'Will I be penalised for quitting my job early?'

The Dubai resident works for a company registered with a Fujairah free zone on a fixed-term contract

The reader has a number of queries about the terms of his contact. Getty Images
The reader has a number of queries about the terms of his contact. Getty Images

I joined a company registered in a Fujairah free zone but now I want to resign. Do I have to serve a notice period since it was not stated in my contract? Do I have to pay anything to the company for leaving? If I have to pay 45 days worth of salary in compensation, what legal documents are needed? How am I going to pay it? Is this 45-day penalty automatically applied as soon as I resign or can I negotiate? And would it be deducted from my final salary after the notice period? In case of a negotiation, should it be done on a verbal or written order and also should a free zone officer be present? Also my company just provided us our medical insurance benefit, five months after our employment started. Is this legal? BO, Dubai

BO has provided a copy of his contract of employment and it is on a fixed term, valid for three years. While there is no mention of a notice period on resignation, the contract does states, “in the absence of company written policy, relevant provisions of UAE federal labour law apply”. This means that the standard notice period of 30 days will be required and notice should always be provided in writing.

In respect of the penalty payable for breaking the contract early, UAE Labour Law, Article 116 states: “Should the contract be rescinded by the worker … the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that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.”

No other payment is due but this is usually deducted from the last month or two’s salary. It is technically payable on leaving service but is usually offset against salary by agreement. The penalty payable is as stated in law so an individual has no right to negotiate a reduction, although there is nothing to lose by asking if the employee is on good terms with the employer. There is no need for any third party to be present as a company applying this penalty is simply following the published law.

This employer is a Fujairah-registered entity and it is not mandatory for medical insurance to be provided to employees on Fujairah visas. That said, the contract of employment states “the company will provide full medical benefits”, so I would expect that to be from the start of service. It is doubtful that much can be done about this delay but BO could suggest that not providing this benefit from the outset is grounds to reduce the penalty. However, the employer is under no obligation to comply.

I have worked for an Abu Dhabi hotel for five months but I want to resign, as I am not happy. It is mentioned on my contract that during my probation period I can give notice of seven days but it is not clear if I have to pay for all the expenses such as my visa, flight ticket, medicals and so on. My question is will I have to pay all that if I will resign? SG, Abu Dhabi

Under UAE law, the costs of employment are the responsibility of the employer. Article 60 of UAE Labour Law makes it clear that no monies should be deducted from employees unless in respect of a salary advance or loan. This was reiterated in Ministerial Order 52 of 1989, Article 6 which clearly states that all expenses incurred in taking on an employee must be borne by the employer and cannot be passed on to the employee.

I’m a British citizen, resident in Abu Dhabi for two years. I have an ISA (individual Savings Account) in the UK and I have been paying in £100 per month (Dh466) since I left the UK. Can I still pay into the ISA as an overseas resident? What is the legal position and what I should do? Can I keep it running? WM, Abu Dhabi

Provided the ISA was opened while a person is still resident in the UK, the savings account can be retained for an indefinite period but no further contributions should have been made from the date WM left the UK as these tax-efficient savings schemes are for UK residents only. The only exception is if someone is a Crown employee working overseas or their spouse. The onus is on the ISA account holder to notify the provider if their residence status changes and they should stop making payments and advise the provider when they left. The ISA provider should then return all payments made in error, without the addition of any interest or investment growth that has been earned since the date of non-residency.

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

Published: June 2, 2019 07:30 AM


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