Daily Personal Finance Insights – Removing indiscretion
End of Service Benefits
Salary pay for the purposes of End of Service Benefits (EOSB) in the UAE is generally accepted as being the employee’s ‘basic pay,’ excluding allowances, provided that the contract of employment properly distinguishes between the basic pay and allowances. However a recent Court of Cassation has deemed that EOSB calculations should be based upon basic salary and, in addition, commissions or bonuses where such amounts are essentially fixed or guaranteed.
Indiscretion with Employee Bonuses
A recent employment tribunal decision may be very relevant in cases concerning employee bonus payments in the UAE, particularly those before the DIFC Courts, especially bonuses indicated as “discretionary” in employment contracts. It is therefore imperative, where the contract of employment or the bonus scheme documents refer to discretion, that there is little doubt as to what this ‘discretion’ refers to. This case highlights the importance of setting out the terms of any bonus scheme very carefully, and at making it clear where the employer can exercise its discretion not to give an employee a bonus. The fact that a bonus scheme has been referred to as ‘discretionary’ may not in fact give the employer the unfettered right to withhold or refuse to make a bonus payment to employees.
Expats in the UAE are being enticed with an attractive pension plan. Pension experts predict the launch of the Abu Dhabi National Bank retirement scheme could become popular, with some mutterings that such a scheme could even become compulsory among companies as it benefits both employers and employees. A generous pension scheme helps employers attract expat talent and retain existing foreign staff - over half (53%) of UAE expat employees claim that retirement security has become a higher priority for them. Read more in cashy’s article on demystifying the new pension trust.
A more business friendly environment
A new competition law will come into force on 23 February 2013 with the aim of creating a more business friendly environment in the UAE. The aim of this new law is to protect and enhance competition, as well as to fight monopoly practices in order to promote a free market economy. The new law is also aimed at protecting consumers through oversight by the Consumer Protection Department (CPD) for, “monitoring and control of prices.” The CPD will “work to attain fair competition and combat monopoly.”
Finally -- It’s down it’s up
The IMF predicts the overall economy in the UAE is likely to slow down in 2013 due to the anticipated flat growth in the global oil demand. However the IMF indicates the UAE will record strong growth in services led by tourism in 2013. Recent major infrastructure development announcements and investments by the UAE Government will help the economy retain a semblance of stability and nominal GDP growth.