The Federal National Council (FNC)U.A.E approves 3 year Work permit for employees

 The Federal National Council (FNC), the  parliamentary body of the United Arab Emirates, has approved  the extension of the validity period of work permits from two years to three years. This comes after the FNC committee recommended a change to reduce the financial costs associated with obtaining work permits.

  Currently, work permits are issued in the United Arab Emirates for two years. The document was issued by the Ministry of Human Resources and Emirates. It is illegal  to work in the country without a valid permit. A report by the Committee on Finance, Economy and Industry of FNC proposed to extend the tenure to three years. The commission also offered other recommendations, including waiving work permit fees when changing jobs. Another recommendation approved by the FNC  was that employees should work for the employer for at least one year  after the trial period. However, this requirement can be waived if the employer agrees.

Dubai public prosecution will no longer keep passports

The Dubai Public Prosecution will no longer be keeping any passports of residents or visitors who have been charged with a crime or need a bail. The data of the person instead will be stored electronically.

If the person needs bail, they will no longer require a friend or relative to keep their passport on their behalf.

The 'Smart Bail' initiative has been announced at the Dubai Government Excellence Programme on April 9.

Ali Humaid Al Khatim, Advocate General and Chief Prosecutor of Immigration at the Public Prosecution, told that the move is to ensure they eliminate the method of holding passports.

Last year, and almost every year, we held 50,000 passports and we want to reduce this. The resident or visitor will have all of their data saved in our system all over the UAE so we will not need their passport," he said.

"This will also give the person ease because he can get his visa renewed or anything related to the passport because he will have the important document with him."

UAE's new bankruptcy law an advantage for business

U.A.E businessmen will no more have to face arrest or legal prosecution for unpaid debts, nor do they have to flee the country - as many had done in the past- to avoid jail term following the implementation of the landmark UAE insolvency law, legal experts and analysts said.

However, since the law, which came into effect by end-2016, is applicable only to commercial firms, government-owned companies and individual traders, non-trader individuals who are unable to repay their debts will not get protection from arrest under the law. In other words, insolvent individuals will not be able to resort to the new bankruptcy law to avoid criminal prosecution. As a result, cases of personal bounced cheques will remain subject to the general rules under the UAE Civil Code, experts said.

The new legislation, which applies to all onshore and free-zone companies in the UAE - with the exception of companies in the financial free zones - will offer protection for employees, shareholders and directors of companies undergoing court-led insolvencies, experts said at a "Technical seminar on UAE's new bankruptcy law".

The seminar was organised by The Institute of Chartered Accountants of India (ICAI) - Dubai.

The new bankruptcy law contains 230 articles and offers creditors and debtors increased flexibility in dealing with financial distress while ensuring certainty and security for business owners and investors, who can rely to some extent on protection for their businesses during a restructuring. It will also enable them to effectively negotiate with their creditors, they said.

Following the implementation of the law, there is no need to set up special tribunals as in the past to deal with the insolvencies of large companies.

"With proper insolvency regulations, businessmen will no more have to face arrest or legal prosecution for unpaid debts nor do they have to flee the country to avoid arrest as many had done in the past," experts said.

Legal experts said the new law, which repeals much of the previous bankruptcy regime laid down in the Commercial Transactions Code (CTC) which was in existence since 1993, primarily involves four new procedures, each of those supervised by the court. These include a 'light touch' rehabilitation process for solvent debtors facing financial difficulties called "the preventative composition;" a more substantial rehabilitation process for insolvent debtors - the restructuring scheme; an end-of-the-line insolvent liquidation process, and a framework for the financial restructuring of financial institutions.

As per the new law, criminal proceedings in connection with dishonoured company cheques drawn by the debtor prior to the commencement of the relevant process stay once a preventative composition or restructuring scheme has been initiated. "However, misuse of this protection may result in criminal liability for a fraudulent insolvency offence."

Dr Habib Al Mulla, chairman of Baker & Habib Al Mulla, who was a keynote speaker at the seminar, said criminal actions filed for dishonoured cheques would be suspended if a "preventive composition plan" or "debt restructuring plan: is initiated. In this case, the cheque holder becomes one of the unsecured creditors.

