UAE worker liable to compensate employer if he leaves part-way through limited contract

I am working in a company in Dubai and I have a limited contract with them. My employer has decided to deduct 25 per cent from my salary along with a performance warning letter as per article 120 and 102. Could you please advise if this is justified and if I want to leave the company what would be the best way? FB, Dubai

The clauses mentioned refer to reasons for dismissal without notice (Article 120) and disciplinary penalties (Article 102). There are a number of reasons why an employee can be dismissed without the normal notice period and these include failing to perform his basic duties despite multiple warnings, div­ulging trade secrets, having submitted fake documents, violating safety instructions, having committed assault in the workplace, excessive absenteeism, failure to complete duties satisfactorily following formal investigations and warnings and also “if the employee is appointed under a probationary period and dismissal occurred during or at the end of said period”.

Article 102 details the disciplinary penalties which may be imposed by an employer and as well as the standard warnings this states that an employer may fine an employee, but this should be a one-off fine not an ongoing reduction in salary. The amount is set out in Article 104 and this states that “a fine may be a certain amount of money or an amount equal to the remuneration of the employee for a certain period of time. A fine in respect of a single offence may not exceed remuneration payable for five days. It is not permissible to deduct within one month an amount equal to more than five days’ pay from the employee’s remuneration in settlement of fines imposed upon him.” A figure of 25 per cent of salary is in excess of five days, so the employer must only make a deduction within this limit.

FB may give one month’s formal notice to resign at any time but if he resigns part-way through a limited contract he will be liable for compensating the employer. The amount of compensation can be no more than half a month’s pay for three months or for the remaining period of contract, whichever is shorter. For anyone on a fixed contract the end of service gratuity is forfeited if they resign with less than five years’ service.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. 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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