JD Supra United Arab Emirates

Publisher:: JD Supra
Publication date:: 2019-04-29

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Latest documents

Middle East International Dispute Resolution Compendium
To mark Riyadh International Disputes Week we wanted to share our Middle East International Dispute Resolution Compendium, which discusses recent developments in the dispute resolution landscape across the region including specific coverage of the latest changes in Saudi Arabia.
Understanding the Key Features of UAE's New Emirati Pension Law
Introduction The General Pension and Social Security Authority (GPSSA) recently introduced a significant change in the pension landscape through Federal Decree-Law No. 57 of 2023 on Pension and Social Security. This legal amendment marks the most significant update to pension regulations since the beginning of UAE Federal Law No. 7 of 1999. The new law aims to extend Emiratis' contribution to the public good, increasing the retirement pension value with more working years. The Scope of the New Pensions Law: The new pension law applies exclusively to new Emiratis entering the UAE workforce. Emiratis currently or historically employed in the UAE registered with GPSSA for pension purposes, continue to be governed by the 1999 Pensions Law, except in cases expressly modified by the new Pensions provisions. Under Federal Decree-Law No. 57/2023, the new Pension Law categorizes the term Employer into three distinct classifications: • Government Sector: Encompassing federal government authorities, public institutions, public companies, banks with federal government shares, and local government authorities within the concerned Emirate's jurisdiction. • Private Sector: Encompassing any natural or legal person hiring national employees for compensation. • International Missions: Covering regional and international missions, including foreign political missions operating in the UAE. According to the new Pensions Law, employers are mandated to make monthly contributions to the GPSSA, considering the employee's total salary, which includes various incentive payments like bonuses or commissions. This contribution breakdown comprises the employer's share of 15%, the employee's share of 11%, and a government subsidy of 2.5%, specifically for employees earning less than 20,000 dirhams, resulting in a combined total contribution of 28.5%. The new Pensions Law for the private sector raises the maximum contribution account salary for Emiratis working in the private sector from Dh50,000 to Dh70,000. Under Federal Law No. 7/1999 Pensions Law, if an individual's earnings exceed AED 50,000, pension contributions will only be calculated based on the AED 50,000 cap, with any additional income beyond this limit not considered for pension contributions. The Calculation of the Contribution Period under Article 6 considers the time an insured individual spends with an employer, inclusive of service periods, leaves, and secondments. This includes instances like study leaves, sick leaves, and periods without entitlement to full salary. The individual remains under the new pension Law during leaves or secondments, and the Board establishes specific rules for calculating contributions in such cases. However, periods of suspension without pay or salary deprivation are excluded from the Contribution Period calculation as outlined in the new pension Law. Pension Calculation: The GPSSA determines the pension amount based on various factors. • The pension is calculated at 2.67% of the pension account salary for each year within the contribution periods. • Once an individual reaches 30 years of contributions, the rate increases annually by 4% until it reaches a maximum of 100% of the salary. • An individual becomes entitled to the pension from the day following the termination of employment, extending until their death. • The GPSSA guarantees a minimum monthly pension of AED 10,000. If the calculated amount falls below AED 10,000, the GPSSA covers the difference. • If the total subscription period exceeds 35 years, the individual receives an additional benefit at a rate of 3 months for each year beyond the 35 years. This is calculated based on the pension account salary. Employer Obligations under Federal Decree-Law No. 57/2023: • Employers must register eligible employees with the GPSSA within one month of their employment start. Within 15 days of an employee's termination, the employer must update the GPSSA. • Non-compliance results in fines of AED 200 per day, along with a lump sum fine up to AED 50,000 per employee. • Provide all necessary documentation for accurate contribution calculation within 10 days of initial registration. Delays lead to fines of AED 100 per day. The GPSSA may independently calculate contributions in such cases. • Monthly contributions are mandatory, deducted directly from the employee's salary. Contributions in the first and last month, even if not worked fully, should not be pro-rated. • Ensure contributions are paid by the 1st of the following month; late payments beyond the 15th may incur fines of 0.1% of 10% of the due amount per day. • Employers must calculate contributions accurately based on the actual salary, and Failure to do so may result in an additional 10% of the contribution due. Read more below...
