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Abu Dhabi, UAEWednesday 12 December 2018

Do employers have to alert banks when they pay a gratuity?

The Dubai resident has been made redundant and does not want his bank to freeze his account

The reader hopes to find another job in the UAE soon. Photo: The National
The reader hopes to find another job in the UAE soon. Photo: The National

Does an employer have to advise the bank when it transfers your end of service pay? I was made redundant in late July and am working a two-month notice period. I am looking for another role in the UAE, so do not want my account to be locked. I have an outstanding loan with the bank. Is there anything I can do? DV, Dubai

When someone receives their last salary payment prior to leaving service with an employer, it is standard for the payment to be marked as ‘final settlement’. It is my understanding that employers are obliged to do this, especially when they are aware that someone may have outstanding liabilities such as a personal loan.

If a bank is informed of a final salary they are likely to freeze an account, especially where there are outstanding debts. This is done to prevent customers withdrawing their money and leaving the country without settling their liabilities. This action reduces the debt problems banks have to deal with. How quickly a bank will unfreeze an account varies. If the outstanding debt is small, some banks will unfreeze an account on being shown sight of a new job offer or a new employment visa. In a few cases, a bank will not unfreeze an account until the first salary payment is made.

In such a situation, where an individual expects an account to be frozen, it would be wise to withdraw cash to tide them over for a few weeks. Having a good relationship with a bank and advising them of circumstances may also be helpful as they will be clear there is every intention of continuing with the loan repayments and may then be more amenable. If someone does not have outstanding liabilities, their account will not be frozen or it will be unfrozen very quickly.

Can my employer issue a labour ban if I quit my job within my probation period? I am on an unlimited contract. RC, Sharjah

The answer to this depends on an individual's skill status. Following a change to the rules early 2016, far fewer people will receive an employment ban than in the past but even someone on an unlimited contract can be affected. Employees in the higher skill categories, numbers one to three, will not face a ban in this situation, provided they give notice of resignation, but workers in skill categories four and five can only move to another employer without a six month ban after completing a period of not less than six months with their current employer. RC has not advised of his occupation, so I cannot confirm how he will be personally affected and he will have to establish what skill level his visa is. RC should note that he still needs to provide the employer with 30 days’ notice although the employer can allow him to leave sooner if they so wish.

I am out of the country but planning to return to the UAE to search for a new job as I lost my last one in 2017. I have a credit card with a bank in the UAE with an outstanding balance of Dh12,000. I want to pay this off but will start payments again once I am back in the UAE and have a new salary. Can I still travel to the UAE? MA, India

MA sent me a copy of his passport but even with this, I cannot answer this question. This newspaper is not able to obtain personal information on behalf of any individual. Only MA, or a lawyer that he employs, would be able to contact the bank to find out if a police case has been registered against him. Alternatively, they could contact the relevant UAE immigration department to check if a travel ban has been registered.

Ideally, MA should contact the bank directly, with the account number of the loan and any other accounts, to find out this information. His email implies that he knows how much he owes, but if he is referring to the outstanding balance from when he left the UAE in 2017 he should be aware the amount would have increased due to the addition of outstanding interest and penalties.

Any bank is within their rights to take action if a borrower fails to make three monthly repayments. They can register a police case and apply for a travel ban. This means the borrower’s details are stored in the immigration system and they would be detained on arrival and prevented from entering the country.

MA's lender will be able to advise if they have registered a police case against him and what is required from him to lift it.

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