As business conditions in the UAE start to stabilise, many employees are asking an understandable question: what happens to the tough measures introduced during the crisis? Salary cuts, unpaid leaves, and redundancies were common – and questions about whether those measures need to be reversed, or can be challenged, are becoming increasingly relevant. This article sets out where employers and employees stand legally.
Reversing Temporary Salary Cuts
It depends on how the salary cut was agreed in the first place.
Where a reduction is clearly labelled as temporary – i.e. tied to a specific timeframe or to the circumstances that gave rise to it , the expectation is that once that timeframe expires or those circumstances no longer exist, salaries are restored to their original level. For example, if it was agreed that a three‑month reduction will apply, then such reduction should end after the three months lapse.
it is worth noting here though that restoring salaries to their original level doesn’t usually mean repaying the amounts that were already deducted. The key issue, however, is what was actually agreed between the employer and employee. Salary reductions of this kind should result from mutual consent – not be unilaterally imposed by the employer. How clearly that agreement was framed, and what was communicated and accepted at the time, carries real legal weight.
Temporary or Permanent: How the Agreement is Worded
Whether a salary reduction is treated as temporary or permanent comes down entirely to what was agreed upon and how the agreement was worded.
If an employee agreed to a salary reduction with no mention of it being temporary or conditional, the employer may later argue it was a permanent change. If, on the other hand, the agreement clearly stated that the reduction is for a limited period or tied to specific conditions, it will generally be treated as temporary. What was written, agreed, and accepted at the time is what carries real legal weight.
Redundancies After a Quick Business Recovery
Redundancies are not uncommon during period of economic crisis. The question whether an employee should be reinstated following a business recovery, is from a legal perspective, secondary to a more fundamental one: was the termination lawful in the first place – i.e., at the time it happened?
Where an employer had a valid reason for termination, such as redundancy and followed the required process under the Labour Law including notice period obligations, end‑of‑service benefits, and all other entitlements, the termination is likely to stand, regardless of whether the business subsequently recovers.
Challenging Layoffs After Recovery
Challenging a valid termination in practice is difficult. Under UAE labour law, compensation for unlawful termination is generally awarded where termination is found to have been retaliatory pursuant to Article 47 of Labor law -. A company’s subsequent and quick recovery, on its own, is not sufficient grounds to successfully challenge a redundancy that was otherwise carried out in accordance with the law.
Salary Cuts Agreed Under Pressure
Where an employee accepted a salary reduction, the law generally assumes that consent was given voluntarily. Challenging that assumption requires more than general fear of job loss – an employee must demonstrate real coercion or undue pressure at the time the agreement was reached. Courts assess each case on its own facts, but without clear and compelling evidence of forced consent, such challenge is difficult to sustain.
The Takeaway
The issues that arise as an aftermath of a crisis – whether around salary reductions, redundancies, or the validity of agreements reached – ultimately turn on the same underlying principles: what was agreed, how it was documented, and whether the proper legal process was followed. Rights and obligations are shaped not by how circumstances look in hindsight, but by what was communicated and accepted at the time.
For employers and employees alike, clear documentation and careful wording during a crisis are not merely good practice – they are what determine legal outcomes long after conditions have improved.
Seek Legal Counsel:
Should you wish to discuss or have any questions or require assistance with any employment matters relating to the above, please do not hesitate to reach out to Partner, Alia Al Mulla and Senior Associate, Bassem Ehab.