Question: I have been with my employer for about two years and they have now advised that they plan to introduce a pension-type scheme for all employees in place of the usual end-of-service gratuity.
The set-up is that they pay into some kind of investment and we can also pay in voluntarily.
They plan to start this from January 2024 but I don’t want to join as it seems to be best for employees who stay with them for many years. My plan is to leave in mid-2024 and return to my home country.
My employer has no idea of my plans and I want that to remain private. Will I have to join this scheme rather than continue as things are at the moment? MF, Abu Dhabi
Answer: There are a number of large mainland companies that offer an alternative to the standard gratuity scheme and the Dubai International Financial Centre, which has its own legislation, set up Dews (DIFC Employee Workplace Savings) as an alternative to a gratuity in 2020.
Watch: UAE launches new gratuity scheme
UAE launches new gratuity scheme
Such schemes for mainland and free zone employers should not be compulsory and legislation stated that no employee should be any worse off if they joined a savings scheme as an alternative to the end-of-service gratuity. Dews is compulsory for DIFC employees.
There has also been an announcement that the UAE government will introduce an optional savings plan for all private sector employees. There is no time frame for this yet and we don’t have any other details.
Under the old labour law, there was a specific clause related to alternatives that said no employee should be disadvantaged if they were a member of an alternative arrangement and that it would be optional.
Under the new labour law, Federal Decree Law No.33 of 2021, which came into effect in February 2022, no mention is made of alternative arrangements to the end-of-service gratuity.
My understanding is that any existing arrangement would continue to be recognised in the same way.
Use this tool to calculate your gratuity pay
Given the recent announcement, it may be that the introduction of alternatives has been planned for some time.
With this in mind, I would be surprised if many employers proceed with setting up an employee savings plan until such time as we have full details of the new government-supported alternative scheme. Indeed, that may not be permitted.
We have been advised that there will be a number of investment options, including one that is described as “risk free” and will fully protect the capital invested.
Assuming MF’s employer proceeds with a new arrangement, this could be an option for him to protect the amount invested but joining is described as optional, so he should be able to continue accruing the end-of-service gratuity as he does now.
Q: I joined a company last month and my visa was processed. After 14 days, I was given a termination letter and they will be cancelling my visa soon.
My contract says I have to work a 14-day notice period, but is there a problem if I don’t?
I did a handover on the same day I received the letter so that the company can consider that as my last working day.
When I checked with HR, I was told not to serve the notice period and I sent an email with this information and left the office. Will this be a problem?
Does my new employer have to pay any visa charges if I join them within three months? AJ, Dubai
A: AJ was given the correct amount of notice in accordance with Article 9 of the UAE labour law, which refers to the probationary period.
During the probationary period, “the employer may terminate the service of the worker during this period after notifying the latter of the same in writing 14 days at least before the date specified for the termination of service”, Article 9 states.
Whether an employee undertakes any work during this time is at the discretion of the employer.
If a person has been with a company for such a short period, it is not unusual for the employer to decide that there is no point in the employee working and may tell them not to come to work. However, that is the decision of the employer.
An individual will generally remain employed until the end of the notice period and will be paid for these days. The visa should be cancelled after this time unless both parties agree to do so sooner. This must be agreed by both the employer and the employee.
In accordance with the new labour law, if an employee leaves service during the probationary period, the new employer may have to provide some form of compensation, but this is not the case here.
As the current employer terminated the contract, no compensation is payable to the next employer.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 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
