How to Create a Salary Slip in UAE [With Format and Template]

As companies in Dubai and the Middle East scale their workforce, the salary slip format in UAE as well as the salary certificate format in UAE are important documents. Know how to create them using ready-to-use templates and frameworks. Also, learn why the salary slip format UAE in Excel plays such a vital role for employees and HR teams. 

Despite the global economic downswing, UAE companies are hiring rapidly, and the rate of employment has accelerated in recent years. According to a survey conducted in March 2023, employment is increasing at the quickest rate in seven years. 67%  of UAE employers plan on hiring new employees in 2023, and one of the most crucial documents in this entire process is the salary slip format for UAE.

For employers, the salary slip format UAE (Word or Excel) means that you can seamlessly manage payroll, and employees need this document to participate in various economic activities (e.g., getting a mortgage). Access to the salary slip format UAE in Excel (which is the best option) or even a salary slip format UAE in Word can be extremely helpful for HR teams in this region.

Importance of the Salary Slip Format for UAE

A payslip or salary slip is an essential document which contains a detailed summary of the different components of an employee's salary as well as specific employment information. For HR teams in startups, this is often a new concept, which signals the formalization of the human resources functions – particularly when you follow a structured document like salary slip format for UAE in Word or Excel.

All employees, regardless of their business hours or contracts, have the right to a payslip, whether it is sent as a physical copy or as an electronic payslip via online delivery. This document enables employees to view their monthly salary, gross pay, and other personal information.

The employee's payslip is crucial as it serves as legal evidence of his/her earnings and deductions. In addition, it is necessary to receive any applicable government benefits, like medical benefits or subsidies.

In exchange for an annual or monthly salary, individuals are employed in the UAE. They are required to receive their monthly compensation on the given dateline and no later than 10 days after the end of the payment cycle. Unless otherwise specified in the contract, one will typically pay their employees once every 14 days. Remember that payment must be made in the UAE's national currency and only on weekdays.

In UAE, all salaried employees, regardless of their work time or employment contracts, must receive a salary sheet or payslip.

Learn More: HRMS to Make the Shift to UAE's New Work Week Seamless 

What is the Salary Slip Format for UAE?

Simply put, the salary slip format for the UAE is defined as a structured document that includes all the essentials of wages received by an employee in the region, as mandated by the UAE government. You can use the template we will share in this guide, or create your own salary slip format for UAE by including all the right components. These are:

1. Payroll ID or employee ID

Every employee is assigned a unique payroll number. Typically, it is created by the payroll system of one's company. Remember that employee identification numbers are always unique. It can be configured as per your preferences. Companies in UAE generally employ the initial two characters for the company's initials, the next two for the year, and the final two for the employee number.

2. Details of payer

In this part of the salary slip format for the United Arab Emirates, you must include your company's name and address. You must also include the fortnight or month for which you are preparing the payslip. #ProTip: If you enter the first date of the month as 01.01.2023, the salary slip format for UAE (Excel) will automatically display it as “Jan-23”. This is a handy feature of Excel when running payroll.

3. Employee attendance 

The UAE payslip format should ideally calculate the payable days automatically. If the individual has not taken any leave, the complete number of working days will be listed. Otherwise, it will subtract leaves obtained from working days and add allowed leaves. Based on the template you use, sick pay and any pregnancy or paternity leave might be separately itemized on your payslip.

4. Company tax code

If you are required to pay any form of tax for any reason, you are assigned a unique tax code. This code dictates the sum deducted from each paycheck. In the UAE, for instance, businesses have to withhold 5% of local employees' wages as a pension contribution. This doesn't apply to foreign employees, however.

5. Deductions

Gross compensation is the amount you are expected to receive initially.  When working in the UAE, this could be your ultimate compensation. However, if you reside somewhere else and are obligated to pay taxes, you will be capable of determining your net pay — the amount you are expected to receive after taxes have been deducted. This is typically not part of the average salary slip format for the UAE.

6. Payroll processing details

This section contains the bank information, which includes the bank name, account information, as well as IBAN number. The Labor Ministry of the United Arab Emirates instructs the employer to transmit the salary by using the WPS system. Consequently, every bank account is assigned an IBAN number, which is used by employers to transfer employee salaries.

An IBAN (International Bank Account Number) is a code consisting of up to 34 letters and numbers that institutions use to ensure that international remittances are processed properly. IBAN within the United Arab Emirates is composed of 23 characters: a two-letter country code, a two-digit check number, a three-character bank code, and a sixteen-digit bank account number.

Additionally, to facilitate payments and wage distribution, the UAE government has implemented the Wage Protection System (WPS). It is a cutting-edge electronic salary transmission system that allows private sector organizations to pay employees' salaries via banks, authorized financial firms, as well as the Bureau de Change.  Knowing these concepts is vital for using the salary slip format for UAE correctly.

Learn More: UAE's New Labor Law: A Smart Guide 

How to Calculate Employee Wages in a Salary Slip Format for UAE?

This forms the central part of the salary slip format for UAE. Here, you need to insert salary details, which include:

• CTC: "Cost to Company" refers to the expenses an employer incurs in the process of hiring, training, and engaging an employee to ensure productivity.

• Basic salary: Typically, the basic compensation ranges between 40% and 60% of the CTC. In this introduction to the salary slip format for UAE, we will presume that 50% is the basic salary. You may modify the formula based on company policy.

• HRA: The House Rent Allowance, or HRA, is determined by company policy. Most corporations provide HRA to their employees, especially if they hire foreign laborers. If the contract of employment doesn't contain this clause, leave it vacant.

