Ask Gulf News: Can employers reduce salaries and change roles during restructuring in the UAE?
UAE law: Salary cuts and role changes allowed only with written employee consent
Question: I run a company with several employees. I would like to know whether an employer can downgrade an employee’s position with a salary reduction due to restructuring. Also, what does a standard final settlement include?
Answer:
An employer may downgrade an employee’s position and reduce their salary only if the employee agrees to the change in writing. Without written consent, such changes are not permissible. Any amendments to the employment contract must be signed by the employee.
Article 24 of the Labour Law states that a worker receiving a monthly wage may be transferred to another wage structure (such as daily, weekly, hourly, or piecework) only if they agree in writing, without affecting the rights they accrued while on a monthly salary.
A final settlement typically includes the following:
End-of-service gratuity, calculated on the basic salary as follows:
21 days’ wage for each year of the first five years of service
30 days’ wage for each additional year of service
Notice period payment, as per the labour contract, calculated on the full salary
Payment for accrued annual leave, calculated on the basic salary, regardless of the duration
Any unpaid salary, or part thereof, paid in full
Flight ticket, if the employee is terminated (not applicable in case of resignation)
Any additional entitlements agreed upon by both parties or required by law, such as documented overtime, commissions, or bonuses
