Abu Dhabi, UAEMonday 13 July 2020

'Do I have to pay a 45-day penalty for resigning from my job?'

The Dubai resident had to quit her position to look after her two children

The Dubai employee is on a fixed-term contract, which is why a penalty may apply for her early resignation. Getty Images
The Dubai employee is on a fixed-term contract, which is why a penalty may apply for her early resignation. Getty Images

I resigned from work after 12 years because I need to look after my two children as we don't have a helper. Is there a way I can challenge Article 116, which says I must pay a 45-day penalty for resigning? I work in Jebel Ali Free Zone. I have served the 30 days’ notice and the employer is paying me in full for this time. After I handed in my letter of resignation, my company said they fully understood my situation and allowed me to begin the notice period. In their reply, there was no mention of any penalty that they would want me to pay. Can this reply be my evidence to safely consider that they mutually agreed to terminate the contract without any compensation? MR, Dubai

Jebel Ali Free Zone Authority (JAFZA) does not come under the guidance of the Ministry of Human Resources and Emiratisation but it does adopt the provisions of UAE Labour Law. This means that if someone is on a fixed-term contract, Article 116 will apply if they wish to leave employment before the end of the contract term. This states: “Should the contract be rescinded by the worker … the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that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.” In all cases, the decision to apply this article rests with the employer and while most will apply the penalty, it is not mandatory.

As this is a point of law, the employer does not have to state that the penalty will apply. However, it should be shown in the final salary calculation which should be provided to all employees for their agreement prior to a visa being cancelled when service ends.

An employer must not refuse a letter of resignation and accepting this does not mean that a standard penalty won’t be applied. Given the lengthy period of service and the specific circumstances MR should speak directly to her employer and ask if they will agree to waive the penalty.

I am currently working with a mainland LLC company in the UAE where I am a partner in the business. I am not sure where the business is heading in the current economic climate so can I change the type of visa I have to one linked to the properties I own in the UAE? I own two apartments in Dubai and together they are worth over Dh1 million, which I understand is the minimum I need to qualify for a property-linked visa. I only have a mortgage on one of the properties. Can I get a property visa on this basis and, if so, how long is it valid for and what else do I need? KF, Dubai

There are ways to obtain a residency visa related to property ownership but very specific rules apply. In each case the minimum purchase price of a single property is Dh1m and note that this is the purchase price as registered with the Dubai Land Department, not the current value.

The property must have been completed and handed over by the developer. KF states he owns two properties but at least one of them must have been purchased for Dh1m or over to qualify. For properties in Dubai, these types of property visas are valid for a period of two years and then must be renewed.

Other conditions apply too, such as a mortgage on the property not accounting for more than 50 per cent of its value. The property owner must also have an income of at least Dh10,000 a month, which is not derived from employment or work in the UAE. Therefore, a property visa is not likely to be viable for KF as he is working and receiving an income from the business In all cases, applications must be made to Dubai Land Department for individual approval.

Different rules apply if a person owns property purchased for over Dh5m and does not have a mortgage, or if they own property that is located in other emirates.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 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 30, 2020 11:12 AM

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