As regional tensions begin to impact business, a question is surfacing across UAE offices, corridors and water coolers alike: could salary cuts be next?

For many employees, the concern is rooted in experience. From the global financial crisis in 2008 to the disruption of Covid-19, previous downturns saw companies move quickly to preserve cash, often through salary reductions, unpaid leave, or workforce cuts.

This time, however, the starting point is different.

Read more: No consent, no cut: The UAE salary rule employers can’t ignore

The UAE economy remains on solid footing. Growth is expected to hover around 4 per cent in 2026, supported by strong non-oil activity, while the population has surged past 11 million, reinforcing demand across sectors.

Yet even with that backdrop, sentiment can shift.

Justin McGuire, chairman of MCG Talent, a Middle East recruitment firm operating in the region since 2010, says that downturn or not, the legal framework leaves little room for interpretation.

“You cannot just cut someone’s salary because the market has turned,” McGuire told Gulf Business.

“Under federal law, any change to salary or core contract terms requires employee consent and an updated contract filed through the Ministry of Human Resources and Emiratisation (MOHRE),” he added.

That view is reinforced by legal experts, who point to the clarity of the UAE’s employment framework.

“An employer cannot reduce an employee’s salary without the employee’s express written consent,” says Luke Tapp, a leading employment lawyer and partner at Pinsent Masons.

Under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations, any change to core employment terms, including salary, must be agreed by both parties and documented in writing.

“The effect of these provisions is therefore that an employer must pay the employee’s salary in the contractually agreed amount, unless the employee has consented to a salary reduction in writing,” Tapp explains.

Crucially, external pressures do not change that position.

“War or geopolitical tensions do not, of themselves, create any legal exception to this rule,” he adds.

In practice, that means salary reductions, where they happen, are not imposed, but negotiated.

Employers typically outline commercial pressures and seek agreement, sometimes in situations where the alternative may be restructuring or job losses. Employees, however, retain the right to refuse.

As set out under UAE labour law, and highlighted by legal experts, where agreement cannot be reached, employers must either maintain existing terms or move towards termination, following due process and triggering notice periods and end-of-service obligations.

For companies, the greater risk often lies not in the decision itself, but in how it is executed.

WPS compliance

One of the most important considerations, especially for employers, is the UAE’s Wage Protection System (WPS).

The system monitors salary payments and compliance across onshore entities and certain free zones. Any discrepancy between contracted salaries and actual payments can trigger flags.

“If employers operating within these areas reduce salaries without notifying the WPS, this could trigger a breach of the WPS which will then result in operational and financial penalties,” Tapp says, noting that companies must ensure any changes are properly reflected in payroll systems.

The consequences for employers can be significant, including restrictions on business activities such as applying for visas, he adds.

In other words, salary cuts are not simply a contractual issue, they are a regulatory one, with direct implications for day-to-day operations.

A more uneven job market

Against this backdrop, the labour market itself was already entering a more uneven phase, even before the current regional situation began.

McGuire describes a growing divergence between sectors owing to current market forces. Technology, AI, infrastructure and government-backed projects continue to hire, supported by long-term investment, while other industries are slowing, with longer hiring cycles and tighter budgets.

With the current situation, McGuire says the risk of salary reduction is a possibility.

“The risk is real in pockets of the market — particularly in sectors exposed to geopolitical instability, delayed investment, or cash flow pressure.”

On the state of the overall jobs market, he says it “has not collapsed, but it is no longer easy at all.”

“The gap between top performers and everyone else is widening.”

For now, that leaves the UAE labour market in a delicate balance, supported by historically strong economic fundamentals, but navigating rising uncertainty.

This is not 2008. It is not Covid. But it is no longer business as usual either.

What UAE employees need to know:

• Salary cuts require your written consent
  Employers cannot reduce pay without a signed agreement.
• Refusal is a right but not without consequence
  Employers may ultimately move towards termination if agreement cannot be reached.
• No special rules currently apply
  Unlike Covid-19, no temporary framework currently exists to allow unilateral salary reductions.
• WPS compliance is critical
  Any agreed changes must be properly recorded and aligned with payroll systems.
• Prepare for a tougher market
  Hiring is slowing in some sectors, and competition is increasing.

The UAE recorded heavy rainfall across multiple regions on Monday as a low-pressure system triggered convective cloud formation and showers of varying intensity.

According to the National Centre of Meteorology (NCM), Al Manama in the Emirate of Ajman recorded the highest rainfall at 93.3mm.

Ghayathi in the Al Dhafra region of Abu Dhabi followed with 91mm, while Al Wathba recorded 88.2mm. Mohammed bin Zayed City saw rainfall of 78.7mm, and Al Ruwais in Al Dhafra registered 75.7mm, placing it among the most affected areas.

The weather system brought widespread rainfall across parts of the country, with several areas experiencing significant accumulations within a short period, WAM reported.

The NCM said it will continue to monitor the situation and provide regular updates, urging residents to follow official advisories and adhere to safety guidelines issued by relevant authorities.

