Questions & Answers
Reducing the salary of an employee before termination
Hello Nicole,
Greetings!
I have been working in a private company in Dubai for the last 13 years under an unlimited contract. Recently, they have made my position redundant.
I am now serving 3 months notice period as per the labour contract (2 months already served, I am now in 3rd and last month).
My employer has put me on forced paid leave to adjust my notice period against leave days balance. I need some clarification per below, please.
1. The employer is paying me a full salary for a notice period of 3 months. However based on the recent announcement from the Ministry of Labor (for Private Co. employees), can my employer reduce my salary temporarily/permanently in this last month of notice period?
2. If the answer to question 1 is YES, how will it impact the calculation of my end of service benefits like gratuity or leave balance encashment? Will it be recalculated based on the revised (reduced) salary?
3. Am I eligible to claim any other Termination/redundancy pay apart from gratuity and leave balance encashment?
Hi,
Sorry to hear about your predicament. My response is below:
1. "My employer has put me on forced paid leave to adjust my notice period against leave days balance."
This is illegal and against labour law. The leave balance will have to be compensated with cash and cannot be set off against the notice period.
2. The employer cannot reduce the salary of an employee under the new ministerial resolution passed on March 26, unless the amended salary is reflected in an amended employment contract registered with the labour regulator.
Please note only the fixed basic part of the salary is permitted to be reduced as per the resolution. All other emoluments such as housing, travel...etc., have to be paid in full.
3. Assuming that the employer amends the terms of the contract to reflect the change in salary as mentioned in 2 above, your EOSB will be calculated according to the new salary.
4. It is unlikely that the labour authorities will grant you any severance, redundancy pay given the economic scenario.
You can only claim gratuity, leave encashment, and any other amounts due from the company to you.
Hope this clarifies.
