Question: I have a comprehensive insurance for my factory and I have paid all the premiums. A month ago, the factory was exposed to a big fire that resulted in huge losses. According to reports from the competent authorities, the cause of the fire was an electrical short circuit and the firefighting equipment was working well. However, the insurance company has refused to pay compensation on the grounds that the factory was exposed to a similar accident eight months ago. My question is: Does the insurance company have the right to refrain from paying compensation on this pretext? Please advise.
Answer: First of all, the insurance company has no right to deny paying compensation. This is because the insurance contract says that it is a consensual and compensatory contract in the sense that each party receives the amount it contributes and it is a bilateral and successive contract since the obligations thereunder are performed continuously till the expiration of the contract term.
In case of a risk covered by the insurance, the insured or his representatives shall be entitled to receive the financial compensation to be paid by the insurer, provided that the insured has paid the agreed premium under the insurance policy. It is decided by Dubai Court of Cassation that: ‘Fire insurance is a contract of compensatory capacity and aims to compensate the insured — or the beneficiary of the insurance policy — for the damages that arise from the fire and are the inevitable result of it, within the limits of the damage to the beneficiary. Also, insurance is one of the time-bound contracts that have a period of consideration, as the insurance is only effective from the date of its validity and ends with the end of the last day of its term and does not extend to the damages that may occur arising from a fire that broke out after the end of the insurance period, unless agreed otherwise.’ (Cassation No 2011/272, commercial.)
This is stipulated in Article 1034: ‘The insurer is bound to pay the insured amount or the sum due to the insured or the beneficiary, as agreed, upon occurrence of the risk or maturity of the period fixed in the contract.’
Article 1038, 1040 and 1041 state: ‘The insurer is liable for damages resulting from the unintentional fault of the insured or the beneficiary. The insurer is liable for damage caused by persons, whatever be the nature of their fault. The insurer is liable for the damages resulting from the fire even if the fire broke out owing to a defect in the insured item.’
The exception to the above principal is if the fire is caused deliberately. According to Article 1039: ‘Notwithstanding any agreement to the contrary, an insurer is not liable for damages caused deliberately or fraudulently by the insured or the beneficiary.’
Sick leave and end-of-service benefit
Question: A questioner from Dubai asks: I am the owner of a company. I have employees who work according to the rules stipulated by UAE Ministry of Labour. If an employee was exposed to coronavirus and was isolated for more than 15 days, does he get sick leave with full salary? Secondly, I have an employee who is demanding his end-of-service benefit for having worked in the company for five years. Is he entitled to it? Please advise.
Answer: With regard to the first question, if the employee was detected as infected with coronavirus and was isolated, then he is entitled to 15 days of leave with full salary and half pay for the next 30 days of leave. This is according to Article 83 of UAE Labour Law, which says: 1. ‘During probationary period, an employee is not entitled to any paid sick leave.’ 2. ‘If the employee has spent more than three months in service, continuously, after the completion of his or her probationary period, and then falls sick, then he or she is entitled to sick leave for not more than 90 days — either continuously or intermittently — for each year or service, computed as follows: A. The first 15 days with full pay. B. The next 30 days with half pay. C. The subsequent period, without pay.’
It was also decided by Dubai Supreme Court that: ‘According to Article 83 (2) of the Law Regulating Labour Relations, if a worker spends more than three months after the end of the probationary period in continuous service of the employer and then falls ill, then he or she shall have the right to a sick leave of no more than 90 consecutive or intermittent days for each year of his or her service, which is calculated as follows: A) First 15 days with full pay. B) The next 30 days with half pay.’ (Cassation No 2016/168, labour.)
If the sickness occurred during annual leave, then it is considered as part of annual leave, as per Article 77 of the same law. The annual leave period is deemed to include such holidays as prescribed by law or as agreed to, and any other period of sickness that occurred during this leave is considered as part thereof. It was decided by Dubai Supreme Court that “it is indicated by Article 77 of the law that annual leave is included in its calculation as sick leave when it is interrupted by and is considered part of it. (Cassation No 2004/64 Labour.)
With regard to the question on gratuity, the principal, according to UAE Labour Law, is that gratuity should be paid to an employee at the end of service, not during the service. The employee’s right to end-of-service remuneration is related to public order and no one can deprive the employee from it once his right to it is established.
Article 132 states: ‘The employee who has completed one year or more in continuous service is entitled to the end-of-service remuneration at the end of his or her service.’ It was decided by Dubai Court of Cassation that ‘The rights established for the worker, including gratuity, are related to public order, because the law regulates them with texts that command them and they cannot be violated. This end-of-service benefit must be calculated from the beginning of the continuous service until its end, pursuant to the text of Article 132 of the law, and the worker may not be deprived of any part of it once his or her right to it is established. (Cassation No 2017/132, labour.)
The law did not restrict the employee from requesting for his or her end-of-service benefit while he or she is still working, especially when the employee is in need of funds, but it does not mean that the employer is obliged to pay it. The employer may refuse because it is not due yet, since the employee is still working. This means that it is related to the agreement between both the parties.