UAE tightens salary rules as pressure on jobs market mounts

The UAE is tightening salary payment rules as businesses grapple with the economic fallout of the US-Israeli war on Iran and some are forced to cut jobs or wages.

From June 1 private sector employers must pay salaries on the first day of each month. The previous Wage Protection System allowed a grace period of 15 days before a payment could be flagged as late. This has been toughened up by the Ministry of Human Resources and Emiratisation, which will now send companies notifications on day 2 and penalties after the 10th day.

Since the conflict began in February, human resources experts have reported that more companies are delaying salaries.

The new penalties “are designed to be more and more serious depending on the length” of the delay, said Sarah Brooks, founder of employment consultancy Fikrah HR.

All companies registered with the ministry must distribute salaries through the approved Wage Protection System or other authorised channels, and must provide documentation confirming payment.

Businesses say the standardised framework reflects the UAE’s broader push for stronger governance and financial transparency.

“For SMEs in particular, it introduces a new level of financial accountability,” said Ayham Gorani, CEO of UAE fintech Pemo.

“Many growing businesses still manage payroll through fragmented or manual processes, which creates unnecessary risk under tighter deadlines. Companies can no longer afford to wait until the last few days of the month to understand their cash position.”

Employees across the UAE – especially in tourism-related sectors – have reported cost cuts and layoffs since the start of the conflict.

Austerity measures are continuing, according to Brooks. Some businesses were hit immediately; others that held cash reserves are now burning through them.

“There may be more layoffs incoming,” she said.

Workers sent home on unpaid leave when the conflict began have since returned but prolonged disruption has kept revenues low, prompting companies to reassess headcount.

“Companies are strategically looking at their staffing to assess whether they need everybody. We also typically see a marginal lull in business over summer,” Brooks added.

To find out more about the updated Wage Protection System and who might be exempt, watch the video

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