I have been working for a semi-government company for over three years. Our main client has not renewed their contract and as a result our company is terminating our employment contracts early. The company now wants to retrieve six months’ rent from my end of service and salary payments because it provided me with a housing allowance at the start of employment. This is unfair as I have taken a yearly housing contract and already paid out the full sum to the landlord. What is my legal standing please? IA, Abu Dhabi
The situation will depend on the wording in the contract of employment. Generally a housing allowance forms part of an individual’s income and if it is paid in one go it is considered an advance on salary so that a full year needs to be worked to cover the liability. Employers may sometimes pay the allowance in one go so that employees do not have to take an interest-bearing bank loan, but it is still part of salary. It is very rare that any housing allowance would considered as an amount that would not need to be repaid if an individual leaves service early for whatever reason. Unless the contract of employment states that it is not repayable on not completing a year of service, then IA will need to repay the monies received as advance pay to cover his rent.
Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at email@example.com. Follow her on Twitter at @FinancialUAE.
The advice provided in our columns does not constitute legal advice and is provided for information only