New UAE Labour Law: When can my employer deduct my salary?

Dubai: Have you taken loans from your employer or owe the company money due to any damages caused by you? If so, what is the maximum amount of money that the company can deduct from your salary?

The new UAE Labour Law, Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations, has a specific article – Article 25 – which stipulates the regulations that need to be followed in case an employee’s salary needs to be deducted.

The law also puts a cap on the maximum amount of salary that may be deducted at 50 per cent, if an employee has multiple reasons for the wage to be deducted.

Here are the details of what the article states. It is important to note that the legislation will come into effect from February 2, 2022.

ARTICLE (25) DEDUCTION FROM THE WAGE

1. No deduction shall be made from the wage of the worker unless in the following cases:

a. Recovery of loans granted to the worker, up to the maximum monthly deduction from the worker's wage stipulated in this Article, after the written consent of the worker, without any interests.

b. Reinstitution of overpayments made to the Worker, provided that no more than 20 per cent is deducted from the wage.

c. Payments deducted for the calculation of contribution to schemes, pensions and insurances, pursuant to the legislation in force in the UAE.

d. Worker's contributions to a provident fund in the establishment or the loans due to the fund, as approved by the Ministry.

e. Payments towards any social project, privileges or other services provided by the employer and agreed by the Ministry, provided that the worker agrees in writing to contribute thereto.

f. Sums deducted from the worker against violations committed under the establishment's sanctions bylaws approved by the Ministry, up to five per cent of the wage.

g. Debts due as a result of court order, up to one quarter of the Worker's Wage, other than an awarded alimony, where it shall be permissible to deduct more than one quarter of the wage. In case of multiple debts, the amounts required to be paid shall be distributed on priority basis.

h. Amounts necessary for repair of any harm caused by the worker, as a result of his error or violation of employer's instructions, and resulting in loss or destruction of, or damage to any tools, equipment, products or material belonging to the employer, provided that no more than five days’ wage are deducted per month, and no amount in excess of this shall be deducted unless with approval of the competent court.

2. If the reasons requiring deduction from salary are multiple, then, deduction may in no event exceed 50 per cent of the wage.