Offering new contract Image Credit: Getty Images/iStockphoto

Dubai: Employees in the UAE are cheating big time on their employers, top lawyers have revealed.

Changes in rules governing labour bans and no objection certificates have made employees bolder, even as employers fail to safeguard themselves against employee breaches of trust, fraud and other offences, some lawyers said.

The issue of temporary labour permits being given to employees with running disputes in the court and their exemption from payments of court fees also act against the interests of the employers, they said.

 Surge in complaints

“Ever since the labour ban conditions were relaxed, we have seen a 60 to 70 per cent rise in cases where employers are coming to us as genuine complainants. The complaints include breach of trust, disclosure of business and trade secrets, non-competition clause violations and infringement of proprietary rights,” said Musthafa Zafeer, Senior Lawyer and Partner at Musthafa & Almana Legal Consultants and Advocates in Dubai.

Zafeer should know. Since November 2011 he has filed 60 such cases in the Dubai Courts, including 10 in just one week. “The problem is so widespread that we have set up an exclusive business legal lounge to address the issue,” he said.

Bindu Chettur, Lawyer at Mohammed Salman Legal Consultants and Advocates, said, “I have handled around 40 cases since last year. It has become common practice for employees to set up businesses in the name of their spouses or others close to them and diverting their employers’ existing clients and jobs to the parallel business.


Job diverted

The owner of a Dubai-based contracting company, who has filed a case of employee breach of trust against a senior manager in the Dubai Courts, said he was shocked to find that his colleague had clandestinely diverted business worth Dh15 million over a year’s time from his company to a parallel business set up by a former employee.

“I didn’t know until one of my clients asked me if the manager still worked with me. When I said yes, he told me that the manager, my most trusted employee, had solicited business from him for another company,” he said.

“An inquiry revealed that eight projects for which the contracting company had received inquiries had been re-routed to the parallel firm. When we terminated the manager’s services, the employee went to the courts saying due notice was not given.”

He said the manager had set up a full-fledged website from another country showing his company’s projects as that of the other entity. Worse, he alleged that three other employees were also creaming away projects to their own set-ups in construction-related fields.

His lawyer said, “Besides the breach of trust criminal case under Article 404 of the UAE Penal Code, my client has also filed a case under Article 379 for disclosure of business secrets and a civil suit under the Civil Transactions Act to claim damages for revenue and other losses.”

There are a number of examples where erring employees have prompted legal action - four colluding employees of a financial services company who diverted clients to a competitor; three employees of an IT services company who signed a non-disclosure undertaking with their employer but blatantly traded company secrets; a top employee of a trading house who diverted jobs worth millions of dirhams to his own company by offering to do the same work at a lower cost.

But employers say they feel helpless in such situations.

The managing partner of a Dubai-based studio alleged that a driver, employed for nine months, had coughed up traffic fines worth Dh13,500 after office hours.

“Upon searching the car, we discovered he’d printed massage business cards offering his services as a masseuse with our company details. If this is not good grounds to fire an employee, we further found a camera which contained images of the driver and some girls in our office at night … The driver was dismissed after receiving any money owed and signing a receipt for his end of employment.”

Subsequently, “the driver went to the labour courts and complained against the company for late salary payments which was untrue.”

The partner claimed that the company provided evidence of payment and other illegal activities but the labour court sent the case to the Dubai Courts.

The partner said after a legal battle that lasted over a year and a half, the driver was awarded four years’ salary on the basis of “fake” documents and he is still roaming free on the company’s visa.

 Labour entitlements

Khalid A. Wahab, Advocate at Al Midfa & Associates, said one of the most common types of cases that the law firm faces are employees asking for more labour entitlements or end-of-service benefits. “One of the common cases we face is where the employee asks for unpaid salaries for one full year, where the employer cannot provide evidence about the payment of salaries.”

He said, “In labour matters, the court fees are ultimately borne by the employer. The exemption of court fees payable by the employee has increased the number of such cases, because it encourages the employees to ask for more labour entitlements. For example, if an employee is entitled to Dh100,000 as per law, he would claim half a million just because he does not have to pay court fees.”

“It is not the relaxation of the labour ban that has made employees bolder, but the issue of temporary labour permits which are given to those who have running disputes in the court. This along with the exemption of the court fees works against the employer’s interests. However, we cannot deny that in a lot of situations, employees deserve to have both of them if the employer is in the wrong. The solution, in my opinion, is the correct application of the law by the judges.”

Despite such instances being commonplace, many employers are caught unawares.

 Lack of legal advice

According to Musthafa, the problem arises because employers do not take sufficient safeguards. “Employers, especially SMEs, are not inclined to take legal advice until things go horribly wrong.

“They often treat appointment letters as the final agreements and do not mention the same conditions and clauses in the labour contract. That is why they land in a soup.”

He said although the labour contract is a fixed template, there is a provision to include additional clauses under “other conditions”.

“The little details that go into an appointment letter should go into the labour contract as well because it is only this document that holds good in the court of law.”

He said employers should also give a copy of the labour contract to the employee. “This does not generally happen. But everyone should know where they stand legally.”

Chettur said, “Employers must include key clauses in the labour contract to safeguard their interests. By bringing in a proper audit report to establish the guilt of an employee, they can frame criminal cases and even claim civil compensation after the guilt is established.”