Reduce Employee Salary in UAE: In the evolving business landscape of the UAE, employers are sometimes forced to make tough decisions including salary adjustments. But can you legally reduce employee salary in UAE?
As of 2025, the UAE Labour Law permits salary changes only under specific conditions and with mutual agreement. Employers cannot make unilateral salary reductions without legal risk.
Reduce Employee Salary in UAE Labour Law Update 2025
What the UAE Labour Law Says About Salary Reduction
Reduce Employee Salary in UAE: Under Federal Decree Law No. 33 of 2021, which remains in force in 2025, Article 65 clearly outlines the obligations related to salary:
“An employment contract cannot be modified unless both parties agree to the change in writing.”
This means any attempt to reduce employee salary without the employee’s signed consent is considered a labour law violation.
When Can Employers Reduce Salary in UAE?
Reduce Employee Salary in UAE: A salary reduction is only allowed if it satisfies the following conditions:
1. Mutual Consent
Both the employer and employee must agree in writing to the salary reduction. This usually involves:
Signing an addendum to the existing contract
Updating the employment contract in MOHRE records
2. Valid Business Justification
Employers must have valid economic, restructuring, or performance-based reasons. MOHRE may review such cases during complaints.
3. Transparency
The employer must clearly explain the reasons and future expectations (e.g., temporary salary cut due to project loss).
4. Notification Period
Employees must be given adequate notice period, typically 30 days, unless a different term is agreed upon.
Legal Process to Reduce Employee Salary in UAE
Reduce Employee Salary in UAE: Here is a step-by-step guide for HR teams and employers:
Step 1: Discuss With the Employee
Schedule a meeting to explain the business reason behind the proposed salary change.
Step 2: Draft an Amendment Letter
Prepare a written amendment to the existing contract, including:
New salary amount
Effective date
Reason for change
Temporary or permanent nature
Step 3: Get Signed Approval
Both parties must sign the amendment voluntarily. It is advised to obtain the employee’s signature on every page.
Step 4: Update MOHRE System
Log in to the MOHRE portal, select “Contract Amendment,” and upload the revised contract or salary structure.
Step 5: Keep Proper Records
Retain all signed documents, email communication, and salary change records for at least 2 years.
What Employers Cannot Do
Reduce salary without consent
Force employees to sign amendments under threat
Offer cash salary below UAE minimum wage (as per industry)
Reduce benefits (e.g., housing or travel allowance) if not clearly stated in new contract
Reduce salary based on personal conflict or discrimination
Employee Rights Regarding Salary Reduction
Reduce Employee Salary in UAE: If you’re an employee and your employer attempts to reduce your salary without consent, here’s what you can do:
1. Refuse to Sign
You are not legally bound to accept any pay cut unless you agree in writing.
2. File a Complaint With MOHRE
Call 80060 or use the MOHRE app to lodge a salary dispute complaint.
3. Ask for a Valid Reason
Demand transparency regarding the reason for the reduction economic downturn, restructuring, etc.
4. Seek Legal Advice
Especially if the employer is non-compliant or retaliatory.
Can You Reduce Salary Temporarily?
Reduce Employee Salary in UAE: Yes, but only under mutual agreement. Many companies use temporary salary reductions during periods of:
Economic downturn
Project delays
Force majeure (e.g., natural disasters, pandemics)
Temporary reductions must have:
A clear start and end date
Restoration clause (return to original salary)
Agreement signed by both parties
Example Scenarios: Salary Reduction in UAE
Legal Scenario:
A logistics company loses a major client and informs staff of a 15% salary reduction for 6 months. All employees sign a consent letter. The contract is updated on the MOHRE portal. Legal and valid.
Illegal Scenario:
A small trading company cuts staff salaries by 25% without any written communication or consent. When employees protest, they are threatened with termination. Illegal and subject to MOHRE penalties.
Frequently Asked Questions
Q: Can salary be reduced during probation?
Yes, but the employee must still agree and sign a revised offer or probationary agreement. The updated contract must be reflected in the MOHRE system.
Q: Can an employee resign after salary reduction?
Yes. Employees have the right to resign with proper notice if they disagree with the salary change.
Q: Is MOHRE involved in salary change approvals?
MOHRE does not pre-approve changes but monitors compliance when disputes are filed.
Q: What if I already signed a salary reduction under pressure?
You can still file a grievance with MOHRE, especially if the signature was obtained under duress or not properly documented.
Minimum Wage and Allowances in 2025
Reduce Employee Salary in UAE: Though the UAE does not have a nationwide fixed minimum wage, industry-specific benchmarks are applied by employers and monitored by MOHRE.
Make sure that your salary even after reduction meets these benchmarks. Examples:
Cleaners & domestic workers: AED 1,200 – AED 1,500
Skilled workers: AED 2,000 – AED 3,000 minimum
Professionals (IT, HR, Admin): AED 4,000 – AED 7,000+
Final Thoughts
Reducing an employee’s salary in the UAE is not a decision that can be taken unilaterally. The 2025 UAE Labour Law is clear any salary reduction must be agreed upon in writing by both employer and employee. Failure to follow proper procedures can result in labour disputes, company penalties, and damage to the employer’s reputation. For employees, knowing your rights ensures you’re not exploited during tough times.