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;
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