'Do I have to pay my employer three months' salary if I leave early?'

The Dubai employee is on a fixed-term contract

Two people are standing at a table, across from each other. Their hands grasp each others in a firm handshake. On the table sits a contract of employment. Getty Images
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I work for a private company in Dubai as a manager. I am on my third contract with them and have completed five years of service. I have now been offered a position with another company. As I have a limited contract, there is a clause in it that says if I break the contract I have to pay three months’ salary to my employer. Is this what the actual law states? Do I have to go without three months’ pay? And, if so, how do I manage? My salary is Dh17,000, so if I have to pay it will be a large amount. SS, Dubai

When someone is on a fixed-term employment contract and they want to leave early then they are subject to a penalty. This is clearly set out in Article 116 of UAE Labour Law which states: "Should the contract be rescinded by the worker… the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract." Note that a contract can provide more advantageous terms for an employee but no employer can state a harsher penalty. The maximum an employee can be charged is an amount equivalent to 45 days of service, being half of three month’s income.

SS may have misread the wording in the contract or have confused it with the penalty payable by an employer for making an employee on a fixed contract redundant, as they would have to pay a penalty of up to three months to the employee.

Any penalty payable for breaking the contract early may be offset by the end of service gratuity - this would be due as the service is in excess of five years. While anyone on a fixed-term contract that leaves work of their own accord, with fewer than five years of service, forfeits their gratuity, this should not be the case here, as clarified in Article 138 of the law. This states: "Should the worker bound by an employment contract with determined term leave his work by his own choice prior to the expiry of the contract, he shall not be entitled to an end of service gratuity unless the duration of the service period exceeds five years."


Read more

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I recently moved to the UAE and have found a job but the company says it will not sponsor me from the very outset, only after my three-month probation period is complete. They say this is their usual practice and that I need to prove myself before they pay out for a visa and that I can have time off to do visa runs. Is this normal or allowed as some friends say it happened to them too and others say it is not legal? I am from Singapore and don’t understand the rules here. PL, Abu Dhabi

It is very clear, and well known, that it is illegal to work without a valid employment visa as issued by the Ministry of Human Resources and Emiratisation, or the relevant free zone authority. There are no exceptions to this. This law has been in place for a long time and is specifically covered in Federal Law No (6) for 1973, Concerning Immigration and Residence, as amended by law 7 of 1985, Law 13 of 1996 and also Federal Decree- Law No. 17 of 2017, Article 11 of this legislation states: "The foreigner who obtains a visit visa may not work anywhere in the country with or without pay or for his own." It is therefore clear that to undertake work, any expat must have the appropriate work visa. This information is also in the public domain and any employer should know the rules. Not only is the individual breaking the law but the employer is too and both parties can be fined.


Read more from Keren Bobker:

Can I stay in an apartment provided by my ex-employer for a longer period?

Can I cancel my UAE residence visa and Emirates ID card from overseas?

My UAE residency visa has the wrong job title. Does that matter?


I am a citizen of Pakistan, now living in Japan. When I lived in the UAE, I had a Dubai driving licence but my licence is going to expire shortly. Is there any way to renew my licence? I no longer have my Dubai Resident visa so please help me get my licence renewed. LR, Japan

A UAE driving licence, from whichever emirate, can only be obtained by someone who is resident in the country with an appropriate visa. While the licence is not cancelled on leaving the country and other countries may also accept it, only someone with a valid residency visa is able to renew a licence. LR is therefore unable to renew his licence.

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.