'My employer is not honouring my salary and now wants to slash it by half'

When I joined my company, I signed an offer letter but later on I noticed the employment contract was different. I refused to sign this, but they said they did not want to pay such heavy government fees so they had to reduce my basic salary but will pay me the extra. On the labour contract, my basic salary is Dh600 but on the offer letter it was Dh1,400 per month. I asked my boss for proof I will be paid the higher amount and she wrote that on the employment contract. Now she does not want to pay me and even wants to reduce my salary by 50 per cent. I want to quit my job but she is stopping me as she has my passport. I work from 7am to 9pm on some days and from 7am to 10:30pm on others. I have also discovered that my employer has posted my job position online. What can I do? IO, Ajman

No employee should be treated in this manner and the employer is not acting fairly. The company is a limited liability company which means it has a mainland licence and UAE Labour Law applies.

I have seen the offer letter and it states a salary of Dh1,400 but there is also an illegal clause that says the employer will charge the employee for visa costs. This is not permissible under UAE Law.

While the employer said the reason for the lower salary was to reduce its costs, this is unlikely as visa costs do not change for different salaries for the same role. I am sure the company is aware that in the labour courts, the contract lodged with the Ministry of Human Resources and Emiratisation (MoHRE) is the one that matters. For IO, this is the contract that states a salary of Dh600 per month.

Under UAE law, an employer cannot reduce a salary without the agreement of the employee, and this has been reiterated in the recent Ministerial Resolution (No 279 of 2020). It has also been made clear by the UAE authorities, on multiple occasions, that employers should not retain passports.

IO is on a limited term contract so if he resigns, he will have to pay a penalty to the employer in accordance with Article 116 of UAE Labour Law. This is equivalent to 45 days of salary, but if he makes a case against the employer there is a possibility this could be waived.

Finally, if the employer is advertising the exact same position and then makes IO redundant without an acceptable reason, he would have a good case for claiming arbitrary dismissal in accordance with Article 122 and 123 which could lead to some compensation.

I urge IO to register a case with MoHRE against the company for: the salary cuts, the excessive hours, the passport retention and potentially arbitrary dismissal.

I have a mortgage with a UAE bank that is linked to the Eibor (Emirates Interbank Offered Rate). I read that the UAE interest rates were cut last month but I haven't been informed of a drop in my mortgage rate and when I asked I was told that there wouldn't be one. Shouldn't these cuts be passed on to customers every time? Can I check the rate myself to make sure I am being correctly charged? HS, Dubai

Eibor is the interest rate at which banks lend to each other. This changes daily and is published on the Central Bank of the UAE's website. This is not the same as the bank base rate which was reduced in mid-March.

Most banks in the UAE use Eibor when setting the rate of interest payable on a mortgage, but it is the rate plus a margin as banks are businesses and need to make a profit. Banks use the three-month Eibor rate, as it is impractical to link to a rate that changes daily.

When it comes to checking if a borrower is being charged correctly, the details will be in the small print. This explains how the rate is calculated, how often it can change and also if there is a minimum rate. It is not uncommon for a mortgage to have a ‘floor’, a minimum below which the rate will not fall, when it comes to borrowing. All borrowers need to ask these questions when taking out a mortgage, or indeed any other loan, so they fully understand the conditions and any future changes to the rate of interest payable, whether an increase or a decrease.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 25 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