Memorandum Association

Question 1: A questioner from Dubai asks: Six months ago I established a company with three other people; it was agreed that the 51 per cent of the capital value for the local partner was to be mentioned in the memorandum for ratification only — he is not going to pay that amount — we agreed to pay him some amount annually as a sponsor fee. The full capital is to be paid equally by me and the other three partners. We ratified the memorandum of association for the company, but following this the two partners told me that they could not pay the percentage offered to them and that they are only partners in the management, and thus I and my other partner have to pay the full capital. If I make a side agreement wherein I mention the actual percentage for each partner, would this mean that such an agreement is illegal since it is against the officially ratified agreement or is it deemed valid? In case of a dispute is the side agreement considered before the court whereby I can protect my rights? Is it possible to ratify such an agreement?

Answer 1: The questioner should firstly amend the ratified memorandum of association by removing the non-local partner from the company since they are not a shareholder as they did not pay their percentage from the capital. As for the side agreement, a court may accept this but it may not be ratified before the notary public. Therefore, I would advise the questioner to prepare such an agreement through the legal offices in order to be legally drafted and protect his rights if need be.

Termination

Question 2: A questioner asks: I was employed by a company for more than six years; two months ago, I was terminated and the reason behind this was because I put in a claim for my overdue salary, as I had not been paid for more than three months. I asked the company to settle my end-of-service gratuity and provide me with an end-of-service experience certificate but they told me that I had to pay an amount towards that certificate. Am I obliged to pay the said amount? Please advise and mention the article in this regard. Do I have the right to ask for compensation as my labour contract was terminated for no other reason that I asked for my overdue salary to be paid. My company also has my original certificate and other personal documents and refuses to give them back to me.

Answer 2: Termination by the company due to claiming an overdue salary might be deemed arbitrary dismissal, whereby the questioner may claim compensation. Regarding the end-of-service certificate and the original document belonging to the questioner, Article 125 of the UAE Labour Law Federal Law no 8, 1980 mentions the following; An employer shall provide a worker at the latter’s request and on the termination of his contract with a certificate of termination of service which shall be free of charge; it shall specify the dates of his entering and leaving the employer’s service, his total period of service the nature of the work he has performed, his last remuneration and any bonuses he has received.

It shall also be the duty of the employer to return any certificates, documents and tools belonging to the worker.

End-of-service benefits

Question 3: Questioner asks: I worked for a company for more than two-and-a-half years under an unlimited contract. I submitted my resignation when I got a job offer from another company but the trouble is the calculation of my end-of-service gratuity. The company states this shall be calculated as a third of the end-of-service gratuity not on the basis of 21 days for each year. Is this calculation in accordance with the Labour Law? Am I entitled to a return ticket? (note this is mentioned in my employment contract but my company is saying that I’m not entitled to the air ticket because I’m the one who submitted my resignation.)

Answer 3: Article no 137 of the Federal Labour Law No 8 of 1980 states the following: “Where a worker who is bound by a contract of unlimited duration leaves his work of his own accord after continuous service of not less than one year and not more three years he shall be entitled to one-third of the severance pay provided for in the preceding article; where the continuous period of service exceeds three years but does not exceed five years, he shall be entitled to two-thirds of such severance pay; where the continuous period of service exceeds five years, he shall be entitled to the full severance pay”. As for the question on the questioner’s right with regards to the ticket, if the questioner is returning to his home country permanently he should be given the air ticket. The employer does not have the right to withhold the employee’s air ticket as per the UAE labour law if their resignation has been submitted properly.

— Compiled by Bassam Za’za’, Legal and Court Correspondent