My employer has kept my original certificates in his custody? My employer’s explanation for this is that they are needed to facilitate [dealings with different departments and the Ministry of Labour requirements from time to time] and the certificates will be released upon resignation of the employee from the service. As per the UAE Labour Law, can the employer do this? At the time of leaving the work, in case the employer refuses to give the experience certificate, how can I get it legally? Do I have the right to get the experience certificate also stating the last remuneration and bonuses paid. What other information can be mentioned in the experience certificate as per the UAE law?

I would like to clarify to the questioner that Article 125 of the labour law states the following: “An employer shall provide a worker, on the latter’s request and on the termination of his contract, with a certificate of termination of his 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.”

Therefore, the above article entitles the employer to retain the worker’s certificates until the end of service. Therefore, I advise the questioner that if he has given the employer the original certificates and documents, he shall request for a written acknowledgement stating that these documents are held by the employer and that the employee can claim the same when needed. If the employer refuses to give the experience certificate, he approach the labour court.

Manager’s liability in an LLC

I am a woman. I would like to know about a manager’s liability in a limited liability company under the latest UAE Companies Law. Moreover, what legal action can be taken against the manager by partners?

The new UAE Companies Law, which came into effect in 2015, has made significant changes to the provisions governing a limited liability company (LLC). There is not much deviation from the old Companies Law in the provisions relating to the liability of a manager of an LLC. However, considering that most LLCs do not have a board of managers or directors and are generally managed by a single manager with wide decision-making powers and responsibilities, it is important to understand the relevant provisions regarding a manager’s liability.

Article 84 of the Companies Law states that every manager shall be liable to the LLC, the partners/shareholders and third parties for: (i) any “fraudulent acts”; (ii) any losses or expenses incurred due to “improper use of the power”; (iii) contravention of the provisions of any applicable law, the memorandum of association (bylaws) of the LLC or his/her employment contract; or (iv) any “gross error”. Article 162 of the Companies Law, containing similar provisions, makes a manager also liable for an “error in management”.

Except for the liability for gross error, the old Companies Law had similar provisions relating to the liability of a manager. While Article 84 of the new Companies Law introduces the concept of liability for gross error, which potentially increases the liability threshold, Article 162 continues to make a manager liable for an error in management.

Article 84 precludes the possibility of limiting a manager’s liability through the LLC’s memorandum of association or the manager’s employment contract. It also states that any provision in the memorandum of association of the LLC or the employment contract in conflict with Article 84 shall be deemed void.

Article 165 provides that the company may file a claim for liability against the board of directors for errors causing damage affecting all shareholders. The general assembly must adopt a resolution appointing a person to pursue the claim in the company’s name. Therefore, the partners of an LLC would be similarly permitted to file a claim for indemnification against a manager for losses the LLC incurred as a result of the manager’s wrongful acts.

Article 167 provides that a decision passed by the general assembly to relieve the board of directors/managers from liability for errors will not prevent the filing of a civil liability lawsuit against the directors/managers in relation to errors committed by them during the performance of their duties. Therefore, a resolution of the general assembly of an LLC that purported to release a manager from liability for his or her errors would be ineffective.

The Companies Law does not preclude a manager from maintaining professional liability insurance, or taking an indemnity from the LLC or its shareholders. However, the indemnity may be open to be challenged before the courts.

The Companies Law stipulates various penalties for managers in case of a breach of provisions of the law. The penalties are criminal in nature and include fines and imprisonment.

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