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Procedure for Implementing a Reduced Salary Due to Cash Flow Challenges
August 12, 2024

Introduction:

If you need to reduce an employee’s salary due to cash flow difficulties, this must be approached with caution. Unless a reduction is explicitly mentioned as an exception in the employee’s contract, you are required to submit a customer service request to the Ministry of Human Resources and Emiratisation (MOHRE). As part of this process, MOHRE may request evidence of the employee’s consent along with other supporting documents.

Employee Consent and Documentation:

Prior to initiating a salary reduction, you must obtain written consent from each affected employee. This consent should clearly state the following:

  • Reason for reduction: Clearly explain the cashflow issues necessitating the salary reduction.
  • Reduced salary amount: Specify the new, lower salary amount.
  • Duration of reduction: Define the specific timeframe for the reduced salary.
  • Employee acknowledgement: Include a statement confirming the employee’s understanding and agreement with the terms of the salary reduction.

Steps to Submit a MOHRE Customer Service Request

Assuming you have registered for the Wage Protection System (WPS) through your bank and have been consistently filing WPS reports each month, you will need to follow these steps:

  • Visit the MOHRE inquiry portal at this link.
  • Enter your trade licence details and the emirate where your company is registered. This will allow you to retrieve your MOHRE Establishment Number.
  • Once you have obtained your MOHRE Establishment Number, you can proceed to submit your customer service request through the MOHRE mobile application. The app can be downloaded here.

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Information provided on the site is merely guidance that may change in line with UAE law and regulations. Users must not consider this to be financial advice or their sole resource when making any financial decision. Theta7 is a trading name for THETA 7 Accounting & Bookkeeping L.L.C, an authorised & licensed accounting firm under the Ministry of Economy and the Federal Tax Authority of the United Arab Emirates.
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