Dubai company still liable for tenancy contract in its name

Can a company recover a rental penalty for early termination from a resigning employee when the tenancy contract is between the employer and the landlord?

Responsibility for the contract termination penalty rests with the one who sign the contract – in this case, that would be the company. Antonie Robertson / The National

I have resigned from my job in Dubai. My accommodation has been provided by the company with the tenancy agreement between the company and the landlord. The tenancy agreement stipulates that one month’s penalty and two month’s notice applies in the case of early termination. There is nothing in my contract with the company related to liability for the house rent but the company is attempting to recover the cost of early termination from my final settlement. Is this common local practice and is it justifiable under local laws? ME, Dubai

I am perplexed as to why the company is allowing the penalty to go ahead at all. Even if you have resigned from your position, the tenancy is with the company so it can simply move another employee in your place. If your company has decided not to renew, this would be the way to be able to leave at the end of the agreement. The company would give the 90 days’ notice of the material change to the contract by stating it will not renew but in the interim, someone else can live there.

Having said this, it is common practice for a company to recover costs associated with departing employees. In your case, I do not believe this would be allowed as you already state that your contract does not mention this at all. If the company insists on trying to recover the penalty cost, my advice would be to file a case at the Ministry of Labour, now known as the Ministry of Human Resources and Emiratisation.

My landlord contacted me in February about renewing the contract and we agreed on the terms in March. The contract actually expires in May. Then in April, he told me he is planning to sell instead and that he wants me to vacate. However, I know he is planning to rent the property out again at a higher cost. Is there anything I can do? SB, Dubai

For a landlord to request an eviction for reason of selling, he has to send a written notice either via notary public or registered mail upon expiry of your agreement informing you of the same and giving you 12 months to vacate. This notice cannot be given or served in any other way other than as described above, otherwise it will not be valid.

If the reason for eviction is for personal use or use by next of kin of first degree, he again has to serve you the notice in the same way as above. In this example he will then not be allowed to re-let the property to anyone else for a period of two years from the date of your eviction. If after you have vacated, you subsequently find out that he has re-let the property before the two-year period has elapsed, then you would be entitled to compensation. In your case however, the law is silent as to what would happen if you are made to vacate on the grounds of selling and then after you have vacated, the landlord goes on to rent the property. Having said this, I’m sure that the Rental Dispute Settlement Committee (RDSC) would not look kindly on any landlord who was trying to cheat the system so my advice would be that if this should happen, go and file a case at the RDSC.

Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for over 30 years in London and Dubai. The opinions expressed do not constitute legal advice and is provided for information only. Please send any questions to [e-mail]

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