Confusion over Dubai free zone worker’s housing allowance

Keren Bobker advises a worker who plans to resign and wants to know if he has to return the outstanding housing allowance loan to his company.

I am working on a limited contract in a free zone company. I am considering resigning to go back to my home country. Apart from my basic salary I am entitled to a yearly paid housing allowance. Do I need to pay this amount back on resignation? In the offer letter and in my contract there is no clause which states that it needs to be paid back. But in my monthly payslip, the company deducts the equal monthly rate as a loan instalment, which in my opinion is wrong. I am attaching the offer letter for your reference. MC, Dubai

The offer letter simply refers to a housing allowance being paid annually with no other details. It does not say that it is payable as an interest-free loan, so it does not seem right that MC, having received the allowance, is repaying it each month. Presumably this has been the case since taking up the position, but taking so long to complain may weaken his case. He should still raise the issue with the employer and if he gets no satisfaction, then take it up with the Ministry of Labour.

Note that if an allowance is paid in full, in advance, and an employee leaves before the end of the 12-month period, then the allowance would usually need to be repaid for the months not worked.

According to the offer letter, this is not a limited/fixed contract, so he may leave the company by giving 30 days’ notice, and there would be no penalty as he would not be breaking a contract.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with more than 20 years’ experience. Contact her at [e-mail]. 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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