Your DIFC Employer Stopped Paying Salaries and Is Heading Into Insolvency: Can You Still Recover Notice, Leave and Gratuity?

Yes. The claims survive, and the Small Claims Tribunal has awarded every one of them against a DIFC employer that had stopped paying and begun an insolvency process. In SCT 328/2024, decided on 15 October 2024, an employee with service from March 2005 was awarded AED 111,391.63 for unpaid salary, three months' notice pay, untaken leave and gratuity for service before 1 February 2020. In SCT 323/2024, decided on 10 October 2024, an employee with service from September 2016 was awarded AED 223,192 on the same heads plus expenses. The employer attended neither hearing, so the Tribunal decided each claim on the employee's evidence alone under Rule 53.61.

What the insolvency changes is the route to the money. Neither judgment applied the Insolvency Law: the insolvency process is background in both records, and neither mentions a liquidator, a moratorium or leave. The rules below come from the Insolvency Law, DIFC Law No. 1 of 2019, and its regulations, as served at the time of writing. The table gives each pay head's position once a winding-up order is made.

What did the Small Claims Tribunal award against a DIFC employer that was entering insolvency?

Salary to the day the money stopped, three months' pay for notice, leave at a daily rate and gratuity for the pre-2020 years, less what arrived in the meantime. Both records say the employer hit cash-flow problems in July 2024, left August unpaid and then started an insolvency process, and both claims were heard without the employer, which had been served with notice of the hearing. After each hearing the employee reported that salary to mid-September and the scheme contributions had been paid, so the Tribunal awarded only the balance of September, AED 9,250 and AED 17,500, and declined to address new claims raised after the hearing. SCT 323/2024 added AED 5,045 of expenses recorded on the employer's HR system.

Both judgments were given under the Judicial Authority Law, Dubai Law No. 12 of 2004, which Article 43(A) of Dubai Law No. 2 of 2025 (Official Gazette, 14 March 2025) has superseded: Article 14(A)(1) now gives the DIFC Courts exclusive jurisdiction over employment claims by or against DIFC Establishments. Under Rule 53.2 the Tribunal hears employment claims up to AED 500,000, or of any value where all parties elect in writing, and appeals go to the Court of First Instance under Article 21: see the guide on appealing from the Small Claims Tribunal. No appeal, Court of Appeal item or Conflicts of Jurisdiction Tribunal application was found for either claim at the time of writing.

Key takeaway. Neither judgment applied the Insolvency Law: both were decided as ordinary employment claims on the employee's evidence under Rule 53.61. What an insolvency step does to recovery comes from the Insolvency Law and its regulations, not from these decisions.

How much is each head worth when the employer has stopped paying?

The Employment Law, DIFC Law No. 2 of 2019, Consolidated Version No. 5 of July 2025, sets each head. Article 62(2)(c) fixes minimum notice at ninety days once continuous employment exceeds five years, and both employees received three months' pay at full salary, AED 55,500 and AED 105,000. Article 28 pays accrued untaken leave at the Daily Wage, which Schedule 1 fixes for a five-day week at the Annual Wage divided by 260, the Tribunal's monthly pay x 12 / 260. Article 66(1) gives gratuity only for service before the Qualifying Scheme Commencement Date, 1 February 2020 for an employee already in service on that date, at 21 days' Basic Wage a year for the first five years and 30 thereafter under Article 66(2): AED 27,430 net of an advance in one case, AED 48,639.44 for three years and 149 days in the other. The fourteen-day rule in Article 19 and its daily penalty are in the guide on an unpaid final settlement.

The three heads, as cards.

Does the employer's insolvency stop you filing or continuing a Tribunal claim?

Not until a winding-up order is made or a rescue moratorium begins, and even then the Court can let the claim go on. The Insolvency Law, Consolidated Version No. 3 of July 2025, separates the moments. Between the application and the order, Article 96(1) lets the company, a creditor or a contributory ask the Court to stay an action pending in the Court or restrain any other action, so a Tribunal claim continues unless that stay is obtained. From the order, Article 88(2) provides that no action or proceeding shall be commenced or continued against the company or its property except by leave of the Court and subject to such terms as the Court may impose. Leave is sought in the Court of First Instance, which hears insolvency claims under Article 19(B)(1) of the 2025 Law, and Rule 54.185 keeps insolvency proceedings out of the Tribunal. The text read gives a voluntary winding up no equivalent bar (Articles 57 and 75).

A rescue process bars claims earlier. Under Article 15(2) the board's written notification to the Court that it intends to propose a Rehabilitation Plan fixes the Notification Date, and an automatic moratorium applies to all creditors, secured or unsecured, from that date, for 120 days under Article 16 unless the Court orders otherwise, its detail left to the Regulations by Article 17(1). An Administrator, whom Article 32(1) lets a creditor seek only where a rehabilitation application has been made and there is evidence of misconduct, brings a moratorium under the Regulations under Article 34, and the appointment dismisses any winding-up application under Article 33. A voluntary arrangement under Part 2 can carry a moratorium under Article 8, during which Regulation 4.5(g) bars proceedings against the company or its property except with the Court's leave, and Article 10(3) stops any proposal affecting a preferential creditor's right to enforce it being approved without that creditor's concurrence.

