x Abu Dhabi, UAETuesday 25 July 2017

Leaving your UAE job early may mean financial penalties

On Your Side: Our resident consumer advocate Keren Bobker answers questions regarding limited contracts and other aspects of UAE Labour Law.

Our resident consumer advocate Keren Bobker answers questions regarding limited contracts and other aspects of UAE Labour Law.


I am on a limited two-year contract and I have worked for one year and eight months. I have now resigned, giving 30 days' notice, but my employer has not paid me for January and has told me that I have to stay for three months. What are my rights?
SK, Abu Dhabi

Article 116 of UAE Labour Law states: "If the contract has been terminated on part of the employee … the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation, may not exceed half a month's pay for a period of three months or for the remaining period of contract whichever is shorter, unless the terms of the contract provide otherwise." In this situation, this means SK must forfeit pay equivalent to one and a half months on leaving, as he has broken the terms of his contract. He is not obliged to stay for three months.


I am from the United States and I have accepted a job in Dubai with the same company. I am currently contributing to a 401K [retirement savings plan] and my employer is matching my contributions. In this case I would like to know if an employer can avoid paying the end of service gratuity payment. I have not found any information about this anywhere and my employer is saying that as we are both contributing to the 401K plan, they do not need to pay me a gratuity when I leave after my contract expires in two years' time. AB, United States

UAE Labour Law states that all employees are entitled to receive a gratuity payment on leaving service after a minimum of 12 months' employment, but provided both parties agree and this is properly documented, an employer can offer a pension or savings scheme in lieu of the gratuity. Article 141 states: "In any establishment where a pension or security schemes or similar schemes are maintained, the employee who is entitled to retirement pension may select either this latter or the prescribed gratuity or whichever from both." The employee has a choice and must not be disadvantaged.


I am working in Dubai for a large international company. I have been employed on a three-year contract that expired in December. I'm currently working without a contract. Conditions of employment included a travel ticket for both me and my son to and from the UAE at end of the contract as well as sponsorship of us both. No other benefits stated. The initial contract included a two-month probation period. My son and I were brought to the UAE on my husband's then contract, so my employer did not have to pay for our tickets to the UAE. The owner of the company has now suggested that he pay me out my gratuity [21 days' basic salary for each year of service] but not my travel. He has presented me with a new contract [one year not two], which contains a probation period. Can he withhold my travel (ie roll over to the new contract, and not pay me out at the conclusion of one contract, before starting the new contract)? My reading of the Labour Law Article 37 is that I do not need to have a probation period as I am being employed doing the same work as previously, and have already passed the probation period. Is this correct? CN, Dubai

You were employed on a limited contract and as you have carried on working for the same company it is assumed that you are now on an unlimited contract on the same terms. But you can agree new terms if both parties agree. No further probationary period can be applied and the employer cannot change any terms of the employment without your written agreement. As you have not stopped working for the company and are not leaving the UAE, the employer has no need to pay for repatriation. As service has continued, the end of service gratuity should not be paid and it is not really in your interest for it to be as service is deemed continuous and the amount payable increases after five years' service.


I work in a private company. As per my employment contract, I am entitled to 30 days' leave every year, but our employers insists on us taking the holiday only every two years all at one time, including over Ramadan. This is not always convenient and we are not allowed to take individual days off for any reason. Is this legal? IB, Sharjah

While an employer can dictate when annual leave is taken to a certain extent, the clue is in the name - annual. An employee is entitled to take holiday entitlement each year, and if any is not taken it can be rolled over with the discretion of the employer, but an employer cannot insist that an employee does not take leave entitlement during the year. Article 76 of UAE Labour Law states: "The employer, at his discretion, may determine the date for the commencement of annual leave and, when necessary, he may decide to divide the leave in two parts at the most." He does not have the right under law to deprive an employee of their annual leave.


Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com