I have been with my company for nearly six years and have handed in my notice as I plan to leave the UAE. Over the years I have been promoted a few times and my salary has increased each time so it is now more than two times what it was when I started. I have been given a calculation for my end of service gratuity but it is less than I am expecting. I was expecting 30 days for each year on my final salary but the company has worked it out as 21 days for the first few years but on lower salary figures for each period. The difference is large so I need to know that I am right so I can argue with them and get what they owe me. BM, Abu Dhabi
In this case, neither the employee or the employer is wholly right. When someone resigns after having completed more than five years of service they are entitled to receive a full end of service benefit but the law is very specific regarding how it is calculated. Article 132 of UAE Labour Law states: "The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service and the gratuity shall be calculated as follows: 1. The wage of 21 days for each of the first five years of service. 2.The wage of 30 days for every additional year. Always provided that the total gratuity does not exceed the wage of two years."
The salary used for the calculation is the employee's last basic salary only. The UAE government website confirms this as it states: "The end of service gratuity is calculated on basis of last wage which the employee was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, conveyance, utilities, furniture etc." In this case, BM's gratuity must be calculated using her current basic salary only with 21 days payable for each of the first five years of service, and then 30 days for each full year over five years, or pro-rata.
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I am a salesman for a medium-sized company and I have a salary and also commissions. Sales are poor in the summer months, so I am not hitting my targets at the moment. My boss has told me that if I do not hit target the company, he will deduct money from my salary. I do not think this is in the contract I signed as I would remember. Can the company do this to me? VB, Sharjah
In short, no they cannot. UAE Labour Law includes a section that covers disciplinary rules and the conditions are clearly laid out. An employee can be fined if they break a serious rule but this does not apply to work-related performance in this way. In addition, if there is nothing in the contract of employment that states that the salary itself is performance related then the employer cannot change the way someone is paid. VB can register a case with the Ministry of Human Resources and Emiratisation or his local labour office.
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At the end of last year, I bought an apartment in the UK and a tenant has been living there for a few months. I have to pay a percentage of the rent that they pay to an agent who manages the property for me. After that has been paid, I receive £830 (Dh4,000) paid to a bank account that I have in the Isle of Man. The agent has now told me I have to pay tax on this in the UK even though I do not live in the UK and do not have a British passport. It’s just an investment so is this correct? FS, Dubai
Even if someone is not UK resident for tax purposes, they can still be liable to pay tax in the UK. Any income that ‘arises’ in the UK is subject to UK income tax, no matter the nationality or residency of an individual. That said, everyone is eligible to apply the Personal Allowance, even if not resident in the UK, and only income above this level will actually be chargeable. The Personal Allowance is GBP £11,850 in the tax year 2018 to 2019 ( April 6 2018 to April 5 2019), so if the income receivable is £830 a month, being £9,960 a year, no income will be payable as this is below the personal tax threshold.
As EP is not resident in the UK, the rental income is being paid to her without the tax deduction This is different t how the system works for UK residents, and even though no UK income tax is payable at this level, she may need to complete an annual tax return but that should just be a formality.
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