I was employed on an unlimited contract and started work on in October 2016. It was going well, I hit targets and was promoted. The company is very sociable and I have small children so don’t go out after work and I started getting comments. I got on well with everyone but prefer to spend my time with my family.
In November I was told my contract would be terminated as they thought I did not fit in with the corporate culture, even though I was still performing well. They asked me to leave almost immediately but as they were not going to ask me to complete my notice, they would pay me for three months. They said they would also pay me the end of service gratuity and any holiday owing. I signed the resignation document and started the handover process. It now seems that the three-month severance pay was calculated on my basic salary only and I haven't received the amount of gratuity expected. They seem to have calculated it as if I resigned so I have been paid much less than the full amount. When I queried this, I was told that I was being given three months' salary instead of the usual leaving benefits. I am not happy with how I have been treated and would like to know if I have a case for unfair dismissal? I never received any kind of warning. What is my actual entitlement as they have made me leave? AS, Dubai
The letter that AS signed refers to termination so she did not resign. This means she is entitled to benefits in full. The letter refers to severance pay based on basic salary only but this is not correct. If an employer is effectively giving a paid notice period of three months then the salary and benefits must be paid in full, not just a basic salary.
There is nothing in UAE Labour Law that states a person has to be given any warnings before being terminated but a company should have proper internal procedures. I would class this situation as arbitrary dismissal and this is covered in Article 122 of UAE Labour Law which states: "Termination by the employer of an employee’s service is considered arbitrary if the cause for such termination has nothing to do with the work."
This appears to be the case here but Article 123 goes on to say: "Should the worker be arbitrarily dismissed, the competent court may order the employer to pay a compensation to the worker. The court shall assess such compensation, taking into account the type of work and the extent of damage incurred to the worker as well as the duration of employment and after the investigation of the work conditions. In all cases, the amount of compensation shall not exceed the wage of the worker for a period of three months calculated on the basis of the last due wage." If therefore, the notice period in the contract is one month, it is unlikely AS would be entitled to much more than the three months offered although she should have a valid claim if her full salary is not paid to her. Article 123 also states: "The provisions of the preceding paragraph shall not breach the right of the worker to the gratuity entitled thereto and the compensation in lieu of notice provided for herein."
As AS has not left of her own accord she is entitled to the gratuity payment in full, albeit calculated on her basic salary, and this should not be offset against the amount paid to her as severance pay. She has the right to make a formal complaint. The company operates in a free zone but states it adopts UAE Labour Law. Therefore, she needs to approach the free zone itself, which should have a recognised dispute process.
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My father sponsors me but I work for a company in Abu Dhabi with a labour card. Is it possible for the company to sponsor my medical insurance? My employment contract states the company will provide medical but my company is saying only my sponsor can apply for my medical insurance. SS, Abu Dhabi
The Department of Health in Abu Dhabi guidelines state that: "The regulations require that…employers purchase health insurance coverage for every non-national it employs", which implies that the employer has responsibility in such a case. No employer should refuse to provide insurance to any employee, although this is intended to cover employees sponsored by the employer. Providing suitable insurance for an employee has been the responsibility of an employer in Abu Dhabi since 2008 but to secure medical cover, SS will need to request her employer sponsors her rather than her father.
It is important that cover is put in place and the Department of Health website states: "Obtaining or renewing sponsorship of any resident expatriate will not be permitted without submitting evidence of a valid health insurance policy for the sponsored person to the relevant governmental organisations."
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 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
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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How the UAE gratuity payment is calculated now
Employees leaving an organisation are entitled to an end-of-service gratuity after completing at least one year of service.
The tenure is calculated on the number of days worked and does not include lengthy leave periods, such as a sabbatical. If you have worked for a company between one and five years, you are paid 21 days of pay based on your final basic salary. After five years, however, you are entitled to 30 days of pay. The total lump sum you receive is based on the duration of your employment.
1. For those who have worked between one and five years, on a basic salary of Dh10,000 (calculation based on 30 days):
a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33
b. Dh333.33 x 21 = Dh7,000. So 21 days salary equates to Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.
2. For those who have worked more than five years
c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service.
Note: The maximum figure cannot exceed two years total salary figure.
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