I work for a company with very strict rules where the owner deducts money from our monthly pay as a fine for not working hard enough. One person only received half their pay, as they accidentally damaged a piece of equipment even though it was not major damage and he fixed it himself. We don't consider this fair as we are doing our best and only getting part of our salaries is causing us difficulties. Some people are now behind on their loans. Is our employer allowed to do this? SP, Dubai
An employer is not permitted to randomly reduce an employee’s salary just because they feel like doing so. UAE Labour Law has guidance regarding disciplinary steps that can be taken and there are limits. Article 104 of the law states: “The fine may be a specific amount or an amount equal to the wage of the worker for a specific period. The fine prescribed with regards to one breach may not exceed the wage of five days. Furthermore, for the settlement of the fines imposed on the worker, a maximum amount equal to the wage of five days may be deducted from the wage of the worker per month.”
It is expected that fines are only applied for good reason and this should only be in cases where there is a defined monetary cost. If an employee is underperforming, their manager should address this in a professional manner by giving appropriate warnings. A company cannot just reduce a salary on a random basis for this reason.
The law also makes it clear that fines must be properly documented; per Article 105: “Fines imposed on workers shall be recorded in a special register along with the cause and circumstances of imposition thereof as well as the name and wage of the worker. A special account shall be allocated therefore and the monthly proceeds thereof shall be used for the social welfare of the workers in accordance with the decisions issued by the Minister of Labour and Social Affairs in this regard.”
SP and his colleagues can register a case against the employer with the Ministry of Human Resources and Emiratisation for the unlawful deduction of salary and can also take advice from their local Tasheel office.
I work for a government department and my basic salary is Dh15,000 per month. Yesterday we received notification that from August 2019 our contracts will fall under a particular Ministry and my current salary will be split into a basic of Dh7,000 and an allowance of Dh8,000. This is currently my fourth year in this job. My question is, if I accept the new offer with the basic of Dh7,000, how will it affect my gratuity going forward? If I leave next year, will my gratuity for five years be based on Dh7,000 for five years, even though for four years my basic was Dh15,000, or will it be Dh15,000 for four years and based on Dh7,000 for one year. RM, Abu Dhabi
When it comes to the calculation of the end-of-service gratuity it is the basic salary at that time that is taken into consideration, not any figures payable in previous years, whether higher or lower. This is set out in Article 134 of UAE Labour Law: "Without prejudice to the provisions of certain laws on the pensions and retirement benefits granted to workers in certain establishment, end of service gratuity shall be calculated on the basis of the last wage due to monthly, weekly and daily - paid workers.”
This means that on leaving service RM’s gratuity will be based on the basic salary of Dh7,000 per month only. An employer can choose to pay more but this is rare and it is common for a person’s salary to be split in this way, although I would expect to see a basic salary forming some 60 per cent of the total as a minimum.
RM needs to bear in mind that UAE Labour Law does not apply to Government employees, although it is generally adopted. Article 3 of UAE Labour Law states: “The provisions hereof shall not apply to the following categories: a - Employees and workers of the Federal Government and the governmental departments in the Emirates, members of the State, the employees and workers in public entities and institutions, whether Federal or local, and employees and workers appointed for governmental , Federal and local projects.” This means that a federal employer does not have to comply with the guidelines and employees cannot register a case with the Ministry of Human Resources and Emiratisation.
As the guidelines in respect of annual leave and end of service gratuity are generally followed it is highly likely that he would be due a gratuity payment in accordance with the Labour Law and this is generally the case.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE
The advice provided in our columns does not constitute legal advice and is provided for information only
