Both employers and employees in the UAE have a responsibility to adhere to the Labour Law. Image Credit: Gulf News Archive

Terminated for refusing to take pay cut

Question: I have worked as a sales manager in a company in Dubai for three years on an unlimited period contract. My compensation package includes salary and bonus. A month ago, my employer informed me that my salary and bonus will be reduced as the company wants to downgrade my position from sales manager to an ordinary sales executive.

I was not given a reason for the decision. Later, I found out that the employer had appointed one of his relatives to my position and sent my objection through email. The company is now pushing me to resign. A year ago, the company reduced my salary, but I accepted the cut because I had taken a bank loan and needed to pay the monthly instalments.

My manager has now informed me that if I do not accept the reduction in salary and accept the downgrade in my position I should leave work immediately. Is the company legally entitled to terminate my services in this manner?

Is this not arbitrary dismissal? An internal employment contract I signed with the company stipulates a three-month notice period, but my employer says that the notice period shall be for 30 days only as per the UAE labour law, which supercedes the internal contract.

Answer: Under the UAE labour law, an employer is not entitled to terminate an employee for not accepting a salary reduction and downgrading in his position. Therefore, such a termination of an employee may be deemed by the Dubai Cassation Court as arbitrary dismissal for which the employee is entitled to compensation.

Regarding the notice period, if the employer fails to honour the three-month notice period stipulated in the internal employment agreement, the employer is obliged to compensate the questioner for the period of three months. Both the employer and employee may agree to increase such a notice period as per the UAE labour law. In case of such an increase, both parties shall abide by the rules stated in Article 118 of the law.

A contract shall continue to be valid throughout the notice period, and shall be considered terminated on the expiry of the notice period. The worker shall be entitled in respect of the period of notice to full pay calculated on the basis of his last remuneration and he shall be required to perform his duties in that period if the employer so requests.

Finally, both parties cannot dispense with the notice period, or reduce the period of notice, but may agree to increase it.


Malicious complaint

Question: I have been working in a company for more than four years. A month ago, my company filed a criminal complaint accusing me of embezzling money and disclosing company secrets to a competitor.

The police station forwarded the complaint to the public prosecution, and then to the criminal court. The court appointed an expert to prepare a report. Now, the complaint is under investigation and my passport is in police custody.

My employer has suspended me for the duration of the legal proceedings. My salary for the period has also been withheld. As per the UAE labour law, does the employer have the right to suspend me and not pay me my salary?

In any case, I have not received my salary for more than six months. Do I have the right to seek compensation? If the criminal court finds me not guilty, do I have the right to file a criminal case against my employer for maligning my reputation?


Answer: Article 112 of Federal Labour Law No 8 of 1980 states: “A worker may be temporarily suspended from work if he is accused of committing a deliberate offence involving assault on person. or property, or crimes relating to honour and honesty, or the offence of unlawful strike.

The period of suspension shall run from the date on which the incident is reported to the competent authorities till the latter have made a decision in the case.

The worker shall not be entitled to his remuneration in respect of the period of suspension. Where it is decided not to take the worker to court, or if the worker is acquitted, he shall be reinstated and shall be paid his remuneration in full for the period of suspension if it was maliciously contrived by the employer.”

Finally, as per the UAE labour law, the questioner has the right to file a criminal case against the employer in case the criminal court finds the questioner not guilty. The questioner also has the right to file a civil case in this regard to demand proper compensation for damages.


Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.