UAE Ministry Announces New Rules for Companies to Adjust Work Contract, Lay Off Staff, Reduce Salary

In line with the severe impact of the pandemic among communities and businesses, the Ministry of Human Resources and Emiratisation (MoHRE) has authorized private sector businesses affected by the outbreak to restructure the contractual relationship with employees. Some of these changes allow private companies to lay off employees, grant paid/unpaid leaves, or restructure employee salaries.

Furthermore, as per the Ministry, the contractual changes are to be made in mutual agreement and through gradual procedures.

uae private companies to reevaluate employee job contracts

UAE Ministry Sanctions Private Sector to Restructure Contracts in Light of Pandemic

As per the decision of the Ministry of Human Resources and Emiratisation, businesses affected by precautionary measures taken to prevent the spread of coronavirus and seeking to reshuffle their business structure shall gradually adopt the following actions, in agreement with their employees:

  • Implementing a remote work system
  • Granting employees paid leave
  • Granting employees unpaid leave
  • Temporarily enforcing pay cuts during the prescribed period
  • Permanently reducing salaries

Businesses with Excess in Staff

The decision which took effect on March 26, 2020 states that affected businesses having more employees than they need must register the additional staff on the virtual job market so that they can be recruited by other businesses.

Meanwhile, these businesses are still required by the ministry to provide these employees with accommodation and other dues, except for salary, as long as they are in the country or until they have successfully transitioned to a new job.

Below is the post from the Twitter account of MOHRE regarding this announcement:


Further, under Article 4 of the decision, businesses seeking to recruit during the suspension of overseas hiring shall be required to comply with the following:

  • Post their vacancies on the virtual job market, search through available data, and select whoever meets the requirements.
  • Apply for a work permit from the ministry, which will be provided through online systems, and hire selected candidates.

Businesses can choose from a transfer work permit of the employee to a new employer, temporary work permit or part-time work permit.

Temporary Reduction in Salary

Under Article 5 of the ministerial decision, businesses seeking to temporarily reduce the salary of an employee during the said period shall sign an additional document. The validity of this temporary agreement is limited to the agreed-upon term, or as long as this resolution remains valid, whichever is applicable.

Note, however, that this document can be renewed in the agreement of both parties. It shall be issued in two copies, with one copy for each party. The employer should be ready to present it to the ministry whenever requested.

Permanent Reduction of Salary

And as per Article 6, businesses seeking to permanently reduce the salary of an employee should first obtain the ministry’s approval to do so by applying for ‘change of a job contract’s data’ according to effective procedures.

Job Seekers

And finally, under Article 7 of the ministerial decision employees in the country looking for jobs should register with the virtual job market and apply for available jobs listed by registered organizations based on their qualifications and experience.

The provisions of this resolution are only applicable to expatriate employees and during the period of applying the above-mentioned precautionary procedures.

Though this may come as a big blow to expatriates, the MOHRE has also created certain conditions that would lessen the impact of the restructuring due to the coronavirus pandemic, which is affecting almost all global markets at the moment.

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