As the economy of UAE and other GCC countries are developing day by day due to scaling of businesses, salary slip as well as salary certificate becomes an important document. In recent years the scale of hiring employees in the UAE has increased rapidly. At this pace salary slip becomes an essential document for every employee.
For the employers in UAE, salary slip is required for payroll process and maintain the necessary records whereas employees need salary slip for various economic purposes such as getting a mortgage. This document is generally provided by HR professionals to their employees.
Importance of Salary slip format UAE
A salary slip or pay slip is an essential document that contains important details related to an employee’s salary. It is a new concept for startups in the UAE which signals that a structure is followed by HR managers.
All the employees have the right to get a salary slip whether it is in the form of a physical document or a soft copy. This helps employees to check their CTC, basic salary, deductions and allowance. In addition, a salary slip is necessary for receiving eligible government benefits and subsidies.
In the UAE, all employees, regardless of their working hours or contracts, must receive a salary slip.
What is the salary slip format for UAE?
The salary slip format in UAE contains all the necessary details as mandated by the UAE government. An employer can provide a salary slip to employees which contains all the basic components mandated. These components include:
1. Payroll Identification number or Employee ID
Generally, employers provide a unique identification number. This number is created by the payroll. These numbers can be configurable as per the preferences. In most companies the initial two letters of the employee ID denote the name of the company and the last two digits denote the employee number.
2. Details of the employer
In the UAE employers must mention the organization’s name and head office address. It is also necessary to mention the month for which the salary slip is generated.
3. Employee Attendance
The pay slip should contain the number of days the employee was present for in the organization, if no leaves were taken. If there are any LOPs, they should be mentioned in the salary slip as well.
4. Company Tax Code
If employees are required to pay any amount of tax they are provided with a unique tax code which they can use to calculate the tax deducted. In UAE, businesses withhold 5% of salary as a pension contribution.
5. Deductions
In most countries, you are required to pay taxes on the amount of income you earned but UAE has different laws. Your gross income is what you receive after completing a month. So there is no column of deduction in the salary slip of UAE.
6. Payroll processing details
This section contains the details of the bank account in which your salary slip is deposited by the employer. The Labor Ministry of UAE has made it necessary for employers to provide these details using the WPS system.
How to calculate wage of employees in salary slip format UAE?
Wages forms an integral part of the salary slip format in the UAE. You need to mention the salary details of the employees which include:
1. CTC (Cost to Company)
Cost to the company refers to the total cost incurred by the organization. It is the total salary package of an employee which includes basic salary, allowances and other benefits provided.
2. Basic Salary
Basic salary or in-hand salary refers to the amount an individual receives after all the deductions. This amount may differ from organization to organization and ranges around 60% of CTC.
3. HRA (House Rent Allowance)
This amount is included in the CTC and paid for the accommodation of an employee in the employer’s city. Most companies provide HRA to employees who are hired from foreign lands.
4. Conveyance Allowance
This amount is paid by the employer for the commute of employees from home to work and back. This amount varies from organization to organization depending upon their policies.
5. Medical Allowance
This amount is paid by employers to their employees to cover their medical expenses. Some organizations provide the full amount for the expenses incurred while some provide a fixed amount.
6. Perks
This section of an employee’s salary slip is left vacant until extra perks or bonus is provided to their employees. Companies generally provide bonuses on various festivals. It may vary from organization to organization.
7. Net Salary
In most of the salary slips issued in UAE, the net salary has a specified formula. If you as an employer are creating salary slips you must use the formula.
⁂ Net salary = Gross Salary – Deductions
What is the Salary Certificate format in UAE?
As the name itself suggests, Salary certificates are an official document which contains an organizational seal. Generally, this document is proof that the particular employee has worked with a specific company for the stated period of time. It varies from salary slips in the UAE. The salary slip contains the financial details of the employee whereas it is not necessary for a salary certificate to contain those details.
Typically following details are mentioned in the salary certificate of an employee in UAE:
- The issued date
- Name of the employee
- Gender of the employee
- Designation of the employee in organization
- Joining date
- Net and total compensation of the employee
- Reimbursement and perks (if any)
The signatory of the salary certificate must mention the name, designation, contact details and location. Generally it is issued by the HR of the organization.
Along with the salary certificate another document is issued to the employee in UAE which is a matter of letter. A salary certificate letter contains a specific letter. This document may be utilized in accordance with the reason for which the salary certificate was issued.
Conclusion
In order to generate number of salary slips in UAE a robust HR Software is required so that the manual task can be eliminated. A robust software like Zimyo can help you streamline all your HR tasks and helps to run an automated payroll that reduces the effort of manually calculating the leaves, LOP days, overtime etc. It helps you to seamlessly generate number of pay slips at a time.