A housing allowance, also called an accommodation allowance, is money added to your pay to cover rent. It is common in the UAE, where packages often split into basic salary plus allowances. It is not part of basic salary, so it does not count towards gratuity or overtime.
It is usually a fixed monthly sum or a set share of the package. Employers use it to offer competitive pay without inflating gratuity liability, which is based on basic salary only.
Some firms provide housing directly instead of cash. Either way, the allowance shapes both take-home value and end of service cost.
Benchmark the allowance against the local rental market, not just against rivals.
Review the split between basic salary and allowances so gratuity stays affordable and pay stays attractive. Our reward team models this through Paylense.
Last updated: July 2026 | Reviewed by Tuscan Consulting, Dubai