Dubai: Can your employer reduce your salary?

Question: A group of us work for a mainland company in Dubai. We have been asked to sign new contracts, which is not the same as we accepted our current jobs for. The basic salary in the new contract is significantly lower than the original one we signed. Is this legal? If we refuse to sign the contract and lose our jobs, can the dismissal be considered arbitrary?

Answer: Pursuant to your queries, it is assumed that your employment is under a limited duration contract. Therefore, the provisions of Federal Decree Law No. 33 of 2021 on the Regulations of Employment Relations, Ministry Resolution No. 27 of 2023 Regarding the Extension of the Deadline for the Conversion of Employment Contracts and Administrative Resolution No. 38 of 2022 Concerning the Guidelines for Implementing Ministerial Resolution No. 46 of 2022 Regarding Work Permits, Offer Letters and Employment Contract Forms are applicable.

In the UAE, the Current Employment Law came into force on February 2, 2022, and the Federal Law No. 8 of 1980 which was in existence till then was repealed. However, certain adjustments were made related to the conversion of the employment contract of employees to adapt to the Current Employment Law. An unlimited period employment contract which was registered during the regime of the Previous Employment Law had to be converted to a limited period of employment contract to suit the provisions of the Current Employment Law and the said adjustments had to be completed by all employers on or before February 1, 2023. This is in accordance with Article 68(2) of the Current Employment Law, which states "Employers shall within (1) one year from the date of entry into force of this Decree-Law, adjust their respective positions and change the unlimited term of employment contract to limited-term employment contracts, in accordance with the conditions, controls and procedures set forth herein. Such period may be extended by the Minister for other periods as dictated by the public interest.”

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However, the aforementioned period to convert an unlimited period of employment contract to a limited period of employment contract was extended up to December 31, 2023. This is in accordance with Article 1 of the Ministerial Resolution No. 27 of 2023, which states, "Pursuant to the provision of Article 68 of Federal Decree Law No.33 of 2021 referred to above, we have extended the deadline for employers to rectify their current status regarding the conversation of their employees' employment contract from unlimited to limited employment contracts until December 31, 2023."

Moreover, an employer while converting an unlimited period of employment contract to a limited period of employment contract may not change the existing terms and conditions of the employment unless it is more advantageous to its employees. This is under Article 65 (5) of the Current Employment Law, which states, "The employer may not review the terms and conditions of a valid employment contract concluded with the employee prior to the promulgation of this Decree-Law, with the intent to apply the provisions hereof, unless such amendments are for the greater good and benefits of the employee. The employment contract may be updated after its expiration in accordance with the provisions of this Decree-Law."

Based on the aforementioned provisions of law, if you and your colleagues’ employment contracts are converted from unlimited period of employment contracts to limited period of employment contracts, your employer may not change the terms of employment unless the changes are more advantageous to you and your colleagues.

Furthermore, your employer may not force you and your colleagues to sign the revised employment contracts. This is under Article 14(1) of the Current Employment Law.

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