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Can You Claim Compensation for Unfair Dismissal after a Salary Cut?

JO
James O'Connor
Litigation & Dispute Resolution Analyst
|
18 February 2026·1 min read
Close-up of an employment contract document with a pen and calculator on a desk, representing salary deductions and termination disputes

Article 25 of the labor law states that no amount may be deducted from a worker’s wages except in cases specified by law. This means that the worker has the right to request compensation for arbitrary dismissal, and the court will determine whether the employer’s actions fall under one of the reasons for illegitimate termination of the worker’s service as specified in Article 46.

AI Summary

The article addresses the legal issue of whether employees can claim compensation for unfair dismissal after experiencing salary cuts in the UAE. The legal framework is anchored in Article 25 and Article 46 of the labor law, which prohibit unauthorized wage deductions and define unlawful termination grounds. Courts may award compensation up to three months' wages based on job type, service length, and damages incurred. Practically, workers must file claims within one year of termination, though exceptions exist for commission disputes with written agreements. This guidance primarily assists employees seeking to understand their rights following dismissal and salary reduction.

Generated by AI · Not legal advice

Key Takeaways
  • Article 25 of the labor law prohibits deductions from worker wages except in cases specifically permitted by law.
  • Workers may claim compensation for arbitrary dismissal if the court determines the termination was unlawful under Article 46.
  • Compensation for unlawful termination is capped at three months' wages calculated based on the worker's last salary.
  • The right to claim compensation does not affect entitlement to notice period allowance and end of service benefits.
  • Claims for compensation for unlawful termination must be filed within one year from the date the right became due.
  • Workers may still claim unpaid commissions if there is a written agreement or if the commission was consistently part of their salary structure.

Legal Background

According to Clause 1 of Article 25, if it is proven that the termination was unlawful, the employer is required to pay fair compensation to the worker, as determined by the competent court. This compensation will take into consideration the type of work performed and the amount of damage caused to the worker, as well as the length of their service. The amount of compensation should not exceed the worker’s wages for a period of three months, calculated based on their last salary.

Clause 2 of Article 25 does not affect the worker’s right to receive notice period allowance and end of service benefits, in accordance with the relevant provisions.

Righ to Claim Compensation

It is important to note that the right to claim compensation for unlawful termination is subject to a one-year statute of limitations. This means that if one year has passed from the due date of the right, neither party can make a claim. However, if there is a written agreement between the worker and the employer regarding commission for the last year of work, or if the commission was part of the worker’s salary and was consistently provided by the employer, the worker may still have the right to request it.

In summary, the labor law protects workers from arbitrary dismissal and provides them with the right to request compensation if the termination of their service is deemed unlawful by the court. The compensation should take into account the type of work performed, the length of service, and the amount of damage caused to the worker. The right to claim compensation is subject to a one-year statute of limitations, but there are exceptions for commission payments if there is a written agreement or if the commission was part of the worker’s salary.

Questions This Article Answers

What constitutes unlawful termination under Article 46 of UAE labor law?
This article covers this question in detail above. Read the full article for the complete answer.
How is compensation for unfair dismissal calculated in the UAE?
This article covers this question in detail above. Read the full article for the complete answer.
Can an employer legally deduct amounts from an employee's salary in the UAE?
This article covers this question in detail above. Read the full article for the complete answer.
What is the time limit for filing an unfair dismissal claim in the UAE?
This article covers this question in detail above. Read the full article for the complete answer.
Are end of service benefits affected by a claim for unlawful termination?
This article covers this question in detail above. Read the full article for the complete answer.
Can employees claim unpaid commissions after termination in the UAE?
This article covers this question in detail above. Read the full article for the complete answer.
JO
About the Author
James O'Connor
Litigation & Dispute Resolution Analyst

James O'Connor focuses on UAE civil litigation, arbitration, and enforcement of judgments. He covers ADGM and DIFC court procedures, commercial arbitration under UAE Federal Arbitration Law, and the practical steps involved in filing claims, enforcing awards, and managing debt recovery in the UAE.