Read: Rain prompts temporary closure of parks in Sharjah and Ajman

Several UAE private school groups are formally requesting to resume in-person learning, potentially as early as next week, following a temporary shift to distance education amid the regional situation.

Under directives from the Education, Human Development and Community Development Council, distance learning was extended for two weeks at the start of the third academic term, which resumed on March 23. The Ministry of Education confirmed the move as a precautionary measure amid the current situation.

However, some operators are now seeking approval to bring students back to campus sooner.

Taaleem, which operates 37 schools across the UAE, has reportedly formally applied to regulators including the Knowledge and Human Development Authority (KHDA), Abu Dhabi Department of Education and Knowledge, and the Ministry of Education to resume on-campus learning from Monday, March 30.

Separately, Gulf Business understands that schools under the Cognita Group have submitted similar requests to the KHDA.

Cognita’s UAE portfolio includes schools such as RGS Guildford Dubai, Repton Dubai, Repton Al Barsha, Repton Abu Dhabi, Horizon English School, Horizon International School, Ranches Primary School and Al Ain English Speaking School.

One school in the group told parents it is “working closely with the KHDA to determine a safe and appropriate timeline for reopening, in line with official guidance”.

It added that distance learning will continue until approvals are granted, with hybrid learning under consideration during the transition.

Balancing safety and demand

The potential return to classrooms comes as schools, regulators and families weigh educational continuity against student safety.

Alan Williamson, CEO of Taaleem, said any reopening would be phased and guided by wellbeing considerations.

“Our priority is to ensure that every student continues to learn in a safe, supportive, and stable environment, whether on campus or through distance learning,” he said.

“We are seeing a balanced picture across our community. Many families are expressing confidence in a return to campus, while others prefer a more cautious approach.

“This ongoing dialogue is central to how we plan, ensuring we remain responsive, flexible, and guided by the needs of our families.”

To accommodate differing preferences, Taaleem could also adopt a hybrid model, allowing students to continue online learning if they are not ready to return physically.

The Philippines has officially declared a state of national energy emergency, following an executive order issued by President Ferdinand Marcos Jr., as the government moves to safeguard fuel supply amid escalating geopolitical tensions.

The declaration, announced on March 24, is rooted in an executive order from Malacañang that cites an “imminent danger” to the country’s energy security due to disruptions in global supply chains and sustained volatility in international oil prices, Reuters reported.

According to the order, the Middle East conflict has created “uncertainty in global energy markets” and triggered supply chain disruptions, placing upward pressure on oil prices and posing risks to the domestic economy.

The emergency status authorises the government to implement coordinated interventions under existing laws, including the procurement of fuel and petroleum products to ensure adequate and timely supply. The order also allows advance payments to suppliers if required to secure deliveries.

A central committee has been established to oversee the movement, distribution, and availability of essential goods, including fuel, food, medicines, and agricultural products, ensuring continuity across critical sectors such as transport and healthcare.

The declaration will remain in effect for one year, providing authorities with extended flexibility to respond to evolving energy risks, Reuters further stated.

Read: Report: Oil spikes as Hormuz disruption rattles global markets

Ajman University has launched a new PhD programme in Artificial Intelligence, as it looks to strengthen advanced research capabilities aligned with the UAE’s national AI ambitions.

The research-intensive programme, offered by the College of Engineering and Information Technology, will be delivered by faculty ranked among the world’s top 0.5 per cent and 2 per cent of scientists. It builds on the university’s existing academic track record in the field, with Ajman University ranked first in the UAE for Data Science and Artificial Intelligence and placed within the top 51–100 globally, according to the QS Subject Rankings 2025.

Doctoral candidates will be mentored by internationally recognised researchers, including scholars ranked among Stanford’s top 2 per cent scientists and the top 0.5 per cent globally by ScholarGPS. The programme will focus on publication-driven research conducted within advanced AI laboratories and the AIRC Research Centre.

“Artificial Intelligence stands at the centre of the UAE’s transformation under the AI Strategy 2031. As the national vision advances, the next phase calls for deeper research capacity and sustained intellectual leadership,” said Dr. Karim Seghir, chancellor of Ajman University.

He added that the programme is designed to develop researchers capable of generating new knowledge, shaping policy, and driving innovation across key sectors.

The PhD has already been accredited by the UAE’s Commission for Academic Accreditation (CAA) and is delivered within a university accredited by the WASC Senior College and University Commission (WSCUC), supporting international academic recognition and standards.

The programme completes Ajman University’s end-to-end academic pathway in artificial intelligence, building on its undergraduate and master’s offerings in the discipline.

It is also aligned with national and global priorities, including healthcare, smart cities, sustainability, cybersecurity, financial technology and digital transformation.

Graduates are expected to take on leadership roles across academia, research institutions, government and industry, supporting the development and responsible deployment of next-generation AI systems.

Read: University of Sharjah partners with Binance Academy to drive blockchain innovation