"This may encourage distressed businesses to initiate composition plans and potentially consider filing for bankruptcy and debt restructuring rather than prompting a member of the management to abscond and exit the UAE."

"Under the new system, the ability to seek new financings is reinforced. Provisions in the new law are more flexible compared to those the CTC. More powers are attributed to bankruptcy trustees who are nominated by debtors under the new regime. "This may potentially reduce the court' involvement and lead to a smoother and more efficient process," said Dr Al Mulla.

He said the much-needed federal bankruptcy law has indeed brought a level of modernisation and reform, although it has its shortfalls. "However, real assessment of the successful impact of these laws will depend on how they are used and how much they will improve the business and investment climate in the UAE."

Christian Saunders, the partner of Allen & Overy LLP, who was also a speaker at the seminar, said the new law is focused very much on rehabilitation. For the first time workable 'cram down' processes that allow courts to modify loan terms are available.

"Likewise, the new law imposes mandatory timelines for the completion of the processes. While the new law is not perfect in every respect, it represents a significant improvement on the existing legal framework."

Only a debtor can apply to the court for a preventative composition. This procedure appears to be intended to be used at the early stages of financial distress to provide breathing space to a debtor facing initial financing difficulties. The aim of the process is rehabilitation supervised by the court.

A restructuring process may be commenced by a debtor where it has failed to meet its debts as they have fallen due for a period of more than 30 working days as a result of financial difficulties or where such debtor is balance sheet insolvent. The process may also be commenced by an unsecured creditor owed a debt of more than Dh100,000 that is more than 30 working days overdue following a formal demand by the creditor.

In the case of a court ordering an insolvent liquidation, the debtor (or presumably its board if it is a company) may no longer participate in any commercial activity. An official or insolvency trustee shall be appointed by the court to manage the debtor or its business. The court-appointed official or insolvency trustee is tasked with determining the indebtedness of the debtor and monetising the debtor's assets under the court's supervision.

"The new law represents 'evolution not revolution', but constitutes a significant improvement on the existing framework. Implementation will be critical, however - whether the new law is a success or not will depend almost entirely on the approach taken to it by the local courts - will they abide by the spirit of the law, and bring in best international practice," said Saunders.

Pankaj Mundra, chairman, ICAI UAE (Dubai), said the new law embodies a sea-change in the method to the treatment of debtors in the UAE and presents significant implications for the administration of the procedures set out in the Law.

"The removal of the criminal offence of bankruptcy by default, provisions for bounced cheques and new requirements for creditor-initiated insolvency proceedings are likely to be helpful."

The previous insolvency regime, which was set out in the CTC, was largely untested and much criticised by practitioners and market participants.

"In short, it was regarded as cumbersome and unsuitable for a modern dynamic economy with prevalent sophisticated financial products and institutions. It appeared to serve neither the goal of prompt and efficient liquidation nor the goal of corporate rehabilitation," Allen & Overy legal experts said.

The World Bank has calculated that on average an insolvency process in the UAE results in a recovery for creditors of less than 30 cents on the dollar, takes 3.2 years with a cost of the estate of 20 percent of the estate. If you compare that to, say Singapore or the United Kingdom with figures for recovery of 88.7 and 88.6 cents on the dollar, taking 0.8 and one year, with a cost of four and six per cent. 

India Goverment discontiued pension scheme for NRIs

Pension scheme for Indian workers living abroad has been discontinued by the Government of India citing poor response.

The scheme, Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY), was launched in the UAE in 2012 in its pilot phase before introducing it in 16 other countries. The objective was to encourage and enable the overseas Indian workers by giving government contribution to saving for their return and resettlement (R&R), save for their old age, obtain a life insurance cover against natural death during the period of coverage.The foreign office is discontinuing three initiatives - a pension-cum-life insurance scheme, short-term academic courses, and a business opportunities platform - a year after it took charge of overseas Indian affairs, according to a report in The Telegraph.

