What happens to employment if a UAE employer goes bankrupt?
The employment contract ends when a court rules the employer bankrupt or insolvent, or when the authorities decide it cannot continue for exceptional economic reasons. Article 25 of Cabinet Resolution No. 1 of 2022 lets MOHRE cancel the worker's permit on its own initiative and issue a new one so the worker can move.
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The workers' money
Entitlements remain claimable under the labour law. In collective disputes, Article 32 of the regulation allows MOHRE to seek a provisional seizure on the establishment and to liquidate the bank guarantee or insurance held for workers without the employer's approval if the claim is substantiated.
Why subcontractors watch this
When a contractor fails, unpaid workers on its projects become a dispute for MOHRE, and site work stops. Main contractors should watch for WPS warnings about subcontractors, because day 5 of late wages already suspends their permits under Resolution 340 of 2026.
How SupaJack Construct helps
Payroll batches and WPS files are kept per run, so a contractor can show which wages were paid and which were not at the date of any ruling.
Related tools and guides
See the UAE labour law guide for contractors, the final settlement calculator, the gratuity calculator, the annual leave calculator, the unpaid leave deduction calculator, payroll and WPS in SupaJack Construct, time and attendance and the meaning of basic salary.
Worked example
A subcontractor with 80 workers is declared bankrupt in March. Their contracts end, MOHRE cancels the permits and the workers can take new permits with other contractors. Their unpaid wages and gratuity are claimed through MOHRE and the bankruptcy.
Questions people ask
Does bankruptcy end the contract?
Yes, on a court ruling of bankruptcy or insolvency.
Can workers move to another employer?
Yes. MOHRE may issue new permits.
Can MOHRE use the workers' guarantee?
Yes, in a substantiated collective dispute.