Mohamed Elmasry’s recent contribution to the Gulf News focuses on how to protect your end-of-service benefits to navigate job transitions smoothly.
AS PUBLISHED IN GULF NEWS
Dubai: Many UAE employees rely on their end-of-service benefits or gratuity as a financial cushion during job transitions. But did you know that UAE banks can freeze or utilize end-of-service benefits to offset outstanding loans or credit card debts?
Mohamed Elmasry, an associate at Alsuwaidi & Company Advocates and Legal Consultants, corroborated this, stating: “This practice is based on the contractual agreement between the bank and the borrower.”
He clarified that this practice of freezing the gratuity does not apply only to salary accounts, but also other accounts you may have loans on.
“This practice can apply to any account held with the bank where the loan or credit facility is established. While salary accounts are the most affected due to their role in receiving the end-of-service benefits, the bank’s right to offset liabilities against funds in any account held by the borrower with the same bank typically extends to all types of accounts,” he said.
Elmasry also suggested speaking with your organization to look for ways in which you can avoid the gratuity amount being frozen.
“If permissible, workers might consider having their end-of-service benefits deposited into an account at a different bank where no loans are outstanding, or if feasible, clearing outstanding loans or credit card balances before receiving the end-of-service benefits, which can prevent the bank from freezing the gratuity,” he said.
“While salary accounts are the most affected due to their role in receiving the end-of-service benefits, the bank’s right to offset liabilities against funds in any account held by the borrower with the same bank typically extends to all types of accounts.”
To speak with the author, please contact Mohamed Elmasry on mohamed.elmasry@alsuwaidi.ae
