Breaking contract of UAE employment comes at a cost

I have worked in a private clinic since 2011 under a limited contract. Last August, I renewed my contract for another two years. I have now been offered another job with a government organisation. I have already submitted my resignation and my last day of work is on January 30. My questions: do I really have to pay my current employer 45 days of my salary? Will I get any kind of ban? Should I be charged any additional expenses by my employer? SP, Abu Dhabi

SP is liable to pay a penalty for breaking the terms of a limited contract by choosing to leave before its completion. Article 116 of UAE Labour Law states: “If the contract has been terminated on part of the employee … the employee becomes liable for compensating the employer against losses incurred by him in consequence of contract termination, provided that the amount of compensation may not exceed half a month’s pay for a period of three months or for the remaining period of contract, whichever is shorter, unless the terms of the contract provide otherwise.” Half a month’s pay for three months is equivalent to 45 days, but this should be based on an employee’s basic salary only. SP will not receive an employment ban, as she has been with her current employer for more than two years, and her employer is not legally permitted to ask her to pay any other cost on leaving employment. She should, however, be aware that she will not receive any end-of-service gratuity in accordance with Article 138 of Labour Law, “If an employee under a contract with limited period leaves his work at his own option before the end of the contract period, he shall not be entitled to end of service gratuity unless the period of his continuous service exceeds five years”.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with more than 20 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.

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