Confidentiality Violations in the UAE: Legal Implications for Employees
Introduction: The protection of confidential information is an important aspect of employer-employee relationships, and the UAE has established comprehensive laws to address violations of confidentiality clauses. This article discusses the legal consequences an employee may face for disclosing confidential information to competing companies in the UAE, based on Federal Decree-Law No. 33/2021 on the Regulation of Labour Relations (UAE Labour Code) and Cabinet Decision No. 1/2022 on the Implementing Regulation of Federal Decree-Law No. 33/2021. Non-Compete Clause: Article 10 of the Labour Code addresses non-compete clauses, allowing employers to include such provisions in employment contracts that workers shall not compete or participate in any competing project within the same sector for a specified period after the expiry of the employment contract, not exceeding 2 years. This clause aims to protect the legitimate business interests of employers. However, the clause must be determined in terms of time, location, and type of work. If an employer terminates the contract unlawfully, the non-compete clause becomes invalid. Employers must file lawsuits against the employee for violations within 1 year of discovering the breach. Worker's Obligations: Article 16 of the Labour Code outlines the worker's obligations, emphasizing the preservation of confidentiality regarding work-related information. This includes not disclosing work secrets, returning relevant materials to the employer upon service termination, and avoiding unauthorized possession of work-related documents. The breach of such obligations can lead to disciplinary penalties, including dismissal. Disciplinary Penalties and Dismissal: According to UAE Labour Code Article 39, employers may have the authority to impose various disciplinary penalties on workers who violate the Decree Law. These penalties include written notices, warnings, deductions from end-of-service gratuity, suspension from work, rejection of increments or promotions, and even dismissal. Additionally, Article 44 specifies that disclosure of work secrets leading to industrial or intellectual property loss can be the reason for immediate termination of the employee. Dispute Resolution: According to the new amendment of Federal Decree-Law No. 20/2023, Article 54 outlines the procedure for settling individual labour disputes. The Ministry of Human Resources and Emiratisation (MoHRE) examines and attempts to settle disputes amicably with them and issues the final decisions for claims not exceeding AED 50,000. If the dispute claim value exceeds this amount, it is referred to the competent court. Article 55 exempts labour cases from judicial fees at all stages, and if workers or their heirs submit a request with the value of the claim not exceeding AED 100,000, it may be more accessible for employees. Conclusion: The legal framework in the UAE emphasises the importance of safeguarding employers' business interests, especially regarding the disclosure of confidential information by employees. It provides clear guidelines on the consequences of such disclosures to competing companies. Employees, in turn, must adhere to confidentiality obligations to avoid facing severe consequences outlined in the Labour Code and its implementing regulations.
What Are the Legal Consequences of Defaulting on a Bank Loan in the UAE?
Introduction In the UAE, defaulting on a bank loan is regulated by two important laws: Federal Decree-Law No. 42/2022 on Civil Procedure Law and Federal Decree-Law No. 50/2022 on Commercial Transactions, specifically Bank Credits. This article explores the legal consequences and procedures following a debtor's default on a bank loan under these laws. Federal Decree-Law No. 50/2022 - Commercial Transactions Law Article 409 of the Commercial Transactions Law defines a bank loan as a contractual arrangement where the bank distributes funds to the debtor under agreed conditions. Banks are authorised to secure sufficient guarantees for loans, with the debtor obliged to repay the loan and associated interests within agreed-upon conditions and timelines. Under the new Commercial Transactions Law, criminal actions are limited and apply only to certain cases of bounced cheques. Criminal actions will apply only to specific cases of bounced cheques, including intentional falsification, fraud, providing counterfeit cheques, and withdrawing account balances to prevent payment. Federal Decree-Law No. 42/2022 - Civil Procedure Law Article 143 introduces payment orders for urgent and confirmed creditor rights, with electronic or written issuance for specified amounts or movable types. Creditors need to notify the debtor to pay, and if the debtor doesn't follow through, the creditor may request a payment order. Grievance, or appeal against payment orders can be filed within stipulated timeframes, subject to jurisdictional amounts. Execution Procedures: In the event of default, the bank, acting as the creditor, can initiate legal actions per Article 233. The execution process involves specifying required steps, serving the writ of execution, and notifying the debtor to settle the debt. Article 234 allows provisional seizure of debtor funds, and a travel ban may be imposed if there's evidence of an escape attempt. If the debtor proposes payment, the executor records the proposal and requests the debtor