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ISSUE 6
How is AI transforming payroll?
Decree-Law No.33/2021 on Regulation of Labour Relations (the ‘UAE Labour Law’) can now grant their employees the option to opt into the voluntary alternative scheme. Employers are required to make monthly contributions to the accounts of employees who choose to opt into the scheme. According to the Cabinet Decision, the monthly contributions are to be calculated as follows: 5.83% of an employee’s monthly basic salary for their first five years of employment, and 8.33% of an employee’s monthly basic salary for every year after. The monthly contributions will then be released to the employee upon termination of their employment. AI has been deployed to effectively streamline and simplify the calculations of employee benefits. AI can first collect the relevant data needed to calculate the benefits from several sources, such as employee pay slips. AI can then be utilized to automate the calculations of benefits based on the formulas set out under the law. AI can also be utilized to accurately calculate any deductions that need to be made from an employee’s remuneration, or calculate any payments in lieu of benefits that the employee is entitled to. According to Article 25 of the UAE Labour Law, employers can make deductions from an employee’s remuneration in specific circumstances, such as to redeem any amounts granted to the employee in excess of their rights. Furthermore, under Article 29 of the UAE Labour Law, employees are entitled
Automation One of the most significant ways that AI has impacted the payroll industry is through the automation of tasks. For example, AI has been used to calculate employee benefits. Employee benefits in the UAE have recently undergone significant changes, due to the introduction of a voluntary end-of- service benefits alternative scheme. As discussed in our previous article DEWS: Modernizing End of Service Benefits in the DIFC and Beyond , the UAE Cabinet recently announced the introduction of a voluntary alternative scheme through Cabinet Decision No.96/2023 (the ‘Cabinet Decision’). According to the Cabinet Decision, employers who are based onshore and in free zones that follow Federal
“AI has been deployed to effectively streamline and
simplify the calculations of employee benefits. AI can first collect the relevant data needed to calculate the benefits from several sources, such as employee pay slips.”
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