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Coronavirus: Can UAE employer reduce salary permanently?

Ashish Mehta
Filed on June 28, 2020 | Last updated on June 28, 2020 at 07.39 am
Coronavirus, UAE employer, law, uae law, salary, Covid-19

(Photo: Alamy)

Know your legal rights in the UAE

Question: I am employed by a mainland company based in Dubai Media City, Dubai. On April 15, I received an email from my employer informing me about the reduction in my basic salary by 35 per cent until the current Covid-19 pandemic prevails. The reduction will be effective from April 1. Are companies allowed to slash salary from a retrospective date? Does the employer have the right to reduce my salary claiming it to be 'temporary', but does so for an indefinite period? My employment is related to sales; and commission is one of the components of my salary. My employer is reducing my salary stating that the market conditions are not good. However, my sales targets are not reduced by my employer.

Answer:

It is understood that your salary reduction is in accordance with the Ministerial Resolution No. (279) of 2020 concerning the employment stability in establishments of the private sector during the application of precautionary measures to control novel coronavirus outbreak, (the 'Ministerial Resolution') issued by the Ministry of Human Resources and Emiratisation (the 'MoHRE') related to Covid-19.

The provisions of the Ministerial Resolution are applicable to the expatriates employed in the mainland companies of UAE until the Covid-19 crisis prevails in the UAE. This is in accordance with Article 8 of the Ministerial Resolution which states that: "The provisions of this Resolution shall be applicable to non-national employee during the mentioned period of applying precautionary measures."

An employer may reduce the salary of the employee temporarily or permanently if affected by current Covid-19 crisis. This is in accordance with Article  2 (4) & (5) of the Ministerial Resolution which states: "Establishments affected by the precautionary measures referred to above, who wish to reorganise its employee relations, shall take the following measures gradually, and in agreement with the non-national employee

4. Temporarily reduction of salary during the mentioned period

5. Permanent reduction of salary."

As your employer is willing to reduce your salary until the Covid-19 crisis prevails, it is assumed that the reduction may be temporary in nature and not permanent. Article 5 of the Ministerial Resolution allows an employer to reduce the salary of an employee and states the procedures to do so. It states, "Establishments that wish to temporarily reduce the salary of a non-national employee during the mentioned period shall take the following actions:

1. Conclude a 'Temporary Additional Addendum' to the employment contract between both parties, in accordance with the template attached to this Resolution, provided that it shall expire at the end of its term or enforceability of this Resolution, whichever comes first.

2. Renewing the Addendum referred to in Clause 1 of this Article shall be in agreement between both parties.

3. The Addendum referred to in Clause 1 of this Article shall be executed in two copies, each party holding a copy, and the employer shall commit to present it to the Ministry whenever asked."

Based on the aforementioned provision of law, both you and your employer should mutually agree to

(i) a 'Temporary Additional Addendum' to your employment contract, as per the template attached with the Ministerial Resolution which shall end upon the duration mentioned in the 'Temporary Additional Addendum' or upon the end of the Covid-19 crisis period;

(ii) renew the 'Temporary Additional Addendum' in agreement between you and your employer; and

(iii) two copies of the 'Temporary Additional Addendum' shall be executed, one copy being in your possession and other being in the possession of your employer, and your employer shall be obliged to present the 'Temporary Additional Addendum' to the MoHRE when required.

The said Ministerial Resolution is effective from March 26, 2020. This is in accordance with Article 9 of the Ministerial Resolution, which states:

"This Resolution shall be published in the Official Gazette and shall come into force as of its date of issuance (March 26, 2020)." Therefore, your employer may reduce your salary from April 1 if you consent to reduction in your salary effective April 1 by signing 'Temporary Additional Addendum' to your original employment contract.

You may approach your employer and come to a consensus related to terms of reduction of your salary for the Covid-19 crisis period. However, in the event your employer does not adhere to the provisions mentioned in the Ministerial Resolution and decides to reduce your salary without mutual agreement with you, then you may file a complaint against your employer with the MoHRE.

Know the law

An employer may reduce the salary of the employee temporarily or permanently if affected by current Covid-19 crisis.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.


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