to deposit the sum at the court's treasury. Execution continues against the remaining amount if the proposal is partial, as per Article 235. Forceful entry requires the approval of the execution judge and the presence of a police officer. According to Article 319, a creditor may seek the debtor's imprisonment if they resist executing a writ unless insolvency is proven. Insolvency is not accepted in specific cases, such as when the debtor smuggles money or defaults on instalment payments. Detention periods are specified, not exceeding 6 consecutive months (or up to 36 months in total, unless the debt results from deliberate financial crimes, in which case it may be up to 60 months). Additionally, the creditor can approach the court to seek a Travel Ban against the Debtor as per Article 324. A creditor may request a travel ban if there is a fear of the debtor escaping the state, provided the debt is not less than AED 10,000. Conditions for issuing a travel ban include providing written evidence of the debt and a guarantee by the creditor for potential harm to the debtor. Furthermore, Other Precautionary Measures are outlined in Article 327 of the law. If a debtor with a travel ban does not surrender their passport or is suspected of disposing of money, the judge may summon them and impose payment or attendance guarantees. In summary, defaulting on a bank loan in the UAE leads to legal actions as per the law. Both borrowers and creditors need to know and understand these legal consequences when dealing with financial transactions under UAE law.
Thinking of Investing? What Are the Guidelines for Off-Plan Property Purchases in Dubai?
Investing in off-plan properties in Dubai is an exciting opportunity, offering advantages such as acquiring properties at the project's lowest cost, high return on investment (ROI), and a favourable payment plan. However, it is important to understand the specific rules set out in Dubai Law No. 13/2008 on the Interim Real Estate Register. In this article, we will outline the key requirements for purchasing off-plan property in Dubai. Firstly, buyers must be aware of designated areas for foreign ownership, known as freehold properties, as per UAE laws. Choosing a property located in a freehold area is important for foreign buyers. Registration Process: All off-plan property transactions must be registered in the Interim Real Estate Register. Failure to do so may compromise the validity of the sale or property transfer. Developers are required to register properties within a 60-day timeframe. Land Acquisition and Approvals: Developers, whether they are primary or subordinate, cannot initiate projects or sell units off-plan without obtaining the necessary land and approvals from competent authorities in the Emirates of Dubai. The development must be noted on the property register. Legal Due Diligence: It is essential, involving verification with government authorities such as the Dubai Land Department or Real Estate Regulatory Agency. This step ensures the project is registered, has an escrow account, and possesses the necessary permits. Application Process: Buyers need to follow specific procedures when applying to register an interim real estate unit. This includes providing the necessary data and documents as required by the Land Department of Dubai. Legal Actions on Registered Off-Plan Units: Units sold off-plan and registered in the Interim Real Estate Register can be legally transferred, mortgaged, or subjected to other actions under the law. Fees and Expenses: Developers, both main and subordinate, are prohibited from charging additional fees for selling or reselling completed or off-plan units. Administrative expenses, if any, must be approved by the Land Department. Completion and Registration: Upon project completion, developers must register the finished project in the property register. The registration of off-plan units in the buyer's name as per contractual obligations. Contract Formalities: Developers and brokers are not allowed to engage in informal contracts for off-plan property sales without prior approval from competent authorities. Such contracts are considered invalid. Developer's Rights in Case of Violation: Article 11 of Dubai Law No. 13/2008, modified by subsequent laws, outlines procedures for purchasers violating off-plan sale contracts. Developers must notify the Department of violations, and if unresolved within 30 days, the Department issues an official document verifying the developer's agreement and the project's completion percentage. Based on completion rates, developers can maintain contracts, request public auctions, or cancel contracts with specified deductions. If the project is cancelled or not initiated, full refunds may be required. Correct Area Measurement: The area of a sold real estate unit is considered final, and any increase post-delivery does not entitle the developer to demand additional payment. If the area is smaller, compensation must be provided to the buyer. Enforcement Against Violations: If a developer or broker violates the law, the relevant authorities will prepare a report and refer the matter to competent investigation authorities. Conclusion: Understanding the requirements outlined in Dubai Law No. 13/2008 is essential for anyone looking to invest in off-plan property in Dubai. These regulations ensure transparency, protect buyer rights and contribute to the stability of Dubai's real estate market.
