Company debts won’t affect employee

Company debts won’t affect employee

By Mushtaq Ahmad Jan (Compiled by Ahmed Shaaban)

Published: Mon 18 Jun 2012, 9:39 AM

Last updated: Tue 7 Apr 2015, 12:39 PM

Q1) I used to work as an accounts manager in a trading company for seven years. While I was on vacation, I met with an accident and could not come back. When my visa expired, the company issued me a visit visa, but I could not come because I was unwell. When I recovered, recession had pushed the company to close down, and the owner of the company, who was deeply in debt, left Dubai without settling his dues. Is it possible for me to go back to Dubai on a visit visa and try another job with another company? What would I do if the company had blacklisted me? Please, advise.

A1) Three different legal issues have been raised in this question — ownership of a company and its liabilities, coming back to Dubai and working for another company, and blacklisting. Generally, a company does not have an owner, but rather has shareholders.

A shareholder may be held liable for his own acts. For instance, shareholders of a small company (which is a general practice here in the UAE) are often required to give personal guarantees to the lender bank. Usually, a lender bank obtains post-dated cheques signed by the shareholders or director of a company. Thus, a signatory of a cheque will bear criminal liability in case any of the cheques bounce. And, the signatory or the guarantors will be held liable in the event the company fails to pay its debts. Debts of the company will not affect any employee including you. However, being an accounts manager of the company, if you had signed any cheques on behalf of the company, then, you will be held responsible for the same.

Subject to the absence of any bounced cheque or any other criminal record, you can come to Dubai and work for any company. In any case your employment visa and labour contract have expired.

Under the UAE laws, if an employee leaves a job without completing two years, then, the Ministry of Labour will impose a work ban for six months, or for one year if it is imposed by the company. Both these situations are not applicable to you as you have completed seven years in the company and after expiry of your visa, you did not remain as an employee of the company. Furthermore, a work ban is not applicable if the current or new employer is based in a free zone in Dubai.

Q2) What can be done if the real estate company is refusing to pay back the building security deposit? We rented a flat in Dubai in 2009. During the course of our stay, the building was sold by the real estate agents to another agency. While vacating the flat in December 2011, the new real estate company did not pay us the security deposit citing we should take the security deposit from the original real estate agents. When we approached the original real estate agency they refused the payment giving some lame excuses. What can be done in such situations?

A2) You entered into an agreement with the original real estate agent and paid the security deposit. Therefore, in the absence of any new agreement between you and the new real estate agent which must expressly mention that the new real estate agent is responsible for returning of the security deposit, the original real estate agent is responsible to pay the security deposit as the rent contract binds the original agent and not the new agent.

Ignorance of law is 
not an excuse

Q3) I was working for a company here and resigned nearly 18 months ago. My total end of service benefits came to Dh50,000 which they promised to give in instalments of Dh7,000 each. After three instalments they stopped paying me. After a few months, I had a balance of Dh30,000 which the company wanted me to settle at Dh21,000. After waiting for nearly 18 months, I had no other go than to accept the same as I thought something would be better than nothing. They also took a written undertaking from me in Arabic which I could not understand, but translated that I accept the same. Is this legal and ethical? Please advise.

A3) As per the applicable law, you were entitled to end of employment benefits as provided by the UAE Labour law. Consequently, no company is entitled to reduce the amount. However, you agreed by your own free will, and signed the undertaking, thus entering into a settlement with the company which is binding upon you. You were supposed to sign after you understood the content of the undertaking as ignorance of law is not an excuse in law.

Mushtaq Ahmad Jan is a lawyer at the Global Advocates and Legal Consultants, with a Master’s Degree in International Commercial Law, University of Hull, Kingston-upon-Hull, England. Readers may e-mail their questions to: or send them to Legal View, Khaleej Times, PO Box 11243, Dubai

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