How Salaries are Structured in the Middle East

Salaries are structured very specifically in the Middle East, which is something many expats looking to relocate struggle to get their head around. Here’s a quick guide to how your salary package could look, with the ‘must haves’ and the ‘nice to haves’. 

Base

You base is your guaranteed monthly income. This is usually divided into three standard allowances:

• Basic (usual minimum 60%)

• Housing

• Transport

You can also have additional allowances included within your base, I’ve seen food, petrol, study and others.

On a month-by-month basis, the split between different allowances doesn’t make any difference. You receive your full base in your salary every month, and can spend it on whatever you want. One thing to note is that when you leave your job, you receive an end of service gratuity which is a certain amount of your basic salary. Therefore, if your basic is a higher percentage then you receive a higher end of service. You can see more on calculating this here: https://u.ae/en/information-and-services/jobs/end-of-service-benefits-for-employees-in-the-private-sector 

Bonus

Bonuses in the Middle East are usually discretionary, however they are typically higher than in other areas of the world. They’re talked about as a certain number of months of your salary. For example, if you received ‘3 months bonus’ that would be the equivalent to 3 months of your salary, or 25% of your annual salary. Bonuses range from 2 months to 6+ months (16% - 50%+).

Be careful with bonuses, as many companies calculate bonuses on your basic salary and not the entire base. So if you receive 3 months bonus that is 3X basic salary, not including other allowances.

Some companies offer sign-on bonuses but this is not common.

Education

The majority of businesses pay an education allowance on top of your base salary. This is for your children (not you), and is to cover schooling up to the age of 18. Most businesses offer this for up to 2 or 3 children, and pay it either in cash or as a voucher for the school. It usually only applies to children being schooled in the country that your job is based. This amount averages from AED 20,000 per child up to AED 40,000 per child, but it can go up to as high as the full school fees.

Tickets

There is no legal requirement for a company to pay for air tickets, however in almost all companies this is included in the package. These can be just for the employee, or also include their family (spouse and children). Mostly these are economy, sometimes business class, and can be paid in either cash or with a voucher. They go to ‘country of origin’, which is the country where the employee is a citizen, as a return ticket.   

Insurance

Companies are legally required to pay for health and life insurance for employees, and often pay for children and spouses too.

Visa

It is a legal obligation for the company to pay for your visa, and they can also include your children and spouse on the visa. Sometimes this is covered, and sometimes you will have to pay for this yourself.

Extras

Many companies in the region are offering share schemes and equity in the business, vested over a certain period.

As you can see, salaries are multifaceted in the Middle East and can vary widely from one business to another. If you want a more detailed view of salaries, reach out directly.