UAE: Fine of Up to Dh200,000 for Closing Company Without Settling Employee Salaries


According to the UAE Labor Law, a company that closes without settling its employees’ salaries is liable to a fine of no less than Dh50,000 and no more than Dh200,000.

The code you provided shows the fine amount as 200000. This is correct.

Here is the relevant law text:

Article 123


  • Closes, or ceases the activity, of an establishment without taking the procedures for settlement for employee entitlements, in violation of the provisions of this decree-law, its executive regulations, and implementing decisions; or
  • Fails to pay any of the employee entitlements due to him in accordance with the provisions of this decree-law, its executive regulations, and implementing decisions, shall be sentenced to a fine of no less than Dh50,000 and not more than Dh200,000.

Employee Salaries

The employee entitlements that must be settled by the company before closing include:

  • Salary
  • End-of-service gratuity
  • Notice pay
  • Any unpaid overtime
  • Any unpaid allowances

If a company fails to settle these entitlements, the employees can file a complaint with the Ministry of Human Resources and Emiratization (MoHRE). The MoHRE will investigate the complaint and take action against the company, including imposing the fine.

In addition to the fine, the company may also be required to pay the employees their outstanding entitlements. The employees may also be able to sue the company for damages.

It is important for employers to be aware of their obligations under UAE labor law. They should make sure to settle all employee entitlements before closing their company.

Here are some additional things to keep in mind:

  • The employer must also settle the employees’ entitlements if the company is liquidated or undergoes a merger or acquisition.
  • The employer cannot withhold or deduct any amount from the employee’s salary without the employee’s consent.
  • The employer must pay the employee’s salary on time, in full, and in the currency agreed upon in the employment contract.

If you have any questions about your rights as an employee or an employer under UAE labor law, you can contact the MoHRE or a lawyer.

In the event that an employee’s wage is not paid, the Ministry of Human Resources and Emiratisation (MoHRE) may take necessary action against the company. This is in compliance with Cabinet Resolution No. 1 of 2022, Article 16(2), which stipulates,

“Subject to the provisions of Article (22) of the Decree-Law:

The Ministry may take all the legal actions and measures provided for in the Decree-Law, this Resolution, and the relevant legal regulations against the establishment in the event of non-payment of the agreed salary.”

Furthermore, if an employee’s salary is overdue for more than 15 days, it may be termed a salary delay. This is in compliance with Wage Protection System Law Article 1(2), which stipulates,

Protection System Law Article 1(2)

“If salaries are not paid to employees within 15 days from the due date, the employers will be considered late in paying, unless otherwise specified in the employment contract.”

Penalties and fines
If a company continues to delay in paying its employees’ salaries, Article 1 of the Amended Wages Protection System Law specifies the applicable warnings, penalties, and legal punishments that an employer may face for failing to pay its employees’ salaries on a regular basis.

According to the aforementioned provisions of law, if your employer has not paid your salary for an extended length of time, you may terminate your employment contract without serving a notice period to your employer if you notify MoHRE at least 14 days before to your departure. This is in conformity with Employment Law Article 45(1), which stipulates,

Article 45(1) of the Employment Law

“An employee may quit his work without notice and reserve all his entitlements at the end of service in any of the following events:

If the employer commits a breach of his obligations to the employee stated in the employment contract or this decree-law or it’s implementing resolutions, provided that the Ministry is notified by the employee (14) fourteen working days before the date of leaving the work, and the employer’s failure to remedy the breach through being notified by the Ministry.”

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