UAE: Instances When Employer Can Withhold or Deduct Employee's Salary
In the UAE, where approximately 90 percent of the workforce comprises expatriates employed in both public and private sectors, there are specific circumstances in which an employer can withhold or deduct an employee's salary.

According to Navandeep Matta, a senior legal associate at Nasser Yousuf Al Khamis Advocates and Legal Consultants, Article 25 (1 & 2) identifies seven instances where an employer can withhold or deduct a worker's wage:

  1. Redemption of loans granted to the worker, up to the maximum monthly deduction percentage specified in the article. This requires the written consent of the worker and does not involve any interest.
  2. Redemption of excess amounts paid to the worker, provided that the deducted amount does not exceed 20 percent of the wage.
  3. Deductions for calculating contributions to bonuses, retirement pensions, and insurance as per the applicable legislation in the UAE.
  4. Worker's contributions to the Savings Fund at the establishment or approved loans payable to the Fund, as authorized by the Ministry.
  5. Installments for social projects, benefits, or services provided by the employer and approved by the Ministry, with the worker's written agreement.
  6. Deductions resulting from violations committed by the worker, not exceeding 5 percent of the wage.
  7. Debts arising from a court judgment, limited to a maximum of one-quarter of the worker's wage. However, for alimony debts, more than one-quarter of the wage may be deducted. In case of multiple debts, the payment amounts are distributed based on priority categories.

Matta further stated that in situations where multiple reasons for deduction or withholding exist, the total percentage of deduction and/or withholding should not exceed 50 percent of the wage.

He advised workers to clarify the provisions regarding annual return tickets before signing an employment contract, as employers are not allowed to directly or indirectly deduct travel allowances from the worker's salary. Any deduction beyond the specified limits requires approval from the competent court.

It is important to note that deductions exceeding the authorized limits are not permissible, except with the approval of the competent court, according to Matta.

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