Understanding UAE Regulations on Vaping and Tobacco
Introduction The UAE has implemented laws and regulations to control and regulate the consumption of tobacco and tobacco-related products, including vaping, which refers to the use of electronic nicotine products. This article aims to provide an in-depth understanding of the rules and regulations regarding vaping in the UAE, as outlined in Federal Law No. 15/2009 on Tobacco Control, Cabinet Decision No. 24/2013, and Federal Law No. 3 of 2016 on Child Rights (Wadeema's Law). Vaping is subject to regulations in the UAE aimed at safeguarding public health and protecting minors. Federal Law No. 15/2009 on Tobacco Control: Article 1: The law defines "Tobacco Products" as anything made from tobacco leaves, whether it is the whole leaf, chopped pieces, or mixed with other substances. This includes tobacco powder and any other mixture that includes tobacco. Additionally, the law describes "Tobacco Use" as engaging with tobacco in different ways, such as smoking, inhaling, chewing, sucking, or any other method people use for smoking or using tobacco. Article 5: Prohibited Acts •Sale or attempt to sell tobacco, including vaping products, to persons under 18. •Smoking in private cars with a child under the age of 12 present. •Smoking in houses of worship, educational institutions, and health and sports facilities. •Sale of sweets resembling tobacco products. •Prohibition of automatic vending equipment and devices for tobacco, including vaping, distribution within the country. •Strict regulations on tobacco and vaping advertisements. •Prohibition of smoking, including vaping, in closed public spaces. Article 7: Smoking in Closed Public Places •Strict prohibition of smoking, including vaping, in closed public places. •The competent authority may designate specific smoking and vaping areas subject to conditions outlined in the Implementing Regulation. Article 8: Smoking in Public Places •Smoking, including vaping, is strictly prohibited in public places. •Coordination with the competent authority is required to enforce these restrictions. Article 11: Cafes and Tobacco Service •Cafes serving tobacco, including vaping products, within or near residential buildings face specific restrictions. •Implementing Regulation, in coordination with the competent authority, determines licensing conditions and locations for serving tobacco and vaping. Articles 13 and 16: Penalties for Violations • Individuals violating the rules specified in articles 5(1), 5(3), and 9 of this law may face legal consequences. •Penalties include a minimum imprisonment term of one year and a fine ranging from AED 100,000 to AED 1,000,000, or either penalty. •In cases of repeated offences, the minimum imprisonment term increases to 2 years, and the fine remains at a minimum of AED 1,000,000. •For any violation, an immediate fine of AED 500 is imposed, intended for rectification. •If rectification fails, the case may proceed to criminal prosecution. •Criminal sanctions include a fine ranging from AED 3,000 to AED 10,000, with increasing penalties for repeated infringements. Read more below...
