I am 41 and work in Abu Dhabi as a health and safety officer for a construction company with a salary of Dh5,000 a month. I have outstanding debts of about Dh60,000 that are ballooning because my salary is on hold and I cannot afford the repayments. My company has not paid me for five months now.
My debts are:
Loan: Dh44,667 (Dh2,150 monthly instalment)
Credit card 1: Dh3,781
Credit card 2: Dh11,045
Credit card 3: Dh2,299
I borrowed the money to invest in some businesses, such as a poultry business, and also to cover general expenses such as holiday costs, education and lending money to friends and their friends.
My salary stopped in February 2020 before the pandemic fully took hold. However, even before this my salary was being credited late by one or two months. The excuse was always that clients weren’t paying up. The company says our salaries will be paid once their clients pay them.
I have asked the bank for deferments on the personal loan credit and card 1 because I have no money but they have refused to help. They said my employer is no longer on their approved list of companies they can lend to and my credit score is too low to qualify for assistance.
I also contacted the provider of credit card 2, but they require me to pay a lump sum of Dh1,000 before they give me a payment holiday.
On top of this, from next week we have to take a two-day holiday every week, with our salaries reduced by about 20 per cent.
So far I have missed one payment on the loan and credit card 2 and six on credit card 3. Frustratingly, I have no savings to tide me over until my salary starts again. People who cried for help and borrowed from me in the past never paid me back. Also a poultry business I invested in turned out to be a fraud.
I can afford to repay my debts if my salary starts again. I support my family back home in the Philippines and my monthly expenses include Dh400 for groceries (though I’m secretly eating food at the office at the moment); Dh45 for my phone and Dh1,100 for utilities. I haven’t sent any remittances for seven months and I also repay a close friend for a loan of Dh5,000.
The root cause of all of this is the long salary delay. Without that, I wouldn’t be charged late payment fees and over-limit fees. Also, if the banks had offered a deferment, the debts would not have multiplied as much.
I am confused and don't know what to do. My son, 14, and daughter, 11, haven't received any monetary benefits from me for some time now. Luckily, my in-laws can provide their basic food.
Where can I get help? Can I make my company liable for the penalties because of my unpaid salary? MS, Abu Dhabi
Debt panellist 1: R Sivaram, executive vice president, head of retail banking products, Emirates NBD
You need to discuss and explain your situation to your employer and ask them to clear your unpaid salary so that you can address the ballooning late payment fees. Also consider asking them to exceptionally waive your leave-without-pay mandate until you can resolve your financial issues. This will give you the additional required income to make the outstanding monthly card and loan payments.
I also advise communicating your situation with the banks proactively. Being employed, even if it is with reduced pay, definitely works in your favour. Share documentary evidence of your delayed salary to strengthen your deferment request. In your communications with the bank, mention that you intend to service the monthly instalments of your loan and credit card diligently and that you remain fully committed to clearing your debts.
Ask the bank to support a debt restructuring plan that will allow you to combine your existing personal loan and credit card debt into one lower interest rate loan, payable in easier monthly instalments over a longer term. This facility is offered by most banks and will allow you to manage your finances more efficiently.
Debt panellist 2: Stuart Ritchie, chartered financial planner at AES International
I assume you are employed by a company based in the mainland of UAE and therefore, the UAE Employment Law and the Ministerial Decree concerning the protection of wages apply here.
With regards to the non-payment of your salary, an employee should be remunerated at least once a month. This is in accordance with Article 56 of the Employment Law, which states: "Employees engaged on yearly or monthly remuneration shall be paid remuneration at least once a month; all other workers shall be paid at least once every two weeks." Therefore, non-payment of salary by an employer is a violation of the Employment Law.
If an employer does not remunerate an employee within one month of the salary becoming due, it is considered a refusal of the employer to remunerate an employee. This is in accordance with Article 1(b) of Ministerial Decree No. 739 of 2016, which states: "The employer shall be deemed late in paying unless he pays the salary within the first 10 days as of maturity date, and shall be deemed as refusing to pay the salary unless he pays it within one month as of the maturity date, unless a less term is set/provided in the contract."
You say you could pay your debts if you were receiving your salary, so you should focus on resolving this matter as quickly as possible. If you are unable to resolve the issue directly with your employer, then file a complaint against them with the Ministry of Human Resources and Emiratisation (MoHRE). Unfortunately, your debt is your responsibility and so your employer is not liable for the increase in your debt levels.
While you've spoken to two of your lenders about debt referrals, have you asked the provider of your third credit card for assistance? It's worth speaking to them to find out if a payment holiday can be taken for that credit card, or if they can offer any other help.
With regards to your wider finances, focus on paying off the highest interest-bearing debts first. Therefore, speak to the friend you owe Dh5,000 to and ask if you can delay paying this back, provided your friend can afford to go without this money. This will allow you to focus on your other debts when you do receive your income.
Debt panellist 3: Ambareen Musa, founder and chief executive of Souqalmal.com
With no salary for five months and no commitment from your employer to pay anytime soon, you cannot manage your loan and credit card repayments on your own. To make matters worse, you haven't been able to qualify for the standard debt relief measures introduced by banks in the country.
Since you have absolutely no savings to tap into, and are already relying on friends and family to help you out financially, you may have to consider filing for insolvency. This is usually recommended as a last resort for anyone struggling with debt repayments, but it may be the most appropriate route for you given the circumstances of your employment.
The UAE's Personal Insolvency Law allows you to petition the civil court and request for a court-mediated settlement of your debts, when you aren't in a financial position to afford your debt repayments yourself. Such a settlement would cover all your loans and credit card debt under one umbrella.
As for dealing with your delayed salary, have you and your colleagues taken up this issue with the appropriate government authorities? Based on whether your company is registered in mainland Abu Dhabi or within a free zone, you can submit a complaint with MoHRE, or directly with the free zone authority. Raising a dispute collectively can help put pressure on the employer to release your salaries.
If the dispute cannot be resolved, take the case to the Labour Court. This step may help you negotiate with the employer better and secure your rightful dues sooner. You should also keep an eye out for new job opportunities, although that may be somewhat challenging during these pandemic-ridden times.
The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to firstname.lastname@example.org