Over time, on the other hand, is limited to two (2) hours a day unless it is required to avoid a significant loss, a severe accident, or to prevent or relieve both. If an employee’s job requires them to work on a public holiday for which they would ordinarily be paid in full or in part, after which:
- The employee should be paid with a substitute day off and a salary rise of at least 50% of the employee’s current salary; or
- If the employee is not granted a substitute day off, the employer shall pay a compensation increase equal to 150 percent of the employee’s basic rate for the days worked.
- How is gratuity accrued? When is gratuity paid to an employee?
Gratuity is accrued against the last drawn basic salary and calculated as follows: –
- a) Twenty-one days’ pay for each year of the first five years of service;
- b) Thirty days pay for each additional year;
provided that the entire total remuneration shall not exceed two year’s pay.
The employee, who has completed one year or more in the continuous service, is entitled to the end of service remuneration at the end of his service. Gratuity paid is dependent on the type of separation and the type of contract
For a comprehensive understanding of UAE gratuity accrual and settlement, please refer to our article on UAE gratuity policy and settlement here.
- How is UAE pension calculated and deducted from an employee’s salary? Which employees qualify for UAE pension contributions?
UAE nationals are subject to mandatory national pension plan contributions. Monthly pension deductions are made on UAE nationals’ total fixed salaries to a maximum limit of AED 50,000/-. Employee makes a 5% contribution, employer contributes 12.5% and the government contributes 2.5%.
- What are the different types of employment contracts in DMCC?
There are two types of employment contract: Limited and Unlimited Contract.
- When is an employment contract considered terminated?
An employment contract is terminated in any of the following cases:
- Mutual consent by both parties to terminate the contract, provided that the employee’s consent is in writing
- On the expiry of the specified period in respect of limited contracts, unless the contract is explicitly or implicitly extended
- At the option of either party in respect of unlimited contracts, provided that the correct notice is given and the grounds for termination are not arbitrary; or
- if the employee dies or is completely incapacitated from working as evidenced by a medical certificate.
- Which are the statutory leaves available in DMCC?
A. Annual leave
If the service period is less than 6 months, the employee is not eligible for any leave. An employee is eligible for 2 days per month if their service period is less than one year but more than six months. According to article 75 of the UAE labour law, annual leave is granted for 30 days per year, where the worker’s period of service is more than one year. Annual leave is based on calendar days, and any public holidays and weekends that fall within annual leave is considered as Annual leave.
B. Sick leave
According to article 83, a worker will not be entitled to any paid sick leave during the probationary period. A worker who contracts illness following the probationary period, in the continuous service of an employer shall be entitled to a sick leave not exceeding 90 days, successive or otherwise, in respect of each year of service, to be calculated as follows-
- The first 15 days: with full pay
- The next 30 days: with half pay.
- Next 45 Days: Without pay
C. Maternity leave
A female worker shall be entitled to maternity leave with full pay for a period of forty-five days, including both pre-and post-natal periods if she has completed not less than one year of continuous service with her employer. A female worker who has not completed one year of service shall be entitled to maternity leave with half pay. On the expiry of the maternity leave, may discontinue work without pay for a maximum period of one hundred consecutive or intermittent days if such absence is due to illness which does not enable her to resume work
D. Hajj Leave
Hajj leave is taken by Muslims to go perform pilgrimage. Article 87 states that ‘Each worker shall be entitled, once in the course of entire service, to special leave without pay for performing pilgrimage’. Hajj leaves shall not exceed 30 days and is granted once in the entire employment tenure.
E. Paternity Leave
Both Male and Female employees shall be entitled to five days of paid leave to take care of their infants, and this has to be availed of within the first 6 months of the baby’s birth.
For a comprehensive understanding of the UAE leave policy, please read our article on the UAE leave policy here.
- What is WPS? Is it applicable in DMCC?
WPS is an electronic salary transfer system that allows institutions and organizations in the private sector to pay their employees through banks, exchange bureaus and financial institutions approved by the UAE Central Bank. Currently, Jebel Ali Free Zone Authority (JAFZA) is the only free zone that has fully adopted the use of WPS and it is not applicable in DMCC.
Please read our detailed article on UAE WPS for more information
- What are the items included in the End of Service Benefits calculation in the UAE?
The employee is entitled to the following end of service benefits.
- Gratuity, if applicable
- Repatriation ticket if applicable
- Notice period pay if applicable
- Any unutilized leave (Vacation) pay
- Remuneration until the employee’s last day of employment
- Any other outstanding payment or deduction
- Any other benefit or compensation mentioned in Employment Contract
- Is it necessary to give employees a payslip?
No. Even if it is not compulsory, It is recommended that employers provide payslips to their workers as a document of the elements of the remuneration received every month.
- Is it possible for a DMCC employee to be barred from working in the UAE?
Yes. A DMCC employee can be banned in two (2) situations. The Immigration Department issues bans in response to a DMCC NOC. The following submissions can result in DMCC issuing a NOC:
- An employee’s criminal history as indicated by a police report; or
- A hospital certificate stating that the employee has tested positive for a sickness that is not tolerated in the UAE. The individual who has been barred from entering the UAE would be unable to do so until the ban term has expired.
Cost-effective, efficient, and timely payroll process of wage payment is critical to a business’s success, be it a company in DMCC or anywhere in the GCC. The payroll function’s responsibility is not confined to computing employee wages; it also includes the effective administration of a variety of additional components such as leave, travel expenses, accruals, and other HR activities. The process of payments for employees is simplified and processed by payroll providers who provide accurate and timely service to companies.
The process of payroll in UAE is a little complicated and time-consuming; hence it is always recommended to outsource your company’s payroll function. Outsourcing payroll in UAE will ensure the assistance of a team of trained payroll professionals and it frees up the time of the organization, helping them focus on other projects that add value to their business.
One should be extra vigilant while selecting their payroll provider, as payroll data is highly sensitive, and one should opt for a provider that can ensure high levels of data security.
As a leading payroll outsourcing company, HLB HAMT can help solve your payroll complexities through customized strategies. We take care of our clients’ entire payroll cycle that includes preparation of payroll reports, processing salary payment with WPS compliance, accrual management including Gratuity, pension funds, an online portal for accessing payslips, and many more. Our leadership team spends the necessary hours in every project, ensuring our clients get refined consulting services to take your business forward. HLB HAMT provides payroll in UAE, Bahrain, Qatar, Saudi Arabia, Kuwait, and Oman.
To know more about our payroll process, click here.
Whilst every effort has been made to ensure the accuracy of this information, HLB HAMT will not accept any liability arising out of errors or omissions. Please note that this blog is not all-inclusive. Our guidance is designed only to give general information on the issues/topics covered. It is subjected to change and not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
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