Any UAE worker breaking terms of fixed-term contract can be penalised

If the worker intends to leave the UAE and not take up employment here again, the issue becomes academic as employment related bans are for a limited period and then expire.

I am currently on a two-year extension to my initial two-year limited contract. I signed the extension in March. Due to a number of issues, both with my employer and with living in the UAE, I am seriously considering leaving to take up a job in another country. This means I will be breaking my second limited contract early. I am assuming I will be asked to pay back 45 days salary. Will this be basic or full salary? And will I lose my gratuity? Would I lose my relocation and flight allowances and face a ban? SR, Al Ain

Anyone on a fixed-term contract can be penalised by breaking the contract early. According to the UAE Labour Law, Article 116: “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.” This should be calculated on the basic salary. The End of Service Gratuity is forfeited in this case in accordance with Article 138 of Labour Law: “If an employee under a contract with limited period leaves his work at his own option before the end of the contract period he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years.” In terms of travel allowances, whether or not SR receives an annual flight depends on the wording of the contract of employment but if someone leaves employment of their own accord the employer is not required to pay for their flight to a home country if they have the means to do so themselves, per Article 131. Under the new rules, SB should not receive a ban if there is mutual consent to leave, proper notice is given, and he has qualifications higher than a high school certificate. If he intends to leave the UAE and not take up employment here again, the issue becomes academic as employment related bans are for a limited period and then expire.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE.

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

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