Employment in the UAE During Uncertain Times

Welcome back to Lawgical with Ludmila, where we untangle the legal knot so that you do not have to.

I am Ludmila Yamalova, a US-qualified lawyer based in Dubai. In each episode, we break down complex law and deliver practical insights that you can actually use.

Today’s topic is employment—specifically, employment in the context of current regional and geopolitical developments that are impacting employment relationships in the UAE.

Regional Context and Economic Impact

The region is currently experiencing a period of heightened geopolitical tension, particularly stemming from the ongoing US–Iran conflict, which has already had direct and indirect implications across the Gulf.

In recent weeks alone, the UAE has seen aerospace disruptions, temporary airport closures, drone and missile interceptions, and disruptions to oil shipping and logistical infrastructure. More broadly, the conflict has driven oil prices upward, disrupted global supply chains—particularly through the Strait of Hormuz—and created volatility across financial markets.

These developments are not theoretical. They are already translating into real economic impact.

In the UAE, key sectors are feeling the strain, including:

• Tourism and hospitality, with declining bookings and cancellations
• Aviation and travel, due to airspace instability
• Logistics and international trade, due to shipping disruptions
• Retail, events, and F&B, driven by reduced consumer activity

In response, the UAE government has introduced economic support measures, including a AED 1 billion relief package. However, despite these measures, many companies are making less money—or none at all—while their legal and financial obligations remain unchanged.

Impact on Employment Relationships

Those obligations include:

• Salaries
• Rent
• Supplier payments
• Loan obligations

The tension is most visible in employment relationships.

On the ground, we are seeing:

• Employees placed on unpaid leave
• Forced use of annual leave
• Requests to continue working without pay
• Delayed or withheld salaries

In many cases, these arrangements are undocumented, not agreed upon, and not clearly communicated.

This raises important legal questions:

• What is legally allowed?
• What options exist?
• How should these situations be managed?

Employees are generally considered the weaker party in employment relationships, particularly because they depend on monthly salaries. Therefore, they are often the most affected.

Legal Framework in the UAE

In the UAE, employment is governed by different frameworks:

Private Sector

• Federal Decree Law No. 33 of 2021 (UAE Labour Law)
• Cabinet Resolution No. 1 of 2022 (Executive Regulations)

Additionally:

• DIFC and ADGM each have their own employment laws

Public Sector

• Federal Decree Law No. 49 of 2022 (Human Resources Law)
• Emirate-level HR frameworks

Across all frameworks, the principles are broadly similar.

Key Principle: Payment of Wages

Salary payment is a fundamental obligation.

This includes:

• Payment of wages
• Full amount
• Timely payment
• Proper method (e.g., Wage Protection System where applicable)

Failure to meet these obligations is a breach of contract.

Employment Contracts and Breach

Every employment relationship is governed by a contract—written or oral.

The core exchange is simple:

• Employee provides services
• Employer pays salary

If a company:

• Reduces salary
• Delays payment
• Stops payment
• Changes terms

…it is breaching the agreement—unless the employee agrees.

Consent: Express vs. Implied

Changes require employee consent, which can be:

Express Consent

A written agreement clearly amending terms.

Implied Consent

Acceptance through conduct (e.g., accepting reduced salary without objection).

However:

• Implied consent is fact-specific
• Courts apply a high threshold
• Non-payment alone is never considered consent

Practical Scenarios

Common employer actions include:

• Salary reductions
• Unpaid leave
• Forced annual leave
• Working without pay
• Delayed payments

Legally:

• Employees are priority creditors
• Salary obligations come before other payments

Employee Options

If salary is not paid:

1. Resign Without Notice

• Allowed if employer breaches contract
• Employee still entitled to all dues

2. Continue Working (With Documentation)

If you choose to stay:

• Document everything
• Define duration
• Clarify payment expectations

Importance of Documentation

Any arrangement should include:

• Clear terms
• Defined duration
• Payment obligations
• Remedies in case of breach

Even a simple written agreement is sufficient.

You may also include:

• Legal cost recovery clause
• Enforcement terms

Alternative Arrangements

Possible negotiated solutions:

• Temporary salary reduction
• Deferred salary
• Unpaid leave
• Use of annual leave
• Payment from end-of-service benefits
• Equity or partnership arrangements

All must be mutually agreed and documented.

Unpaid Leave and Flexibility

Unpaid leave can work if:

• Duration is defined
• Terms are documented
• Additional benefits (e.g., service continuity) are considered

Job Offers and Withdrawals

A job offer is a contract.

If withdrawn:

• It may constitute a breach
• However, proving damages is difficult

Courts require:

• Actual, measurable loss
• Clear evidence

Companies may also rely on:

• Force majeure as a defense

Conclusion

The legal framework in the UAE remains clear:

• Work must be paid
• Contracts cannot be changed unilaterally
• Salary obligations cannot be suspended informally

At the same time:

• Businesses are under real pressure
• Employees are vulnerable

The solution lies in:

• Communication
• Documentation
• Practical, legally sound arrangements

Because in times like these, the real risk is not the crisis—it is how you respond to it.

That is all for this episode of Lawgical. If you found this useful, you can find more on our website: lylawyers.com. We are also on Apple Podcasts and Spotify. And for the full experience, you can watch the video podcast on YouTube.

Until next time: stay informed, stay safe, and keep things Lawgical.