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Q: I have worked in a company for more than six years. One month ago my company terminated my unlimited labour contract but it insists that I work for a notice period for three months as per the contract. I left the company immediately; my company via email still requested me to work for the notice period. As per the UAE labour law, does the employee whose service has been arbitrary terminated need to work for a notice period? My company used to pay for every employee working in a notice period only basic salary not full salary — according to my company this is as per UAE labour law. My company provided me with a written termination but I refused to sign. My company forwarded the termination letter via email, in this case does the termination via email and without the consent and reply of the employee considered legal. Please advise.

A: Article No 117 of UAE Labour Law No. 8 of 1980, mentions the following:

Both the employer and the employee may terminate a contract of employment of unlimited period duration for a valid reason at any time following its conclusion by giving the other party a notice in writing at least 30 days before the termination.

iStock_25758648_LARGE quit resignation
For illustrative purposes only. Image Credit: Agency

In case of workers working on a daily basis the period of notice shall be as follows:

1. On week, if the worker has been employed for more than six months but less than one year.

2. Two weeks, if the worker has been employed for not less than one year.

3. One month, if the worker has been employed for not less than five years.

Therefore, as per the above mentioned article the employee upon the employer’s request must work for a notice period even if his termination was arbitrary dismissal.

The termination sent via email to the employee is considered valid and legal and does not require employee’s approval as per the UAE labour law.

Finally, the employee is entitled for full salary not a basic salary when working in a notice period.

LLC: Partners and liabilities

Q: We are six people planning to set up an LLC in Dubai. As per the UAE commercial law, what is the number of partners required to set up an LLC? What are the responsibilities of the partners towards the company’s banks creditors in case the partners are not holding personal liability?

A: A Limited Liability Company as defined by Article 71 of UAE Federal Law No. 2 of 2015 concerning the Commercial Companies (New LLC) came into force on July 1, 2015, replacing the existing Federal Law No. 8 of 1984 and its amendments concerning the Commercial Companies. An LLC is a company where the number of partners is at least two but shall not exceed 50. A partner shall be liable only to the extent of its share in the capital.

A single natural or corporate person may incorporate and hold an LLC. The holder of the capital of the company shall not be liable for the obligations of the company other than to the extent of the capital as set out in its Memorandum of Association.

Therefore as per the above-mentioned article, the general rule is that a shareholder in an LLC is responsible only to the extent of his share/shares in the capital of the company. The exception to this general rule is that such shareholder will be personally liable, if he exploits the principle of the independent liability of the company, conceals his fraudulent acts or misappropriation of the funds of the company in order to cause harm to his partners or creditors. In such case, the protection bestowed by law for shareholder in a limited liability company will not apply. He will be held liable in his personal capacity for such disposition.

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