When switching jobs, particularly to one with a lower salary, it’s possible for your bank to freeze your end-of-service entitlements (EoSE) or final settlement. This often happens when the new employer is not registered with the bank, or your salary falls below a certain threshold stipulated in your loan agreement. Here’s a breakdown of the issue, your rights, and the actions you can take:
Understanding the Bank’s Actions
Banks typically base their decision to freeze funds on the terms of the loan agreement. Two scenarios can arise:
- Contractual Provisions Permit Freezing
- Your loan agreement may specify a minimum salary requirement as a guarantee for repayment.
- If your new salary is below this threshold, the bank may invoke a clause to freeze funds, as permitted under UAE laws like Article 715 of the UAE Civil Transactions Law.
- In such cases, the bank is legally justified in its actions.
- No Contractual Basis for Freezing
- If there are no salary-related clauses in your agreement, and you are not in loan default, the bank may not have a legal basis to freeze your EoSE.
- You can negotiate with the bank by providing proof of your ability to meet repayment obligations.
Steps to Address the Issue
- Review Your Loan Agreement
- Look for specific clauses related to salary thresholds, end-of-service payments, or collateral provisions.
- Contact the Bank
- Provide evidence of your current salary and demonstrate your ability to continue meeting loan repayments.
- Request Loan Restructuring
- If your salary has decreased, discuss restructuring options such as extending the loan tenure or reducing monthly payments.
- File a Complaint
- If the bank refuses to release your funds, lodge a formal complaint with the UAE Central Bank or the consumer protection platform, Sanadak.
- Cite relevant laws and consumer protection regulations to support your case.
Preventive Measures
- Transparency with Your Bank: Inform your bank promptly about changes in your employment or income to minimize risks.
- Understand Your Agreement: Read loan terms carefully before signing to know your rights and obligations.
Legal Support
If the issue remains unresolved, consult a legal expert to explore your rights and take necessary action. Legal professionals can help represent your case in court and ensure compliance with UAE laws.
Conclusion
The legality of freezing your final settlement depends on the loan agreement’s terms. If a clause allows for such action, the bank’s decision is justified. Without such provisions, the freeze may be challenged if your salary is sufficient to cover repayments. Consulting a lawyer is recommended to resolve complex cases and secure your entitlements.
