Abu Dhabi, UAETuesday 15 October 2019

'Can my employer's Dubai branch demand I forfeit my gratuity payment?'

The Singapore resident is relocating to the UAE and is concerned about giving up the end of service entitlement

The employee has been asked to sign a disclaimer giving up the benefit. Getty Images
The employee has been asked to sign a disclaimer giving up the benefit. Getty Images

I am in the process of moving to Dubai with my employer, for which I signed a contract six months ago while with the Singapore branch of the company. The company has now received its Dubai operating licence and I can eventually move to the UAE. However, my employer has asked me to sign a disclaimer to forfeit any end of service gratuity due in future. Are they allowed to do this? I do not wish to sign this disclaimer but fear they will not submit my work permit application until I do so. MS, Singapore

The end of service gratuity is a right of all non-Emirati employees as set out in UAE Labour Law and any employee who completes a full year of service is entitled to receive a payment. The only real exceptions are if a person is sacked for breaking a law, if they are on fixed-term contract and leave with fewer than five years of service, or if an employer has an alternative scheme in place. This would need to be some kind of fully documented retirement or savings scheme where the employee is no worse off than if they received the standard gratuity and it is made clear that it is a replacement for the usual benefits.

In this case, the employer is breaking UAE law and as a branch office in the Emirates, the company is subject to the standard rules. This disclaimer appears to be a separate document as it is not acceptable as part of a standard contract of employment and certainly not in the contract that must be lodged with the Ministry of Human Resources and Emiratisation. Such a clause is not enforceable as companies are not permitted to contract around UAE law. Although it would not be enforced, MS would have to register a case against the company on leaving service, which would mean a delay in receiving payment and for his sake, and for any other employees, the employer needs to be made aware of the law and withdraw their illegal request.

I received a job offer from an Abu Dhabi company after successfully passing a telephone interview from my home in Pakistan. The company asked me to submit my original credentials so that they could apply for a visa. When I received my employment visa, due to some unavoidable circumstances I had to reject the offer. Now the company has hold of my passport and is demanding money for visa charges. They say this is as per UAE labour law article 116. Am I legally bound to pay visa charges or not in this case? ZM, Pakistan

No employee should ever be asked to repay any of the costs in employing them, whether recruitment fees, visa or ID card fees. This was clarified in Ministerial Order 52 of 1989, Article 6 which makes it clear that all expenses incurred in taking on an employee must be borne by the employer and cannot be passed on to the employee.

Article 116 of UAE Labour Law that the employer is referring to is something different. This refers to employees on a fixed-term contract who break the terms of the contract early by resigning. This states: “Should the contract be rescinded by the worker for causes not set forth in Article 121, the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.”

My view is that an individual needs to have started work for a company to technically be employed and they cannot have a proper residency visa in their passport until they have arrived in the UAE and undergone a medical examination. If that is the case, then a penalty should not be applied.

I sympathise with the employer who has paid out to process a visa, and it is annoying for them if someone changes their mind at the last minute, but they cannot legally retain a passport as a ‘threat’. A passport is technically the property of the government that issued it and wording to this effect can be found in the small print in each passport. No employer, or third party, is permitted to retain someone’s passport for any longer than required to organise or cancel a visa. This position has been reiterated, numerous times, by the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) and Ministry of Interior. The offence can carry a jail sentence and a fine of up to Dh20,000. This needs to be pointed out to this company and if they refuse to return ZM’s passport, he needs to contact MoHRE for assistance. From outside the UAE, the main contact number is: 00971 6802 7666.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Updated: May 18, 2019 03:58 PM

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