Deadline warning. Article 10 of the Employment Law gives six months from the Termination Date with no insolvency exception, and Article 20(2) runs its own six months from the date each payment should have been made, while Article 88(2) of the Insolvency Law requires leave once a winding-up order exists.

Where do employee claims rank once the company is wound up?

Ahead of the ordinary creditors, for most of what an employee is owed. Article 99(1) pays the company's preferential debts in priority to all other debts in a winding up, and Article 99(2) leaves their designation to Regulations made by the DIFCA Board. The DIFC legal database lists the Preferential Creditor Regulations 2008 under the Law, and the Insolvency Regulations, Consolidated Version No. 2 in force from 8 March 2024, define a Preferential Creditor by reference to them. Category 1 of the 2008 Regulations, Regulation 4.1.1, is any sum owed as a pension scheme contribution for the employees or as end of service gratuity payments. Category 2 covers remuneration for the four months before the relevant date, payment in lieu of notice to a person whose employment has been terminated, accrued compensation in lieu of vacation leave for employment before that date, and any sum ordered under the Employment Law for a default before that date (Regulations 4.2.1 to 4.2.5), the first and the last up to a sum prescribed by order of the DIFCA Board.

The relevant date in a Court winding up is the first appointment of a provisional liquidator under Article 91 or, if none, the winding-up order, and in a voluntary winding up the resolution (Regulation 4.5.1). Regulation 2.1.2 ranks preferential debts equally among themselves after the expenses of the winding up, abating equally if the assets fall short, and Regulation 6.47.1 of the Insolvency Regulations ranks everything else equally after the preferential, secured and trust claims, so salary arrears older than four months and anything above the cap fall into that pool.

Three limits. No order prescribing the Category 2 cap is listed under the Insolvency Law on the DIFC legal database at the time of writing. The 2008 Regulations were made under the 2004 Insolvency Law and still name it and the 2005 Employment Law: their standing rests on the database listing, the 2024 Regulations' cross-reference and Article 1(6) of the 2019 Law, which saves regulations made under the 2009 Law. And the two decisions found that treat employees as preferential creditors, the winding-up judgment of 14 January 2010 in CFI 033/2009, which does not name the Regulations, and the order of 22 February 2010 in CFI 001/2010, which reads them with Article 67 of the 2009 Law, were given under the 2009 Law: none under the 2019 Law was found.

What happens to a Tribunal judgment you already hold when the winding-up order is made?

It becomes a debt you prove in the liquidation, no longer one you execute. Regulations 1.1.5 and 6.56.1 make every debt or liability to which the company is subject at the date of liquidation provable, present or future, certain or contingent. A Tribunal order, which Rule 53.82 gives the status of a Court of First Instance order, is proved like any other debt, and enforcing it falls within Article 88(2) on its words, a reading no decision found has tested. Proving is done in writing to the liquidator under Regulation 6.16.1, with the particulars and documents Regulations 6.16.2 and 6.16.3 require. A rejection comes with written reasons under Regulation 6.19.2, Regulation 6.20.2 gives twenty-one days from receiving them to apply to the Court, and Article 97 lets the Court fix a time after which creditors who have not proved are excluded from distributions made before they prove.

The figure to prove is the sum ordered, and SCT 328/2024 shows why. Reason 17 gives the start of service as 24 March 2024 where reasons 3 and 25 record 24 March 2005, the date the five-year finding rests on. Reason 21 states two leave figures, AED 20,236.25 and AED 19,211.63, for the same 22.5 days. The sum ordered, AED 111,391.63, is the salary, notice and gratuity sums plus the second leave figure, and omits the AED 8,195 air ticket the reasons accepted. In SCT 323/2024 the sum ordered, AED 223,192, is the five heads to the dirham.

The three moratoria, as cards.

What if the employer is dissolved or struck off before you are paid?

The company can be brought back. In a winding up, Article 106(2) deems the company dissolved three months after the liquidator dispatches the final account and return to the creditors and the Registrar. Under Article 136(1) the Court may, within six years of the dissolution and on the application of any person appearing to it to be interested, declare the dissolution void, and Article 136(2) then allows proceedings as if it had not been dissolved.

Striking off is the Registrar's route under the Operating Law, DIFC Law No. 7 of 2018, March 2024 consolidation. Article 32(1) lets the Registrar strike off a registered person it has reason to believe is not carrying on business, is acting in contravention of the law or whose presence on the register is prejudicial to the DIFC, after a published notice under Article 32(2). Article 33(1) lets the Court restore it on the application of, among others, anyone with a potential legal claim against it or a creditor at the time of the striking off, within six years of the dissolution under Article 33(7)(b), and Article 33(2) deems it to have continued as if never dissolved or struck off.

How should you sequence a claim against a failing DIFC employer?

