Can UAE employers reduce salaries without new contracts?

Your entitlement to benefits shall depend on the type of your employment contract.

Q-I have been working in a private company in Dubai for the last eight years. Due to some financial difficulties, our employer wants to reduce the salaries of all employees by 15 per cent. I have some doubts: Can the employer reduce salaries just like that? How does he need to inform the employees - by e-mail or an official letter? What does the law say about this? Once an employee accepts the reduction, should the employer give him end-of-service benefits till date and make a new contract with a revised salary?
A-It is understood that you are working for a private company in Dubai for the last eight years, and your employer intends to reduce the salaries of all employees by 15 per cent. In this regard, you want to know if it is lawful for the employer to reduce an employee's remunerations and if it is required for the firm to inform its staff by e-mail or an official notification. Further, you also want to know if the employer is required to provide the accrued end-of-service benefits and draft a new contract once an employee accepts the reduction.
It is unlawful for an employer to reduce an employee's remunerations, except as provided under Article 60 of the Federal Law No. 8 of 1980 Regulating Employment Relations in the UAE (Employment Law). According to the law, one's salary may be reduced if it has been agreed by both the employer and the employee. Both should enter into a fresh employment contract signed by both parties and it needs to be submitted and registered with the Ministry of Human Resources and Emiratisation (Mohre) for approval. 
Article 60 of 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:
1-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;
2-Contributions which the law requires the employee to pay from his remuneration, e.g. towards social security, insurance schemes;
3-The employee's contributions to a savings fund or repayment of advances repayable thereto;
4-Contributions towards any welfare scheme or in respect of any other privileges or services provided by the employer and approved by the labour department;
5-Fines imposed upon the employee for any offence he has committed;
6-Any debt payable in execution of the judgement of a court of law;
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 the payment of any legal alimony at the rate of one-quarter of the employee's remuneration."
Based on this provision of the law, even though the employer provides an employee with an official letter or e-mail regarding the reduction in salaries, it will be valid only if the employee agrees and a revised employment contract is signed and submitted to Mohre.
Further, an employee is entitled to end-of-service benefits, if he or she completes one continuous year of service under an unlimited-period contract. This is in accordance with Article 132 of the Employment Law. An employee under a limited-period contract is entitled to end-of-service benefits, if he or she completes five years of service. This is in accordance with Article 138 of the Employment Law.
Thus, your entitlement to benefits shall depend on the type of your employment contract and the tenure of your service with the employer. If you qualify for the end-of-service benefits, the amount shall be calculated based on your current basic remuneration. In the event that your basic remuneration is reduced due to the reduction in your entire salary, you may request your employer to pay the benefits until the date of reduction of your remuneration.
KNOW THE LAW
Although the employer provides an employee with an official letter or e-mail regarding the reduction in salaries, it will be valid only if a revised employment contract is signed and submitted to Mohre.
Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates, Dubai. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.