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Understanding End-of-Service Gratuity and Loan Recovery in the UAE

These rules apply to the Emirates Bank Association-approved General Terms and Conditions and Loan Agreements.

In the context of potential employment termination and an existing personal loan from a UAE bank, it’s crucial to consider the regulations outlined by the Central Bank of the UAE (CBUAE) under Notice No. 3692/2012. 

These regulations pertain to the General Terms and Conditions and Loan Agreements approved by the Emirates Bank Association.

Loan Agreement Terms and Security Measures:

Personal loan agreements often stipulate that a borrower’s salary and end-of-service benefits should be directed to the lender’s bank account. 

As per Article 2(1) of the CBUAE-approved Personal Loan Agreements Formats, borrowers commit to providing their employer’s letter undertaking the transfer of their monthly salary and end-of-service benefits to the lender throughout the loan duration.

Lender’s Rights and Loan Repayment in Employment Termination:

Article 4(6) of the CBUAE-approved Personal Loan Agreements Formats grants lenders the right to demand full repayment of the outstanding loan if they perceive that the borrower might be unable to repay the loan upon termination of employment. 

In this scenario, all installments, interests, fees, and expenses become immediately due without prior notification or court ruling.

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