Housing allowance in UAE: Are you getting it?

Every expat often asks this question in the UAE: Do you get housing allowance?

“Housing allowance are not part of the basic wage and must be agreed upon separately,” Ahmed Odeh, Legal Consultant, MIO Law Firm, told Emirates 24|7.

The UAE Labour Law does differentiate between the definitions of basic wage and total wage.

The former is an employee’s wage excluding all allowances of whatever nature and is specified in the labour contract as such, while total wage is an employee’s wage inclusive of all allowances provided such as accommodation and travel allowances.

“Hence, according to UAE Labour Law, allowances such as flights, housing, transportation and telephone are not part of the basic wage and must be agreed upon separately,” asserts Odeh.

Housing allowance, he states, can be distributed in one of the two following ways: Cash/Cheque in advance and employer undertaking to secure housing on behalf of the employee.

Here are answers to few questions on housing allowance:

# What does the UAE Labour Law state on housing allowance?

The UAE Labour Law differentiates between the definitions of basic wage and total wage. The term “basic wage” is an employee’s wage excluding all allowances of whatever nature and is specified in the labour contract as such.

Total wage, on the other hand, is an employee’s wage inclusive of all allowances provided such as accommodation and travel allowances.

Thus, according to UAE Labour Law, allowances such as flights, housing, transportation and telephone are not part of the basic wage and must be agreed upon separately.

Otherwise, the above allowances shall be considered as part of the total wage. The only allowance applicable shall be upon cancellation of the visa which is a mandatory flight ticket back to the home destination of the employee.

In practice, housing allowance can be distributed in one of the two following ways:

·         Cash/Cheque in advance: This type of housing allowance shall not form part of the basic wage and shall not be calculated as part of the end of service gratuity.

·         Employer undertakes to secure housing on behalf of the employee: This type of housing allowance shall form as part of the basic wage and the employee shall have the right to remain in the property until he/she obtains his/her full entitlements when leaving the position.

# Does it specify any range to be given to employees?

The UAE Labour Law does not provide any fixed criteria or set values for the housing allowance. Such figures are determined and agreed by the employer and the employee.

# Who are eligible for such an allowance?

The UAE Labour Law excludes the following categories of persons are excluded from being governed the provisions of the Labour Law:

·         Employees of the Federal Government and of governmental departments of the emirates of the Federation, employees of municipalities, other employees of federal and local public authorities and corporations, as well as employees who are recruited against federal and local governmental projects.

·         Members of the armed forces, police and security.

·         Domestic servants employed in private households, and the like.

·         Farming and grazing workers, other than those working in agricultural establishments that process their own products, and those who are permanently employed to operate or repair mechanical equipment required for agricultural work.

All other persons not mentioned above are governed by the provisions of the UAE Labour Law and are eligible for housing allowance.

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