Ongoing Gulf regional tensions continue to impact sectors ranging from hospitality and events to retail and logistics, and amid all this, employers across the UAE are forced to reduce their staff.
Amidst the ongoing war, some companies have offered reduced pay. According to recent news, a few companies have even placed staff on partial unpaid leave, without the required legal safeguards.
Under UAE labour law, a pay cut cannot be suddenly imposed by an employer. In line with this, Asma Siddiqui, Senior Associate at BSA LAW, explained, “ the requirement for a lawful salary reduction is clear: the employee must give explicit written consent, and the change must be formally registered with the Ministry of Human Resources and Emiratisation (MoHRE).”
Sidddiqui also said that employers need to explain the scope, reason, and duration of the reduction, and to apply it fairly across the workforce.
Hasan Elhais, legal consultant at Amal Al Rashedi Lawyers and Legal Consultants, said. “An employer cannot force an employee to sign a revised contract containing less favourable terms.
If an employee is dismissed for refusing to sign a revised contract with a lower salary, they may have grounds to challenge the dismissal, file a complaint, and seek employment entitlements as well as compensation for arbitrary dismissal.” This case is especially applicable to the one that left an employee in a worse position.
One of the most important protection measures in the UAE’s labour framework is the Wage Protection System (WPS). This is a government-mandated mechanism that ensures your salaries are paid on time and in full via electronic transfers.
Additionally, employers who miss payment windows can face penalties, freezes on new work permits and in some cases, legal action. While the legal framework has strengthened employee rights, workforce strategy experts highlight that smart companies need to go beyond compliance.