July 23, 2026
No Fixed Salary, Only Commission: What UAE Employees Need to Know About Performance-Based Jobs
UAE law allows commission-based employment, but contracts must clearly define pay, gratuity rights and employee benefits.
With more companies in the UAE adopting flexible remuneration models, commission-only and performance-based jobs are becoming increasingly common, especially in sales-driven sectors such as real estate, financial services, insurance and business development.
For employees, such roles can offer attractive earning opportunities, but they also raise several important questions. Can an employee legally work without a fixed monthly salary? How should the employment contract be structured? Will gratuity apply if earnings depend entirely on commission? Can benefits such as housing allowance and medical insurance still be negotiated?
Under UAE employment regulations, commission-based employment is a recognised arrangement, provided it complies with the requirements of the country’s labour laws.
The legal framework governing these relationships is set out under Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations and Cabinet Resolution No. 1 of 2022 concerning its Executive Regulations. These laws regulate employment contracts, wages, employee rights and obligations between employers and workers in the UAE private sector.
Commission-based Jobs are Permitted under UAE Law
A common misunderstanding is that an employment relationship must always include a fixed monthly salary. However, UAE employment regulations recognise different models of remuneration, including arrangements where an employee’s earnings are linked to performance, sales or revenue generated.
In a commission-only arrangement, an employee may receive payment based on an agreed percentage of sales, profits or business generated through their work. Such structures are particularly common in professions where income is directly linked to performance outcomes.
However, the arrangement must be properly documented and approved through the applicable employment procedures. Informal agreements or verbal promises regarding commission payments may create difficulties if disputes arise between employers and employees.
Employment Contracts Must Clearly Define Remuneration
Even when an employee is paid entirely through commission, a written employment contract remains mandatory.
The UAE Employment Law requires employers and employees to enter into a formal employment contract that records the terms of their employment relationship. The contract acts as the primary legal document establishing the rights and obligations of both parties.
The law defines “wage” broadly. It includes not only basic salary but also allowances, benefits in cash or kind, and payments linked to performance. Importantly, commissions calculated as a percentage of sales or profits are considered part of an employee’s wage.
At the same time, UAE law distinguishes between wage and basic wage. The basic wage refers only to the amount specified in the employment contract as payment for the employee’s work and does not include allowances or additional benefits.
This distinction is significant because several employment entitlements, including end-of-service gratuity, are calculated based on the basic wage.
What Should a Commission-only Contract Include?
A commission-based employment contract should clearly explain how the employee will be paid and how performance-based earnings will be calculated.
The agreement should ideally specify:
The commission percentage or incentive structure;
The sales targets or performance criteria applicable;
When commission payments become due;
The method used to calculate earnings;
Any conditions affecting eligibility for commission payments.
Under the Executive Regulations, an employment contract must include key details such as the employee’s role, workplace, working hours, leave entitlement, notice period, termination procedures, wage structure and any applicable allowances or benefits.
A clearly drafted contract helps prevent disputes over unpaid commissions, calculation methods or entitlement to incentives.
How is Gratuity Calculated Without a Fixed Salary?
One of the main concerns for employees considering commission-only employment is end-of-service gratuity.
Under Article 51 of the UAE Employment Law, foreign employees who complete at least one year of continuous service are entitled to end-of-service gratuity upon termination of employment. The gratuity is calculated based on the employee’s basic wage.
The law provides:
21 days’ basic wage for each year of service during the first five years;
30 days’ basic wage for each additional year beyond five years.
Since gratuity is linked to basic wage, many commission-based employment contracts specify a basic salary amount, even if the majority of the employee’s earnings come through commissions.
The basic salary mentioned in the contract then becomes the reference point for calculating gratuity and other statutory benefits linked to basic wage.
What Happens if no Basic Wage is Mentioned?
If an employment contract does not specify a basic wage, disputes may arise over how statutory benefits should be calculated.
In such situations, UAE law provides a method for determining the daily wage of employees whose remuneration is based on actual work or output. The daily wage may be calculated based on the average wage received for the actual days worked during the six months preceding the claim.
This principle has also been recognised in judicial interpretations by UAE courts, highlighting the importance of clearly defining remuneration terms in employment agreements.
Employees should therefore ensure that their contracts clearly mention the basic wage component before accepting a commission-only position.
Can Employees Negotiate Benefits in Commission-based Jobs?
A commission-only salary structure does not prevent employees from negotiating additional benefits.
Employers and employees may agree on contractual benefits such as housing allowance, transportation allowance, annual air tickets, private medical insurance, company vehicles, mobile allowances, education benefits, performance bonuses or other incentives.
Once these benefits are included in the employment contract, they become binding contractual obligations on the employer.
For employees, the overall value of a commission-based package should therefore be assessed not only by the earning potential but also by the benefits and protections included in the contract.
Review the Contract Before Accepting the Offer
Commission-based employment can provide significant financial opportunities, particularly for employees in high-performance sectors. However, the absence of a traditional fixed salary makes it even more important to understand the legal terms before signing an agreement.
Employees should carefully review whether the contract clearly defines the commission structure, payment terms, basic wage, gratuity implications and additional benefits.
A properly drafted employment contract ensures that both employers and employees understand their rights and responsibilities while reducing the possibility of future disputes under UAE employment law.