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Many clients have approached us inquiring about the UAE labor laws position on commissions, and in particular whether they are to be considered an essential or additional part of an employees remuneration. Generally, the most common questions are “What does the law say about the commission?” “Is the commission considered as part of the salary?” “When should a commission be paid?” “My salary consists only of commission; would I be considered as a partner?”
At the outset, it must be noted that Article 1 of Federal Law No. 8 of 1980 (UAE Labor law) defines remuneration as: “All payments made to the worker on a yearly, monthly, weekly, daily, hourly, piece of work, or production or commission basis, in return for the work he performs under the contract of employment, whether such payments are made in cash or in kind”. It is evident from the above article that the UAE legislator has accepted that employee’s remuneration may include a commission and considers the same as part of the salary provided that such commission is given to the employee on a regular and transparent basis.
The commission shall be paid to the employee in accordance with the terms and conditions of the employment contract or any amendment thereto. There are all sorts of combinations possible subject to the mutual agreement between the employer and the employee. The employee may even receive a monthly upfront payment which later can be deducted from the due commissions earned at the end of a specified period.
The Dubai Court of Cassation by a decision of 9 March 2009 has established a general rule that in the case of an employee’s remuneration being limited to commission only, such employee shall not in any circumstance be considered as a partner, provided that the employer reserves control and supervision of the employees works.
Finally, should the employer fail to pay any outstanding due to the employee (including a due commission), the latter may request his employer in writing (via e-mail or any other secure written channel) to pay the due amounts, without fear of being accused of unfair labor practice. Should the employer fail to pay the employee’s due commissions, the employee is then entitled to lodge a complaint with the Labor office claiming for his dues in addition to any arbitrary termination’s compensation, if applicable.
In conclusion the UAE labor laws position on commission payments is quite a sensible one. Commission payments, whether as part or exclusive element of an employee’s remuneration, are a perfectly acceptable way of consideration for the employees work, and they are substantially treated in the same way as a normal salary. The determining factor, however, will always be the employment contract.
