Salary Certificate in UAE: Everything You Need to Know

What is a Salary Certificate in UAE? 

A Salary Certificate in UAE is a document provided to an employee by the company he is part of which is proof that the employee has been in the organization for a specific salary in a particular period of time.

As a result, this document is very important for the employee, it helps the employee present proof of income whenever he/she needs it, mostly for loans, Immigration paperwork, bank accounts, etc. 

In this article, you will learn everything you must know about Salary Certificates and Salary letters in the UAE and their purpose. Additionally, here you will be able to find relevant information about the requirements and procedures. On the other hand, make sure to learn the advantages of owning a Salary Certificate in the UAE. Let’s observe: 

Banks and financial institutions need to be certain of your capacity to repay any credit card or home loan, personal or car loan, or any other type of loan. This evaluates your savings and your monthly income. This helps them to ensure that they are lending money to an individual with regular earnings and repaying potential.

The majority of banks require that you must bring those documents in person while other banks allow you to send them by email as an attachment and some other banks will allow you to fax the documents over.

In addition, some banks even allow you to send the documents through cell phone text messages to a dedicated phone number. 

Most importantly, you can apply for the requirement of a Salary Certificate if you approach your company’s Human Resources Department (HRD). You must inform your HRD if the bank or financial institution has a specified format of a Salary Certificate.

Normally, HR professionals are aware of the types of salary certificates the majority of banks require but sometimes it is better to provide them all the data. 

Format of UAE Salary Certificate  

Although the basic information almost remains the same, most banks and financial institutions usually follow their own format of a salary certificate; however, the basic information may change in some cases

“In the UAE, the salary certificate must be certified by the Consulate General of the employee’s home country and the Ministry of Foreign Affairs”. Additionally, it contains a lot more components.

A salary certificate format consists of all the employee’s details like monthly salary, the total of his/her deductions, net salary summary, etc.

Salary certificates that are not addressed to any particular organization or individual and can be used for several purposes. The format of the salary certificate could vary from one bank to another, the most frequently required data is mentioned in the list below: 

• Employee’s name  
• Joining date  
• Dearness Allowance (DA) 
• Employee Code (If available)  
• Address  
• House Rent Allowance (HRA) 
• Basic Salary of the employee  
• Employee’s cost to the company  
• Medical Allowance (MA) 
• Net salary of the employee  
• Employee’s designation  
• Special Allowance 
• Status of the employee (if temporary or permanent)  
• Employee’s department  
• Travel Allowance 
• Net allowances Signature of the authority  
• Provident Fund Deduction 

You must ensure that the salary certificate is correctly signed by the authorized signatory, stated on the official letterhead and that it carries a rubber stamp of the interested organization. 

A Salary certificate verifies your earnings and position in the company as well as many other factors. The banks use this information in order to make a decision about the approval. 

In the UAE, the employee requires a salary certificate UAE when applying for any type of loan or a credit card. To bank to verify an individual’s income the bank may request a payment slip from his/her job or to show a bank statement where the proof of income is shown and, in some cases, banks request to see completed income taxes forms. 

What Is the Purpose of an employee’s Salary Certificate? 

Every financial institution or bank needs to study who you are whenever an individual approaches them processing credit cards or a personal loan or a car loan or any other kind of loan, certainly, they need to determine your ability to repay the loan. In order to do this process, the Bank evaluates your savings and your monthly earnings by evaluating your Salary Certificate. 

This information helps the institution to ensure that they lend their funds to an individual who has a stable monthly earning and has the capacity to fully repay the debt.  

A salary certificate acts as proof of your position in the company and your income. The institution or bank uses this information which is a key factor to come to a decision regarding your creditworthiness. The document is requested for 4 main purposes:  

• Bank transactions 
• Applying for loans 
• Applying for a credit card  
• Paying taxes. 

Normally it is appropriate to have the salary certificate format ready to request in order to avoid delays in the processing of loans and other type of requests.

Benefits of a Salary Certificate  

A salary certificate is proof of our income and it can be used for the reason of bank transactions and income tax payments. While applying for a visa or to executive programs at various universities, you may have to submit copies of your salary certificate, as proof of your salary and designation in the company. 

The income tax is the total amount which you need to pay and it totally depends on the salary and the income tax return amount, which you claim from the government. Hence, it is your right to ask your employer for a salary certificate. 

