UAE worker resigns from fixed contract – can employer issue 6-month ban?

I have worked for a company for three years and four months. I completed my first limited contract and am now on a renewed visa, which will end on December 15 this year. I have been offered a job by a semi-government company which I want to take. As instructed by my new employer, I prepared a letter of resignation with a notice period of three months. When I took this to the HR department, they told me that if I leave they will give me a ban of one year and charge me a penalty. This would be a “company ban” of six months plus a labour ban of another six months. As the new job will be with a semi-government company, would I still get a ban? A friend thinks my current employer is just trying to scare me so I don’t leave. Can you confirm the legal situation please? SB, Abu Dhabi

In many cases once a person reaches the end of a fixed-term contract their employment continues on a regular unlimited basis, but SB has sent me a copy of his contract and he has signed up for a second fixed contact for a further two years, expiring in December of this year. As SB has been with the company for more than two years he will not receive any ban on leaving employment and it sounds as if the employer is making threats that cannot be substantiated. In this case it is academic who the new employer will be. As SB is on a fixed contract and wants to leave early, he will be subject to a penalty in accordance with Article 116 of UAE Labour Law. This states that “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”. This equates to 45 days of pay. In addition, anyone who leaves employment of their own accord while on a fixed-term contract will also forfeit their entitlement to the end of service gratuity if they have worked for less than five years on a continuous basis, per Article 138.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years of experience. Contact her at Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice

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