Dubai - The employer and employee must enter into a fresh employment contract signed by both parties.
Published: Sat 3 Aug 2019, 12:00 AM
Last updated: Sun 4 Aug 2019, 9:32 AM
Question: I and my colleagues have been working under an employment contract of unlimited duration for a period of two years with a company in Abu Dhabi. In October 2017, my employer announced to all employees that due to slowdown in business the company shall reduce the salary of those who are earning a salary above Dh10,000 by 15 per cent. They issued a letter to each individual stating the following:
"In order to cope up with current market conditions, maintain financial stability and protect employment of our employee, it has been decided to restructure the organisation. As part of this process, there shall be changes in monthly salary for a temporary period."
I and my colleagues signed the letter accepting reduction in salary. Since then, the company has been giving us a reduced pay. Is this legally correct? What is the definition of 'temporary period' and how long can a company stretch this? Does the second partner of the company have the right to sign and issue the salary reduction letter?
Answer: If the employer wants to reduce the salary, they should enter into a fresh employment contract signed by both parties and it needs to be submitted to the Ministry of Human Resources and Emirtisation (the 'Ministry') for approval.
Article 60 of the Federal Law No. 8 of 1980 regulating employment relations in the UAE (the 'Employment Law') states, "No amount of money may be deducted from an employee's remuneration in respect of private claims, except in the following cases:
(a) the recovery of advances or amount of money paid to the employee in excess of his entitlements, on condition that the amount deducted in this case does not exceed 10 per cent of his periodic remuneration;
(b) Contributions which the law requires the employee to pay from his remuneration, e.g. towards social security, insurance schemes;
(c) The employee's contributions to a savings fund or repayment of advances repayable;
(d) Contributions towards any welfare scheme or in respect of any other privileges or services provided by the employer and approved by the Ministry;
(e) Fines imposed upon the employee for any offence made;
(f) Any debt payable in execution of the judgment of a court;
Provided the deduction shall not exceed one-quarter of the employee's remuneration. Where two or more debts are payable, the maximum shall be half the employee's remuneration and the sums of money attached shall be divided pro rata among the beneficiaries, after payment of any legal alimony at the rate of one-quarter of the employee's remuneration." Due to non-compliance of the provisions of the aforesaid article of the Employment Law, your employer may not reduce your salary.
Further, since the temporary period is not defined and specifically mentioned, the term of 'temporary period' mentioned in the letter is ambiguous.
Any person who is duly empowered and authorised by your employer to sign any documents relating to the Ministry may sign any documents on behalf of your employer.
However, you and your colleagues may approach any Tasheel Centre to obtain further clarification on this matter.
Know the law
To reduce salary, the employer and employee must enter into a fresh employment contract signed by both parties and it needs to be submitted to the Ministry of Human Resources and Emirtisation for approval.
Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom, Singapore, 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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