The pension scheme was the only initiative representing the blue-collar workers living abroad but it failed to attract a huge number of subscriptions. Officials speaking to The Telegraph attributed the lack to demand to the refusal of both, the current Narendra Modi administration and the former Manmohan Singh government to popularise the scheme.

According to the scheme, if a male subscriber deposits Rs 5,000 annually under the scheme (Rs 1,000 through the National Pension System and Rs 4,000 through the UTI Monthly Income Scheme) he would stand to receive Rs 1,000 from the government as a contribution towards his pension and Rs 900 towards the MIS each year. Women could avail Rs 2,900 as government contribution annually (Rs 2,000 for the pension and Rs 900 for the MIS.)

The scheme also sheltered the subscribers with free cover from the Life Insurance Corporation of Rs 30,000 in the case of natural death, Rs 75,000 in the case of unnatural death or permanent disability due to an accident, and Rs 37,500 for partial disability.

The investment had to be made for five years or the duration of employment abroad, whichever is shorter. Once back in India, the worker would get the total sum in their MIS account, coupled with the interest earned, as a lump sum. The pension remains in their account, accruing interest till the worker turns 60 and they can avail the money monthly.

Exemption from six month Labour ban

 I have an MBA degree. I worked as a PRO with a company here for three months on a Secretary Visa. My company asked me to resign without any pre-notice grace period during the probation period. Is this right? Would I be liable to six-month ban? How may I avoid that?

During probation period, both employee and employer can terminate the contract. Therefore, it is valid for your employer to terminate the contract. Under the UAE law, 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 employer, during which time the individual is not allowed to work in the UAE. However, the Ministry the Cabinet Resolution No 25 of 2010 regarding internal work permit at the Ministry of Labour exempts the following three categories from the ban:

    In order to remove the ban, an employee must prove qualifications by presenting a duly attested educational certificate as mentioned herein 

(i) If an employee holds a university degree (Master’s), and earns a minimum salary of Dh12,000 per month; (ii) If an employee holds a diploma (post secondary) and earns a minimum salary of Dh7,000 per month; and (iii) If an employee has passed high school and earns a minimum salary of Dh5,000 per month.

    The contract is terminated due to the employer’s violation of legal and labour obligations towards the worker, or in case the worker has no role in terminating the work relationship.
    The employee is transferred to another company the employer owns or has shares in. Since, you are a Master’s degree holder and do not have any role in the termination of your contract, a six-month ban should not be applicable to you.

Pregnancy tests for women workers under revised set of medical fitness rules in UAE

Pregnancy tests for women workers for some categories will be required under a revised set of medical fitness rules for granting work and residency permits to expatriates in the country, health officials announced.

The date for its enforcement will be decided in due course while the fee structure remains unchanged, they said.

Under the new federal rules aimed at benefitting public health, all maids, nannies and female drivers will be required to undergo pregnancy tests. In case of a pregnancy, it will be up to the sponsor to allow her to work or not. Only a category of professionals applying for new or renewal of visas will be tested for Hepatitis B and Syphilis. Under this category, those testing positive for Hepatitis, will not be given residency permit while those testing negative will be given mandatory vaccination and issued a certificate. Those with Syphilis will be given treatment locally. Expatriates from all other professions and their dependants applying for a new/renewing visa will only be tested for HIV, pulmonary TB and Leprosy. Those testing positive for these diseases will not be given residency permit.

Only six categories of workers including nannies, housemaids, nursery/kindergarten supervisors, beauty salon and health club workers, private drivers and food handlers in cafeterias and restaurants will be tested for Hepatitis B and Syphilis.

“The latest amendments are designed to eliminate any existing gaps as a result of the increased numbers of foreign labourers to work or reside in the UAE,” said the Minister of Health, Dr Hanif Hassan while announcing the new rules.

There is also a plan to increase the number of medical checkup centers.Rules for tuberculosis remain unchanged making old, new or active cases of pulmonary TB subject to deportation.

“In Dubai Health Authority, we isolate and treat such cases until completely cured before deporting them and providing them with one month’s medicine,” said Maisa Al Bustani, Head of the Medical Fitness Centre, DHA.