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How can an LLC company be closed down?

Ask the Law: Conditions under which an employment contract can be terminated

Gulf News

A reader in Dubai asks: I am a partner in a limited liability company (LLC). Due to a business problem and also a dispute between partners about profit distribution, it is difficult to run the company anymore and we have decided to close it down. Please let us know the procedures for closing down the company as per the law. One of the partners is not in Dubai as he has run away due to a cheque problem.

Closing down an LLC company requires the appointment of a liquidator by the court concerned, after a meeting of partners to decide the same, which means that all partners shall be available in the country or a representative of the absent partner as per attested power of attorney to carry out such a procedure. Minutes of the meeting shall be ratified and the other procedures have to be completed like publication in newspapers, notarisation of the papers by the notary public in addition to the procedures of the Ministry of Labour with regard to the cancellation of the visas of workers who come under the sponsorship of the company, the procedures of the Directorate of Naturalisation and Residence for the purpose of cancellation of the partners’ visas and the procedures of the Department of Economic Development and other authorities concerned.

Termination of employment contract

What are the circumstances under which an employer can terminate an employment contract? Does the employer have to give notice to the employee? Does it make a difference if the labour contract is for a limited or unlimited period?

As per Article 120 of the UAE Labour Law, an employer has the right to terminate the employee’s service without notice and regardless of the contract type — limited or unlimited period — if the employee commits an act of gross misconduct or under the following conditions:

If the employee assumes a personality or a nationality other than his own, or has submitted fake documents or certificates; if the employee was appointed under probation and the termination happened during that period or at its end; if the employee commits a mistake causing the employer a substantial financial loss, provided the employer informed the ministry of the incident within 48 hours; if the employee violates instructions relating to safety in the place of work, provided those instructions are written and displayed in a permanent place and the employee has been informed of these instructions orally if he is illiterate; if the employee fails to carry out his basic duties as stated in the contract and continues to do so in spite of a written warning that his service will be terminated if he repeats his misconduct; if he discloses a secret of the establishment, for whom he is working; if he is conclusively convicted by the court of a crime involving honour, honesty, and public morals; if he is found drunk or intoxicated by drugs during working hours; if he commits a physical assault on the employer or manager or one of his colleagues during work; and if he becomes absent without a legitimate reason for more than 20 intermittent days or more than seven continuous days within one year.

A limited contract can be terminated on the following bases: If the term of contract expires and it is not renewed; if both the employer and employee mutually agree to end it; and when either party acts unilaterally to terminate the contract before its expiry date (in this case the terminating party bears the legal consequences).

In case of unlimited contract, an employment relation is terminated in one of the following instances: Both the employer and employee mutually agree to terminate the contract; when either party decides, at any time, to terminate the contract provided that the terminating party abides by the legal notice requirements and continues to honour his obligations for the duration of the notice period, which cannot be less than one month; and when either party acts unilaterally to terminate the contract without complying with the legal notice and without reasons of default by the other party (in this case, the terminating party bears the legal consequences).

— Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.

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