What penal­ties will I face for break­ing a fixed-term con­tract?

The National - News - - BUSINESS - KEREN BOBKER

Q I have been of­fered a new job with another com­pany but it means I have to break my con­tract two months be­fore the end of the ac­tual time. As it is close to the end, do I still have to pay my cur­rent com­pany 45 days of my salary and al­lowances? ZA, Dubai A When some­one is on a fixedterm con­tract and wishes to leave em­ploy­ment be­fore the agreed end date, it does not mat­ter when this hap­pens as the same penalty will ap­ply. Ar­ti­cle 116 of UAE Labour Law 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.”

In this case, the pay­ment would be equiv­a­lent to fewer than 45 days’ salary as it would be cal­cu­lated as half a month for the re­main­ing two months, so roughly equiv­a­lent to 30 days’ salary. While it is not spec­i­fied in law, these days the term “wages” is con­sid­ered to mean both ba­sic salary and any reg­u­lar al­lowances. Any end of ser­vice gra­tu­ity due is for­feit if some­one breaks a fixed-term con­tract with fewer than five years of ser­vice. This is per Ar­ti­cle 138 which says, “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.”

It would be in ZA’s in­ter­est to see out the full term of his con­tract, es­pe­cially as he has to give 30 days’ no­tice any­way. Pro­vided he no­ti­fies the cur­rent em­ployer that he will not be re­new­ing the con­tract, if he works un­til the cur­rent con­tract is com­plete he will have no penal­ties to pay upon leav­ing em­ploy­ment.

I have a “Smart Saver” credit card with Mashreq Bank and want to know how I can ac­cess the Marhaba Lounge at Dubai air­port. Is any reg­is­tra­tion re­quired and what is the pro­ce­dure? IJ, Dubai

Many credit cards have such ben­e­fits and in this case the rel­e­vant in­for­ma­tion can be found on the bank’s web­site which ad­vises that ac­cess is via the LoungeKey Pro­gramme. De­tails of el­i­gi­ble air­port lounges can be found at www.loungekey.com. Card hold­ers need to reg­is­ter to use the ser­vice, us­ing a link pro­vided by their bank, so if IJ does not have this he will need to re­quest it from his own bank. The FAQ sec­tion of the Lounge Key page pro­vides fur­ther in­for­ma­tion re­gard­ing us­age.

I have been work­ing for a com­pany for four years but I have not re­ceived any salary for three months so I do not want to re­new my visa. On No­vem­ber 9 I gave them my

no­tice and they have not paid me any­thing yet. No salary, no fi­nal set­tle­ment, even though I have fin­ished my no­tice pe­riod. What can I do to get my money and can the com­pany get in trou­ble? Can I get a ban in this sit­u­a­tion? RK, Abu Dhabi

RK’s em­ployer is break­ing the law in not pay­ing salaries in a timely man­ner and not pay­ing the end of ser­vice ben­e­fits that are due. He there­fore needs to reg­is­ter a case at the Min­istry of Hu­man Re­sources and Emi­rati­sa­tion (MHRE), or his lo­cal labour of­fice, as a mat­ter of ur­gency. The MHRE helpline num­ber is 800 665. If an em­ployer has failed to pay salaries there are var­i­ous con­se­quences.

The pay­ment of salaries should be mon­i­tored by the Wages Pro­tec­tion Sys­tem and this should flag up the late, or non, pay­ment of salaries so that com­pa­nies can be pe­nalised. The sys­tem was in­tro­duced in 2009 and backed up by Min­is­te­rial De­cree in 2016 which stated, “An em­ployer shall be deemed as late in pay­ing wages if the wage is not paid to the em­ployee within 10 days of the due date; and an em­ployer shall be deemed as re­fus­ing to pay wages if the wage is not paid to the em­ployee within one month of the due date (un­less a shorter term is pro­vided for in the con­tract).” Com­pa­nies that do not com­ply will ini­tially re­ceive a warn­ing, then they will not be granted any new visas, and the Min­istry can even use the em­ployer’s bank guar­an­tee.

While em­ploy­ment bans still ex­ist, RK would not re­ceive a ban for leav­ing em­ploy­ment at the end of a fixed term con­tract. Even if he was to part way through a con­tact he would still be free to leave with­out any kind of em­ploy­ment ban as he has not been paid by his em­ployer for three months. If an em­ployee is not paid for three con­sec­u­tive months, they should not re­ceive a ban, no mat­ter the cir­cum­stances of their de­par­ture.

Keren Bobker is an in­de­pen­dent fi­nan­cial ad­viser and se­nior part­ner with Hol­born As­sets in Dubai, with over 20 years’ ex­pe­ri­ence. Con­tact her at [email protected]­bor­nas­sets.com 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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