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When Can Private Companies Deduct Salaries in the UAE?

Human Resources Ministry Outlines Legal Grounds and Permissible Deductions

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Pavitra Shetty

Published on January 8, 2025, 19:39:11

Ministry Human Resources Emiratisation MoHRE clarified

The Ministry of Human Resources and Emiratisation (MoHRE) has clarified the legal grounds for salary deductions in the UAE private sector. Employers may deduct wages only under specific conditions, with varying percentages based on the nature of the deduction.

The UAE labour law and its executive regulations safeguard employees' rights to receive their agreed-upon salaries on time, provided job duties are fulfilled. Below are the cases where deductions are permissible:

Permissible Salary Deductions

  1. Loan Repayments

Deductions for employee loans are allowed within the legal monthly limit, provided the employee gives written consent and the loan is interest-free.

  1. Recovery of Overpayments

If an employee has received excess payments, the employer may recover up to 20% of the worker’s monthly wage.

  1. Pension and Retirement Contributions

Contributions to retirement and pension plans or social insurance, as per national legislation, are deductible.

  1. Savings Fund Contributions

Deductions for employee savings funds or loans within these funds are allowed with MoHRE approval.

  1. Social Projects and Benefits

Employers may deduct instalments for social projects, benefits, or services with the employee’s written consent

  1. Disciplinary Fines

Employers can deduct fines for employee violations per approved disciplinary regulations, up to 5% of the monthly wage.

  1. Court-Enforced Debts

Court-mandated debts can result in deductions of up to 25% of wages, except for alimony payments, which may exceed this limit. Multiple debts are prioritized for distribution.

  1. Compensation for Damages

Employers may deduct up to five days’ wages per month for damages caused by employee errors or violations unless a competent court approves a higher amount.

Maximum Deduction Limit

Regardless of the reasons, total deductions cannot exceed 50% of an employee’s monthly wage.

Wage Protection and Compliance

Salary Payment Regulations

As per Ministerial Resolution No. 598 of 2022, all employers registered with MoHRE must pay salaries via the Wage Protection System (WPS) by the due date. Salaries are due by the first day of the following month after the contract-specified payment period ends. Employers are considered late if wages are unpaid 15 days after the due date.

Minimum Wage Requirements

The UAE labor law does not set a minimum wage but requires salaries to cover basic employee needs.

Payment Method

Salaries must be transferred through banks, exchange companies, or financial service providers in UAE dirhams or any agreed-upon currency.

WPS Exemptions

Certain categories of employees are exempt from WPS requirements, including:

  • Employees with wage-related complaints referred to the judiciary.

  • Employees under an absconding report.

  • Newly hired employees within their first 30 days.

  • Employees on unpaid leave (with evidence).

  • Workers on fishing boats or public taxis owned by UAE nationals.

  • Employees of banks, financial institutions, and places of worship.

Employees can report unpaid wages or salary-related concerns to MoHRE or file a complaint through the “My Salary” service. The ministry reiterates that compliance with the labor law is mandatory to avoid legal consequences.

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