Financial adviser answers your questions on bank accounts, paid leave, end-of-service entitlement and mortgages.
Bank account not required if you own property in the UAE
My husband and I will be leaving the UAE early next year, but we own a property in Abu Dhabi. There are a few more payments that we need to make in the next 24 months. We are hoping that the market will pick up at some point and we would like to be able to sell the property. Do we need to keep a bank account open until we sell or can we process everything through our lawyer? Ideally, we do not want to keep an active bank account as HSBC requires a minimum balance of Dh5,000 and we would prefer to maintain a lower balance.
FM Abu Dhabi
There is no legal requirement to have a UAE bank account if you own property here (assuming you do not have a mortgage that is linked to it), but I would recommend that an account be maintained as it is possible that when you sell the property that payment could be in the form of a dirham cheque and accounts held in other countries are not likely to accept a cheque in dirhams. Alternatively, you could insist that payment be paid to an overseas account in US dollars as the peg means there is a non-variable exchange rate. Not all UAE banks insist on a minimum balance, especially if you require a simple cheque or savings account. Many will allow you to maintain a minimal balance, but as we have reported before in this column there should be some activity every few months or some banks may close the account. It is also a good idea to open an account that allows you to use internet banking from abroad.
My friend took up a job last year with a free-zone company. Her contract stated that she was entitled in her first 12 months only to unpaid leave. In hindsight, we should have questioned this, but we were a bit naive. Is this contract legal if it contradicts UAE Labour Law? I understood that it was normal to get two days per month or at least 21 days' paid leave each year. Can you clarify as it seems her employer is being unfair?
The UAE Labour Law (which supersedes any individual contracts if individual terms are worse) states that for every year of service, an employee is entitled to annual leave of not less than the following: 1. Two days leave for every month if his service is more than six months and less than one year; and 2. A minimum of 30 days annually, if his service exceeds one year. At the end of his service, the employee is entitled to annual leave for the fraction of the last year he spent in service. Annual leave is usually calculated on the basis of a calendar month rather than by working days. I interpret this to mean that leave cannot be taken until it has accrued, but if an employee has worked a full year, they are entitled to 30 days off. This can also be calculated pro-rata, so if someone has worked for a company for six months, they have earned 15 days of paid leave. The period of 30 days includes statutory holidays, such as National Day and the Eid holidays. In this particular situation, the employer is acting unfairly and they cannot enforce the unpaid leave clause in the contract as it contradicts UAE Labour Law.
I've been through the UAE Labour Law a few times, and I'm fairly familiar with the gratuity concept and calculation, but there's one thing I'm not too sure about. Is the end-of-service entitlement applicable if the employee is relocating away from the UAE but remaining with the same employer? Technically, the UAE employment contract is being terminated, but the individual's employment is not being terminated. Should the gratuity be paid when they leave the UAE, or when they eventually stop working for the company no matter where they are based?
The end-of-service gratuity is payable when someone stops working for a UAE employer as that is when their local employment contract finishes. If an individual then continues to work for the same company in a different country, they may have continuous employment as far as they or the employer is concerned, but they are still subject to labour laws in the country in which they are resident and working. If, therefore, the individual stops working in the UAE, the end-of-service gratuity must be calculated in accordance with standard Labour Law provisions and should be paid at the same time as the final UAE salary.
I have a mortgage with Abbey (now Santander) in the UK and need to speak to someone about making some possible changes. The problem is that I cannot find a telephone number for the company that will work from outside of the UK. The correspondence I have received just shows a UK local rate number and its website has the same information. Do you have some contacts that have a full telephone number that would work when calling from the UAE?
MM Abu Dhabi
I sympathise as I have had the same issue with UK banks. It is indeed frustrating when the literature only shows low-cost telephone codes that are not valid from outside the country. Having made a few enquiries, I have found that Santander has a couple of telephone numbers that you can use. Although these are not for their mortgage department, the staff might able to assist or will transfer you to the relevant departments. The numbers are +44 1908 238013 and +44 1908 237963. Alternatively, you can send a message via website (www.santander.co.uk). Go to the "Access from Abroad" page and you will see an e-mail option that takes you to a message facility page. You can then request the contact details of the correct department. For security reasons, however, you should not provide your account number.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Write to her at email@example.com with queries for this column or for advice on any other financial planning matter.
Letters can also be sent to firstname.lastname@example.org