The order follows the moments the Law separates.

1. Fix the Termination Date and each head, and keep a running credit of every payment that arrives.
2. Check the DIFC Courts' published lists and the Registrar's Public Register for any winding-up application, rehabilitation notification, administration order or strike-off notice.
3. If nothing has been filed, present the claim in the Tribunal within the Article 10 and Article 20(2) limits, with every head in the claim form: claims raised after the hearing were not considered.
4. If an application is pending, expect a stay application under Article 96(1). If an order has been made, apply for leave under Article 88(2) in the Court of First Instance first.
5. Once a liquidator is in office, submit a proof under Regulation 6.16 with the contract, payslips, leave record and any Tribunal order, claiming the preferential categories expressly.
6. Diary the twenty-one days under Regulation 6.20.2 from any rejection, and any date fixed under Article 97.
7. If the company leaves the register, apply under Article 33 of the Operating Law or Article 136 of the Insolvency Law within the six years.

What decides these claims is paper rather than argument. A proof the liquidator can check line by line against the contract, the payslips and the leave ledger is admitted, while a total without workings draws a request for particulars under Regulation 6.17.1. Both Tribunal claimants were awarded the balance they proved, not the totals first claimed, and the same discipline carries into a liquidation, where the employee shares a fixed fund with every creditor who proved in time.

Frequently Asked Questions

My employer has stopped paying but no formal process has started. Can I file in the Small Claims Tribunal now? Yes. Nothing in the Insolvency Law restrains a claim until a formal step exists: a winding-up application, a rehabilitation notification or a voluntary-arrangement moratorium. Both SCT 328/2024 and SCT 323/2024 were heard and decided after the employer had, on each record, initiated an insolvency process, without any stay. Article 10 of the Employment Law gives six months from the Termination Date, and Article 20(2) gives six months from the date each unpaid payment should have been made.

A winding-up application has been presented against my employer but no order has been made. Does my claim stop? Not automatically. Article 96(1) lets the company, a creditor or a contributory apply to the Court to stay an action pending in the Court or restrain any other action, so the claim continues unless such an order is made. Article 87(2) will later treat the winding up as having commenced on the date of the application, and Article 86 makes any attachment of the company's assets after that date void unless the Court orders otherwise.

The Court has made a winding-up order. Can I still bring or continue my claim? Only with the Court's leave. Article 88(2) provides that no action or proceeding shall be commenced or continued against the company or its property except by leave of the Court and subject to such terms as the Court may impose. The application belongs in the Court of First Instance, which hears insolvency claims under Article 19(B)(1) of Dubai Law No. 2 of 2025, and Rule 54.185 keeps insolvency proceedings out of the Tribunal.

Will my unpaid salary be paid before other creditors? Part of it. Under Regulation 4.2.1 of the Preferential Creditor Regulations 2008, remuneration for the four months before the relevant date is preferential up to a sum prescribed by order of the DIFCA Board, and Regulation 2.1 pays preferential debts after the expenses of the winding up and ahead of the unsecured creditors. No prescribing order is listed at the time of writing, so whether that head is uncapped or waits on an order is open. Arrears older than four months rank equally with the ordinary creditors under Regulation 6.47.1 of the Insolvency Regulations.

Is notice pay preferential even though I was never actually given notice? Regulation 4.2.2 makes any sum owed by way of payment in lieu of notice to a person whose employment has been terminated a preferential debt, whether the termination was before, on or after the relevant date, and states no four-month limit for it. The Tribunal awarded three months' pay on that head in both judgments after the employer had simply stopped paying. No published decision was found that applies Regulation 4.2.2 to an award like these, so claim the category expressly in the proof.

I already hold a Tribunal judgment. Do I need to do anything in the liquidation? Yes, prove it. The judgment is a provable debt under Regulations 1.1.5 and 6.56.1, but attachments after the winding up commences are void under Article 86 and enforcement after the order needs leave under Article 88(2), and Article 97 lets the Court fix a time after which creditors who have not proved are excluded from distributions made before they prove. Submit a proof under Regulation 6.16 with the order attached, and apply to the Court within twenty-one days under Regulation 6.20.2 if the liquidator rejects any part of it.

Does the Article 19 daily penalty keep running during the insolvency? Neither judgment awarded a penalty, because neither claim included one. Article 19(4)(a) waives the penalty for any period during which a dispute about the amount is pending in the Court, and Regulation 4.2.5 makes a sum ordered under the Employment Law preferential only where it relates to a default before the relevant date and stays within the prescribed sum. The conditions for the penalty itself are in the guide on an unpaid final settlement.

The company has been struck off or dissolved. Is it too late? Not necessarily. Article 136 of the Insolvency Law lets the Court declare a dissolution void within six years on the application of any person appearing to it to be interested, after which proceedings may be taken as if the company had not been dissolved, and Article 33 of the Operating Law lets the Court restore a struck-off registered person within six years on the application of a person with a potential legal claim against it or a creditor at the time of the striking off.

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

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