Does calculation of end-of-service benefits include notice periods?
I would like your help in understanding what the UAE Labour Law says about redundancy. Several employees are being made redundant at my company. In such cases, the human resources department issues a letter and tells employees that it is their last working day. They pay the employee one month’s salary as notice in the final settlement, but the gratuity and annual leave are only calculated to the day they are made redundant. For example, if they issue a redundancy letter on November 1, an employee’s final gratuity and annual leave is calculated only until that date. I feel they should calculate the gratuity and annual leave until December 1. Could you clarify? SN, Dubai understand that the contract of employment specifies a notice period of one month, the minimum required under the Labour Law. This means that the employer needs to give a month’s notice for termination, with a valid reason, although they can pay the salary due for the month at once and ask the employee not to return to work. Even if actual work ceases immediately, all benefits are payable for the full notice period.
In this case, it means that not only is the salary payable but also all benefits for a further month (until December 1). This includes annual leave days and calculation of the gratuity. The visa should not be cancelled until the end of the notice period and the cancellation papers should include a calculation of benefits as of that date and no earlier. In addition, any employees on a Dubai visa should also have medical cover for 30 days after visa cancellation.
I have lived and worked in Abu Dhabi since August 2019, but I may lose my job due to Covid19 issues. I will probably return to the UK as things do not look good in my industry. My question is about UK tax if I return. I have been away from the UK for more than a year now. Does that mean I do not have to pay tax? Or do I need to stay in the UAE until the end of this year to avoid paying tax? I have spoken to a few friends but am confused. JS, Abu Dhabi
The UK has strict rules regarding liability for income tax. JS will not be exempt from paying UK income tax if he returns to the country at the end of this year. A person must spend a full tax year out of the UK to be considered non-resident and eligible for income tax exemption on their overseas income.
A UK tax year is from April 6 to April 5, so JS would need to be a UK non-resident for tax purposes until next April to qualify for the exemption. Anyone deemed to be a UK resident is subject to UK income tax on their overseas income.
Various criteria apply in accordance with the Statutory Residency Test that specifies the number of days in a tax year that anyone can spend in the UK to retain their non-resident status. This will vary between 45 and 183 days, depending on individual circumstances. Partial tax years outside the UK, even if there is a full tax year out, may also be subject to tax but that depends on various other conditions. Tax can be complicated, and it is worth seeking professional advice.
My employment contract ends soon and will not be renewed. I will leave the UAE and return home but hope to come back when I can find more work here. I do not have any debts and I want to keep my bank account open. Is it essential to
have a job with a visa to have a bank account or is it OK to keep my account as it is? DF, Dubai
It is not mandatory to have a residence visa to have a bank account in the UAE, but you are required to show a valid visa upon request. Account holders are also expected to provide a copy of their visa upon renewal. That said, many banks will permit non-residents to have a basic account without any credit facilities.
Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 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