Questions & Answers
Employer's right to deduct debts of employees from their end of service gratuity
I was working in a company in the UAE for five years. In the UAE they do not have a retirement plan for expats, only End of Service Allowance (EOSA). My employment contract is an open contract. No contract duration.
I had taken a loan from the company. I borrowed the funds to support my children education. I had been approved for the loan given I have a salary.
The company decided to terminate the employment of about 400 employees. I did not request to be terminated. No package was given at all for compensation except EOSA plus ticket and freight cost.
I recently received the company Draft Final Settlement document whereas the EOSA amount that I was hoping to use to survive and provide food and shelter for my family was taken away completely and applied towards paying the loan.
They fired me, I did not ask to be fired. They have broken their side of the contract.
What legal recourse do I have for not accepting the company literally taking away my EOSA and leaving me bone dry?
Dear Questioner,
From what I read above it seems to me that the company has followed the law in its correct sense dealing with you in this termination.
As an Expat worker, you are not subject to any pension plan. All that you have is the End of Service Gratuity which is calculated based on the number of years you have served and based on your last Basic Salary.
Also, the company has the right to terminate your contract giving you One month notice in case your contract is Unlimited. The company did not breach the contract by terminating it. The word Unlimited does not mean that they cannot terminate the contract, but it means that the duration is not limited to a specific period and can be any period.
Last, the company has the right to deduct at the termination any monies that are due to their favour from the terminated employee and by this, they are actually following the correct articles of the UAE labor law.