Nowadays, salary certificate is obligatory in every type international job and every foreign organization tend to ask for the salary certificate from the previous company as a proof of their employment experience and salary.

What is a Salary letter? 

A salary certificate letter has an added section that says that it is addressed to a particular financial organization or a particular bank and it also states the reason behind issuing the certificate. This document can only be used for the reason that is specified on it while applying to the bank. 

For example, if you are trying to apply to X Bank for a personal loan, the salary certificate letter will be addressed only to “X Bank” for the purpose of seeking a personal loan or a credit card. You cannot use this document to make a submission to any type of other institution or for a different purpose since the receiving party is in the letter. 

In other words, a salary certificate letter has an added section that is addressed to a particular financial organization or a particular bank and it also states the reason behind issuing the certificate. This document can only be used for the reason that is specified on it while applying for the letter. 

What is the purpose of a Salary Letter? 

Firstly, it is a letter that is sent by the employee’s organization to the bank. The company’s employer writes a letter on the company’s stamp, mentioning that the employee’s salary mentioned in the letter will only credit the bank, and the lender will approve the loan.

Secondly, the letter mentions that if the employees receive any benefit on their salary, the salary and all the benefits will credit the bank. Every company in the UAE transfers their employee’s salaries to a bank of their preference which provides loans to their employees. 

For a Personal Loan in UAE, the Salary Certificate Letter plays an important role. Therefore, no bank in the UAE will accept a loan application without a proper Salary Certificate. there should be uncomplicated proof that clearly states the amount of salary and the company that is paying even if the employee shows his/her bank statement with the income. The salary letter fulfils this requirement. 

For instance, the Salary letter is one of the most essential documents whenever any employee applies for a credit card or a personal loan in the UAE.

When using a loan to transfer salaries, the employee needs to take all the income money and transfer them to the bank where he/she previously received the loan, which should be in the form of a letter. 

  Format of a UAE salary letter 

• Date: 
• Managers, 
• Name of the bank: 
• Address of the bank: 
• Reference: Transfer salary to (bank name) 

Example: the employee sent this letter and does not account for any form of financial guarantee. 

Therefore, in order to apply for personal loans, the salary transfer letter is an extremely important part of the necessary documents. Be sure to check the format so that it can be accessed right away in any type of emergency.

Similarly, different banks have many different standards for issuing credit cards or loans. Although each bank or financial institution must have a notice of wage and income, there are still many other documents that may vary from bank to bank. 

What Is the Difference between a Salary Certificate and a Salary Letter? 

There are two types of Salary Certificates – one is the Salary Certificate Letter and the other the Salary Certificate. Both of them have the same format but the Salary Certificate is directed to a specific type of institution and in the case of loan rejection, it will be unusable in other banks. That is to say, the Salary Certificate Letter is directed straight to a bank and if the bank rejects the loan, the same can be used in another bank again and again.  

Except in one minor detail, the Salary Certificate Letter and Salary Certificate are both the same in almost every type of aspect. Similarly, the employee addresses the Salary certificate straight to a particular bank or institution; consequently, on the contrary of the Salary Certificate Letter will not be accepted in any other financial institution or bank in case that loan request gets rejected. 

To sum things up, a salary certificate is the best proof of your monthly income as well as your net salary. This segment specifically means that you can use it for several purposes and in different providers too. 

However, the Salary Certificate letter carries both the specific company as well as the purpose of the petitioner. Therefore, it is not of right to use in any other type of institution, and neither is of good to use in different purposes except the one that the letter specifies. 

How can ConnectHR help you generate salary certificate for Your Employees?   

Now that you know what is a salary Certificate and the differences between a Salary certificate letter vs salary certificate, what you should do now is request guidance from one of our professionals. 

With ConnectHR by your side, you can easily acquire any type of service for yourself or if you are an employer for one of the members of your staff and start taking advantage of all the previously mentioned benefits.   

You should definitely request our other services to benefit your company’s growth. Therefore, in case you want to improve your HR department, you can request for HR management services, insurance, or our attendance.   

With more than 20 years of experience, we are more than capable of providing you with the most efficient business services and solutions whether it is for individuals or companies.

Would you like to contact ConnectHR to obtain more tips and useful information about the salary certificate generation in the UAE ? 

If you have any inquiries, call us on +97143316688 and you will talk to one of our representatives who will kindly answer all of your questions. 

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