‘Is there a penalty for declining a job offer after accepting it?’

If someone accepts a job offer, with a contract under the Ministry of Human Resources and Emiratisation rules, they need to give notice of resignation. Getty

Question: I have accepted a job offer from a company in Dubai. I am currently visiting my home country and after talking to my family, have changed my mind.

I applied for a few jobs and have another offer that I like more.

Are there any consequences if I tell the first company that I no longer want to work for them? Will I have to pay a penalty of any kind? LB, Dubai

Answer: LB has not confirmed whether they have agreed to take this job in writing or signed a contract with the new company, or simply accepted verbally. This makes a difference to the situation.

If someone accepts a job offer, with a contract under the Ministry of Human Resources and Emiratisation rules, they need to give notice of resignation.

If LB has accepted the job in writing, they are required to give notice of leaving the employment in accordance with the contract terms.

Assuming a ministry contract has been signed, the company may already have incurred some costs if they have applied for a residency visa and work permit. They may have turned down other applicants and that isn’t a great position to be in if they need to find a replacement.

If someone accepts a job but fails to turn up for work as agreed, the employer could request a travel ban on a claim that the individual has absconded.

LB will not be liable for any costs or penalties, and any incurred by an employer must never be passed on.

The new UAE Labour Law makes a provision for a situation in which an employee leaves in the first few months and these rules mitigate some of the costs incurred.

Article 9.3 states: “If the worker wishes to move during the probationary period to work for another employer in the state, he shall notify the original employer of the same in writing within not less than one month from the date of his wish to terminate the contract. Then, the new employer shall compensate the original employer for the costs of recruitment or contracting with the worker, unless otherwise agreed upon.”

This is also covered in article 9.4: “If the foreign worker wishes to terminate the employment contract during the probationary period, to leave the state, he shall notify the employer of the same in writing not less than 14 days from the date specified for the termination of the contract. If he wishes to return to the state and obtain a new work permit within three months from the date of departure, the new employer shall pay the compensation stipulated in clause three of this article, unless in case of an agreement between the worker and the original employer to the contrary.”

If LB has signed a contract with the first employer, the next one will be liable for costs, and they may need to serve a notice period. If they haven’t, they can start with the next employer straight away.

The lesson here is to be aware that accepting a job has potential consequences if someone changes their mind.

Q: My wife and I will be moving to the UAE for work and plan to rent out our property in the UK.

We have a mortgage that we need to keep but can you give us some information about what we need to do and any tax issues if we do this? NG, UK

A: The first step in this situation is to approach your current mortgage lender and seek their permission to let the property.

You must seek their “consent to let” or you will be in breach of the mortgage conditions. Provided payments are up to date, this is rarely a problem although a small fee may be payable.

In a few cases, mortgage holders may need to switch to a “buy-to-let” mortgage.

As you will become non-resident for tax purposes if you stay out of the UK for an extended period, you should register for the non-resident landlord scheme with His Majesty’s Revenue and Customs so that the rental income can be paid to you without the automatic deduction of basic rate income tax.

The rental income is subject to UK income tax, regardless of the residency situation, as it is deemed to be “income arising in the UK”.

Both NG and his wife will still have their annual personal allowance (the amount of income that can be received before income tax is payable) which is frozen at £12,570 ($15,798) in the 2023/24 tax year. The liability can be reduced by certain expenses, such as letting agent fees and accountancy costs.

As the property is no longer a principal private residence, there will be a capital gains tax liability relating to the period of non-residency.

This is a brief overview only as there are multiple issues and considerations. Professional advice can be beneficial.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years of 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