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Combating Covid-19: Under what conditions can employers reduce salary in UAE

Filed on April 6, 2020 | Last updated on May 17, 2020 at 07.04 am
Combating, Covid-19, Mutual consent, must, slash salary, UAE

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This is in accordance with Article 2 (4) and (5) of the Ministerial Resolution.

Q- I wish to resign from my current employment and intend to explore other job opportunities. I have been made aware of a new regulation that regulates the contractual relationship between an employer and its non-national employees which enables employers in the private sector to restructure its employment contracts due to Covid-19 crisis. Is my employer permitted to amend my employment contract for the purpose of reducing the end of service benefits due to me by reducing my salary structure? Should I put my resignation on hold?

Answer

At the outset, we assume that you are employed by a private sector company incorporated in the mainland of the UAE and you are not a citizen of the UAE. In view of the ongoing Covid-19 pandemic and the preventive measures being taken to contain its spread, it may be noted that the Ministry of Human Resources and Emiratisation (the Mohre) has issued 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.

In response to the first query, it may be noted that an employer affected by the precautionary measures being taken to contain Covid-19 may choose to temporarily or permanently reduce the salary of its employee. This is in accordance with Article 2 (4) and (5) of the Ministerial Resolution, which states:

"Article 2:
Establishments affected by the precautionary measures referred to above, who wish to reorganise its employment relations, shall take the following measures gradually, and in agreement with the non-national employee, as per the following:
1. Apply a remote working system.
2. Granting a paid leave.
3. Granting an unpaid leave.
4. Temporarily reduction of salary during the mentioned period.
5. Permanent reduction of salary."

However, it may be pertinent to note that for your employer to temporarily reduce your salary during the application of precautionary measures, you and your employer shall have to (i) agree to a 'Temporary Additional Addendum' to the original 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 period of applying the precautionary measures; (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 the 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. This is in accordance with Article 5 of Ministerial Resolution, which states:

"Article 5:
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 to 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 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."

Further, if an employer chooses to permanently reduce the salary of its non-national employee, the employer shall first have to apply for the 'Amend Contract' service to obtain the approval from the Mohre. This is in accordance with Article 6 of the Ministerial Resolution, which states:

"Article 6:
Establishments that wish to permanently reduce the salary of a non-national employee shall commit to apply to the service of 'Amend Contract' to obtain the ministry's approval as per the applicable procedures."

Based on the aforesaid provisions, it may be noted that if your employer abides by the procedures stipulated under the Ministerial Resolution, your employer may be permitted to reduce your salary temporarily or permanently provided you and your employer mutually agreed to do so. Therefore, if you resign from your employment now, your end of service benefits should be calculated on your current remuneration as you have not accepted a reduced remuneration.

Know the law

If employer abides by the procedures stipulated under the Ministerial Resolution, he may be permitted to reduce employee's salary temporarily or permanently provided the employee and your employer mutually agree to do so

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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