• Conveyance allowance: This section compensates employees for their commute to and from work. This honorarium is only provided if the employer does not provide transportation. If the employer provides corporate transportation, you must enter 0 in the UAE salary sheet format's conveyance/transportation/commute allowance field.

• Medical allowance: An employer reimburses employees for their medical expenses through a medical allowance. This quantity is determined by company policy and constitutes part of one's employee benefits plan. Some corporations reimburse employees for actual expenses, while the majority provide a fixed amount.

• Overtime pay: An employer compensates employees for working beyond the hours of the standard workweek. It is computed based on the aggregate salary (base salary plus allowances). According to the business policy, the employee receives overtime payments with an increase of at least 25% of his or her base pay, as required by law. This is crucial for any salary slip format for UAE, as the region employs a large number of frontline workers with overtime components.

• Gross salary: The salary slip format for UAE will add all allowances to the base pay to determine the gross compensation. Therefore, basic compensation plus total allowance equals surplus salary, which is below the CTC.

• Salary advance: In the deduction portion, you may include the amount of the employee's salary paid in advance, if applicable. For example, companies using the salary slip format for UAE to employ foreign workers may want to use this component as a form of reassurance before the employee relocates. If this is not the case, then enter 0.

• Perks: This section is typically left vacant unless an employee has consented to receive additional benefits. Companies typically pay bonuses every year on the occasion of Ramadan or another holiday. It varies from business to business.

• Net salary: In most salary slip formats for UAE, the net salary comprises a predetermined formula and is calculated automatically. However, if you are creating your own salary slip format for UAE, make sure that net salary = gross salary - the deductions. 

Learn More: The Great HR Revolution: Reshaping the Future of Work in the Middle East 

Other Considerations

Companies and HR teams using salary slip formats for UAE (Word or Excel) should remember these other key considerations:

1. The need to accommodate deductions into the salary slip formats

There are numerous categories of deductions that must be made from employee compensation in any country, and UAE is no exception. There may be leaves that employees take, which must be accounted for, as well as violations or penalties that require salary adjustments.

Employers in the UAE are also mandated to withhold pension contributions for local employees. Foreign employees do not contribute to, nor obtain pension benefits. Local employees are mandated to contribute 5% of their compensation or wage to a pension plan, while employers must contribute 12.5%.

2. Paper-based salary slips vs. e-slips

The type of payslip varies from company to company. Nonetheless, the company can either produce the payslips manually (typically in the case of smaller businesses) or utilize payroll software to do so. Depending on the employer, this document may be a physical copy or an electronic payslip.

The hard copy of compensation papers can be regarded as the original payslips as well as a payment receipt. In contrast, the most important function of an e-payslip is that it may be securely stored in the cloud and accessible at any point in the future.

A payslip in paper or digital format has the same legal standing, as long as it follows the salary slip format for UAE correctly. However, any form of alteration or tampering with a payslip is a criminal offense.

3. Understanding the difference between CTC and gross salary

Cost to company, or CTC, is the total sum an employer will spend on an employee over the course of one year. In contrast, the gross salary is the amount an employee receives in the shape of a salary before any deductions are made.

The CTC consists of compensation, contributions, and benefits. Gross remuneration, on the contrary, is the quantity that an employer is obligated to pay a worker on a monthly basis. It doesn't account for pension fund contributions, among other factors.

In UAE, aggregate remuneration involves elements like basic pay,  allowances for housing, city compensatory allowance, as well as other allowances. The net salary is the gross minus any deductions.

Learn More:  The Complete Guide to UAE’s New Labor Law

What is the Salary Certificate Format in UAE?

As its name implies, a salary certificate is a signed statement which is printed on office stationery and bears an official seal. It is used to verify that a person worked for a company for a specified period of time for a predetermined salary.

The salary certificate format in UAE is distinct from a payslip or a salary slip. The remuneration certificate needn’t include a detailed breakdown of the individual's pay structure. A salary slip, on the contrary, is a sheet that lists the employee's income and any deductions extracted from their monthly salary.

It is not necessary for the salary certificate format in UAE to indicate a person's financial status in order to serve as valid proof of employment. The payslip, on the other hand, is a paper that offers verification of employment as well as a comprehensive financial summary of the individual.

Typically, the salary certificate format in UAE will comprise the following fields:

• The publication date
• The worker's name
• The worker's gender
• The position of the employee within the organization.
• Job description and designation
• The date the employee's tenure commenced.
• Both total and net compensation
• Reimbursements and benefits (if any)

The signatory must include their name, contact details, and location (generally, this is the HR manager of the company).

In addition to this central salary certificate format in UAE, there’s also the matter of a letter. A salary certificate letter contains a separate section that details why the certificate was released and is directed to a particular financial institution or bank. This document may only  be utilized in accordance with the stated purpose when the letter was requested.

Learn More: The Great HR Revolution: Reshaping the Future of Work in the Middle East 

Use this Template to Create a Salary Slip in UAE

Now that you know all about the salary slip format in UAE, as well as the salary certificate format in UAE in case it’s ever needed, here is a template to help you fill in the details and get the process started. This salary slip format for UAE is compatible with both Word and Excel. Refer to the steps for salary calculation in UAE to fill out the formulae for basic salary, gross salary, and net salary if you are using a salary slip format UAE in Excel, to reuse the template later. 

Conclusion

While a salary slip format in UAE or elsewhere may be handy, payroll at scale requires robust HR software. A software suite like Darwinbox can unify your HR functions and help set up automated payroll that reduces the effort of calculating attendance, leaves, overtime, etc. manually. Further, its AI engine, Darwin, can resolve employee doubts about the salary slip format in UAE (particularly useful for foreign workers), so you can improve the employee experience.

Ask for a Darwinbox demo to know more.