In your home country, switching employers may be as simple as submitting your notice and signing a new employment contract. In the UAE, there are a few extra things that you have to consider such as what happens to your bank account. This is particularly relevant if you have outstanding loans or commitments to your bank. So what are the rules around this and how do banks react to changes in your employment situation?

Your bank account could get frozen

We’ve heard numerous accounts from employees in the country who claim that their banks had put a freeze on their accounts during their job transition period. One customer by the name of Sana described what happened after she started a new job: “Everything went smoothly with my salary transfer from my new employer,” she said. “But about one month into my new job, I was surprised to find out that my bank had frozen my account. The reason is that I had a loan with them and they got communication from my previous employer that I no longer worked there. I was a bit surprised as I was not aware this could happen.”

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What does the UAE Central Bank say about this?

It’s important to note that there is no mention of this activity under the UAE Labor Law and this isn’t a standard procedure by any means. Yet it can and does happen after an employer notifies the bank of an employee’s departure. The UAE Central Bank does have rules in place which outline seven specific cases in which a bank can demand immediate payment of any outstanding loans that a customer may have.

These include:

  • If the borrower is terminated for any reason
  • The transfer of the borrower’s salary to another bank without prior approval of the bank
  • Violation of any terms by the borrower
  • Defaulting on three consecutive loan instalments or six non-successive instalments
  • If the information and documents submitted by the borrower when applying for a loan are found to be incorrect at any time
  • If the bank notices that there are reasons the borrower may not be able to repay the loan

[Related: New bank account in UAE: How to get set up | Frequently asked questions: UAE bank accounts]

What happens when your employment visa is cancelled?

Upon the employer’s cancellation of your visa, a company will usually mark the last salary transfer which will signal to the bank that the customer is possibly exiting the UAE altogether. Be aware that many banks have their own policies on how to deal with a customer once his employment changes. So make sure you have read the terms and conditions very carefully before signing any paperwork. “It is possible that the terms of a loan, credit card or mortgage include a promise by the borrower to notify the lender of changes to his/her employment,” says Jamie Liddington, Head of Employment at UAE-based law firm Hadef & Partners. If the customer/employee signs any contracts with the bank that agree to such terms, then switching employers without notifying the bank would constitute a violation of the terms.

Other reasons a bank may freeze your account or close it

If your account is dormant, your bank could close your it and you may be required to immediately pay off any outstanding loans you have.  A dormant account is one that has seen no activity or transactions in over six months. Again, this depends on the bank’s policies. Emirates NBD has its own set of rules that allow it to close an account at its discretion, in case a customer does not comply with the agreed upon terms and conditions. NBAD, First Gulf Bank and RBS Bank also have similar terms. After an account closure action is taken, the customer would be notified and required to settle any outstanding debt in full.

[Related: Guide to bank accounts in the UAE]

Inform your bank if you are changing jobs

There is some evidence to suggest that you may be able to resolve issues arising with your bank when you change jobs. This can be achieved if you are able to provide all the proper documentation and proof of employment and show that there are no outstanding debts to be paid. According to Raghuveer Mehra, Head of Credit for Retail Banking at RAKBANK, “the customer can inform the bank about the change of jobs and can continue to transfer their new salary into the existing bank. All facilities remain the same after a new set of documents are updated and signed.” He also adds that “it’s the responsibility of the employee to inform the bank that they have changed their job in order for the bank to update their documents.”

Take out the cash you need before you make the change

Given some of the complexities associated with changing jobs within the UAE, it would be a wise move to plan ahead and take out as much cash as needed in case of any issues later on. To avoid any surprises, check with your bank and understand its policies. Make sure that you are prepared for any consequences arising from a shift in your employment situation.