UAE Insolvency Law - What You Should Know
Introduction: In any dynamic economy, financial challenges can arise, leading individuals and businesses to face insolvency. To address these situations and provide a structured outline for resolving them, the UAE enacted Federal Decree-Law No. 19/2019 on Insolvency. This comprehensive law outlines the rules and procedures governing insolvency, aiming to protect the interests of debtors and creditors alike. In this article, we will discuss the key aspects of the UAE's insolvency law and what you should know as an individual or business operating within the country. Defining Insolvency: Article 1 of the UAE's insolvency law defines insolvency as "facing current or anticipated financial difficulties that render the debtor unable to pay his debts." It means the inability of a debtor to pay its debts when they fall due. This definition applies to both individuals and companies. The insolvency law emphasizes rehabilitation and recovery mechanisms over liquidation whenever possible. The law aims to protect the interests of debtors and creditors while encouraging business sustainability and financial stability. 1. Insolvency Proceedings (Articles 3 and 4): The insolvency law provides for two primary insolvency proceedings: • Settlement of Financial Obligations: If a debtor is experiencing a financial crisis, they can opt for this negotiating process. This process allows a debtor to initiate negotiations with creditors to reach a mutually agreed settlement and repay debts. • Insolvency and Liquidation Proceedings: When a settlement is not possible, debtors may have the option to request the court for the opening of insolvency proceedings to seek a solution for their financial difficulties. Insolvency proceedings can be initiated voluntarily by the debtor upon the submission of sufficient documents as per Article 3 of the decree law. Creditors can also initiate insolvency proceedings if the debtor is unable to meet their obligations. After the submission of the documents, the court may order insolvency and liquidation. Under this proceeding, the debtor's assets are liquidated to repay creditors in a specific order of priority. 2. Automatic Stay of Proceedings: As per Article 51, once insolvency proceedings are initiated, all legal actions and executions against the debtor may be automatically suspended, except in cases explicitly permitted by the law. 3. The Role of the Expert and Trustee: The court appoints an expert and a trustee to supervise insolvency proceedings. They play a significant role in managing the assets, settling disputes, and ensuring a fair distribution of funds to creditors. The expert investigates the debtor's assets and liabilities to determine the debtor's true financial condition. The trustees are responsible for the distribution of funds to creditors based on the court's instructions and the provisions of insolvency law. 4. Prioritizing Creditors and Preferential Debts: Article 42 of the decree-law establishes a hierarchy of creditors to ensure a systematic approach to debt repayment, with secured creditors taking preference over ordinary creditors because these creditors have collateral to secure their debts. The law also outlines preferential debts, such as judicial expenses and workers' wages. 5. Rehabilitation: According to Article 55 of this Decree-Law, debtors who have met specific criteria or have settled their debts may apply for rehabilitation. This provision allows for a fresh start, even after undergoing insolvency proceedings. Furthermore, any creditor whose debts have been accepted by the court and whose right has not been paid may file an objection to the application with the supporting documents for rehabilitation within fifteen (15) working days from the date of its notification as per Article 60. 6. Penalties for Misconduct: Under Article 65 of the decree-law, any creditor who commits certain actions, such as filing fabricated debts or imposing additional debts on the debtor unlawfully, causing losses to creditors during insolvency proceedings, may face punishment, including imprisonment and a fine ranging from AED 10,000 to AED 100,000, or both. Similarly, a penalty of imprisonment for a period not exceeding 2 years and a fine ranging from AED 20,000 to AED 60,000, or both, may be imposed on anyone who was declared insolvent and it is proved that such insolvency declaration has caused a loss to his creditors, as a result of the following acts following the law under Article 66. Read more below...
UAE's New IVF Regulations: A Comprehensive Overview
Introduction In a significant development for family matters in the UAE, particularly in the field of Medically Assisted Reproduction, recent amendments to Federal Law No. 7/2019 have introduced some essential provisions. This article provides a detailed examination of the key amendments and their implications for the regulation of assisted reproduction in the UAE.
Eviction Before Your Lease Ends: Know Your Rights as a Tenant in Dubai
Introduction Renting a property is a common arrangement in Dubai, with many residents and businesses leasing real estate for various purposes. However, what happens when you receive an eviction notice before your lease term is up? Understanding your rights and responsibilities as a tenant is important to navigate such situations. Dubai Law No. 26/2007, as amended by Dubai Law No. 33/2008, governs the relationship between landlords and tenants in the Emirate of Dubai. This article will provide insights into what you need to know about eviction before your lease ends and how the law protects tenants in such situations.
A Complete Guide for Corporate Taxation in UAE Free Zone Areas
The UAE has long been known as a tax-free Country, attracting investors and entrepreneurs from around the world. However, to ensure sustainable economic growth and contribute to the country's development, the UAE has shifted from a tax-free government to a Corporate Tax system. The Federal Decree-Law No. 47/2022 on the Taxation of Corporations and Businesses, effective on June 1, 2023, marks a significant change in the UAE's economic landscape. This article aims to provide a comprehensive guide to proper corporate taxation in UAE Free Zone areas, specifically focusing on Corporate Tax and its impact on Free Zone Persons.