UAE Salary Freeze Due to Company Loans: Employee Rights & Legal Guidelines
Discover UAE labour laws regarding company loans, salary deductions, and interest rates. Learn your rights as an employee or company director in debt repayment situations.
By Vadim Kouznetsov, published
Are you facing salary deductions or freezes due to a company loan in the UAE? Understanding your rights is crucial. This comprehensive guide explains the legal framework surrounding company loans and salary deductions in the UAE.
Employment Status Matters
Your rights regarding company loans and salary deductions depend significantly on your employment status:
Regular Employees (MOHRE Contract)
- Companies cannot freeze your entire salary
- Maximum salary deduction for loan repayment: 20%
- Total deductions cap: 50% of wages
- Interest-free loans only
Company Partners/Directors
- Different rules apply if you don’t have a MOHRE contract
- Commercial interest rates permitted
- Loan terms follow Commercial Transactions Law
Legal Interest Rates on Commercial Loans
Under Article 72 of Commercial Transactions Law No. 50 of 2022:
- Interest rates must be specified in the contract
- If unspecified, market rates apply
- Maximum rate: 9% per annum
- Applies to business-to-individual loans
Protecting Your Rights
If you’re facing salary freezes:
- Check your employment status
- Review your loan agreement
- Calculate legal deduction limits
- Document all communications
- Seek legal counsel if needed
Taking Action
For illegal salary freezes:
- File a complaint with MOHRE (regular employees)
- Consider civil legal action
- Review loan agreement terms
- Negotiate repayment plans
Key Takeaway
UAE law provides clear guidelines on salary deductions and loan interest rates. Regular employees enjoy stronger protections, including caps on salary deductions and interest-free loans. Company directors and partners may face different terms under commercial law. Always verify your employment status and review loan agreements carefully before signing.
This article provides general information only and should not be considered legal advice. Consult with a legal professional for specific guidance.
Additional Reading Material
- UAE Labour Law: Employee Dismissal Rights and Compensation Guide 2025
- UAE Labour Law: Your Complete Guide to Public Holiday Work Compensation 2025
- UAE Labour Law: What Happens When Leave Days Meet Official Holidays?
- UAE Labour Law: Complete Guide to Employment Contract Termination 2024
- UAE Labour Law: How to Claim Unpaid End-of-Service Benefits | JobXDubai
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