Business

Domestic staff not covered by UAE Labour Law regarding end of service gratuity

The Federal National Council has discussed this topic on sev­eral occasions, but there is yet to be any formal announcement or change to the law in this regard.

Keren Bobker

September 17, 2016

Has the UAE passed the law covering gratuity payments for domestic staff? I have a maid and driver whose contracts I will be cancelling in December due to our relocation. ME, Dubai

While the main UAE Labour Law, as introduced in 1980, provides for an end of service gratuity for employees, this does not apply to domestic staff, as well as a few other categories of employees.

The Federal National Council has discussed this topic on sev­eral occasions, but there is yet to be any formal announcement or change to the law in this regard. The unified maid contracts that were introduced across much of the GCC at the end of 2014 made no mention of gratuities.

Despite there being no legal requirements for sponsors to pay any end of service gratuity, many do so voluntarily, particularly if someone has been employed for a significant amount of time.

I work in a salon and have been here for just over six months. My pay is not good and the hours are long, so I would like to move to an­other salon in the same emirate. If I give proper notice when resigning, am I free to start another job straight away? What issues might I face? Can they stop me from working somewhere else? SK, RAK

I understand that SK is on an unlimited employment contract. For anyone on an unlimited contract there should not be a ban if they leave after having completed a full six months of work and have given proper written not­ice of at least 30 days.

There is no reason why she should be prevented from working in another salon as any rules about working for a competitor under a non-competition agreement would not be enforceable for this type of position.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 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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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”