UAE Labour ministry contract supersedes all other documents

The Ministry of Labour contract takes precedence over all agreements between employer and employee and is the only document that is recognised by the authorities, the ministry has warned.

A senior labour ministry official told Gulf News any contract between the employer and the employee other than the labour contract will not be taken into consideration.

The warning comes after some employees have complained that they are being deprived of their rights as laid down in the labour ministry's contract.

A group of insurance specialists have alleged that their company is cheating employees by forcing them to sign a letter of intent and depriving them of rights guaranteed by the labour ministry's contract, including basic pay and gratuity.

Paying back commission

The employees who work for Nexus Insurance Brokers told Gulf News that the company was unwilling to accept resignation letters unless the staff hand over all commissions they earned last year.

Documents obtained by Gulf News show the employees have a limited labour contract under which they are given a basic salary of Dh0.001 and Dh6,000 for accommodation, transportation and other allowances.

The letter of intent, which the insurance specialists were forced to sign, says employees were issued a labour contract because it is a requirement of the UAE law. The principal purpose of the labour contract will be to "sponsor employees' activities in the UAE and does not constitute in part or full their contract with Nexus".

"All benefits mentioned in the labour contract issued by the labour department and any other benefit such as accommodation, transportation, leave, air ticket, leave salary, entertainment, gratuity and other benefits are in fact included in commission, and may be stated separately in the labour contract only for the purpose of enabling you to sponsor your family and domestic help in the UAE," the letter of intent says.

R.J., an employee, said they were forced to sign an undertaking that if the company was required by law and the labour contract to pay a certain amount to them, the employees must repay the company commission and collection fees. He alleged that the company does not accept resignations till employees pay back what they have earned in the form of commissions in their last year at work.

"Unless we give them the last year's earnings, they will not cancel our visas," B.F., a former employee, said. "When I resigned, the company handed me a letter that said my resignation would be accepted, but I must first pay a cheque amounting to my last year's earnings. Only then would they give me a release letter."

Employer reaction

Hussain Ayyash, legal and human resources director at Nexus Insurance Brokers, told Gulf News that all the letters of intent are legal and issued to protect the company's rights. "Our employees work on commissions and they earn a huge amount of money. As the employees work on commissions, they have no labour rights. We issue employees a labour contract as a formality as we have to issue it. The labour contract contains certain allowances, which helps employees sponsor their families. But we do not work according to the labour contract. For us, it does not exist."

He said he had filed a complaint at the labour ministry against some employees who had recently resigned and joined competing firms. "We also have to take back commissions they earned in the last year of work with us," Ayyash said.

Gulf News has learnt that the labour court recently ordered Nexus Insurance Brokers to pay Dh20,000 as end of service benefits to a British consultant who resigned and complained against the company to the labour ministry.

Mohammad Bin Dakhin, Director of Governmental Communication at the labour ministry, told Gulf News that any agreement between the employer and the employee other than the labour contract would not be taken into consideration. "In case of dispute between the employer and the employee, the ministry will only consider the ministry's contract," he said.

Bin Dakhin said a letter of intent or internal contracts between the employer and employee are not accepted. "It is illegal to consider that the labour contract has been issued only to allow employees to sponsor their families. Denying workers the rights mentioned in the labour contract is illegal," he said. Bin Dakhin said that any contract between the employer and employee not signed and approved by the labour ministry is not a legal document.

Show cause Notices Issued Against 3 Ayurvedic Companies in Kerala

Three Ayurvedic companies that assure miraculous remedies are now under the scanner of Kerala government. Referring the claims made by these companies as ‘dubious’, the government has seized products that are worth almost Rs 2 crore. The companies could even lose their licenses for alleged violation of Drugs and Cosmetics Act & Magic Remedies Act.

Among the companies that are under scanner are Dhathri Ayurveda Pvt Ltd and Sreedhareeyam Ayurvedic Medicines Pvt Ltd, against whom show cause notices have been issued, for misleading claims under section 33 E of the Drugs and Cosmetics act & section 4 of the Drugs and Magic Remedies Act, 1954 for objectionable ads. The companies are liable to face a 3 year punishment, along with fine.

“These companies are putting many claims on the labels to attract consumers. For example, when the oil is only to treat skin diseases, they claim it is for whitening and stretch mark removal. It’s misleading. So under D&C Act we can proceed against them and cancel the licences of the products,” said CS Satheesh Kumar, Drugs Controller official. According to him, the big sharks whose licences are soon to be lost. The enforcement officials have conducted inspections at the manufacturing premises of Indulekha in Thalasseri and Kannur and of Dhatri in Moovattupuzha and Ernakulam. Steps are on to cancel their licences as per the law, said the DC.

The Kerala Drugs Control Department has also issued a warning to celebrities against the endorsement of these products as they are also liable to be prosecuted legally. The move comes following reception of complaints, which include those from various committees of state assembly. The department has also claimed that the specified companies have not submitted  any document proving their claims.The team of enforcement officials from various districts conducted operations in the depots of wholesalers and manufacturing premises in different places and the total value of the seized products is Rs.5,211,770. The manufacturing companies who were found violating the provisions of the Drugs & Magic Remedies Objectionable Act are Dhathri Ayurveda Pvt Ltd, Kochi, Cochin Ayurvedic Centre (Indulekha), Kochi and Sreedhareeyam Ayurvedic Medicines Pvt Ltd, Koothattukulam, said C S Satheeshkumar, Drugs Controller, Kerala.

UAE Close to finalising Federal Bankruptcy Law – Justice Minister Hadef bin Juan

The United Arab Emirates is close to finalising an updated federal bankruptcy law and a draft of the legislation should be ready by the end of this year, Justice Minister Hadef bin Juan al-Dhaheri said on Monday.

The draft, which has been in the works since 2009, should enable both listed and family-owned companies in the UAE to be rescued rather than having to go through lengthy bankruptcy or liquidation proceedings.

"The ministry is studying a set of laws," Dhaheri told a conference on financial restructuring and bankruptcy in Dubai.

"Among them is a federal law on foreign investment, another one on SMEs (small and medium-sized enterprises) and also another law on arbitration in commercial transactions and another one on bankruptcy and restructuring," he said.

Asked whether the government was going to clear the long-awaited bankruptcy legislation this year, Dhaheri later told reporters: "Hopefully, God willing."

Dubai's debt crisis in 2009-2010 put company restructuring firmly in focus for both the government and investors. However, existing federal bankruptcy laws remain untested in UAE courts as distressed companies prefer to settle creditor claims privately because the existing legislation is opaque and complex.

In 2009, Dubai, one of seven UAE members, issued a special decree to deal with a $25 billion debt restructuring at its flagship conglomerate Dubai World.

Dhaheri also said another draft, on foreign investment, was still being discussed by the ministry's legal committee but declined to give details and timing: "I can't give a framework for it."

The new UAE bankruptcy law may ease debt restructurings with greater provision for out-of-court negotiations and the government hopes it would help attract more foreign investors.

In addition, it contains provisions that can force a minority of creditors to accept a restructuring agreement if it is acceptable to the majority, a process known as a cramdown.

However, it will still be difficult to seize assets - even if they are pledged as collateral - since land ownership in the UAE is on the whole restricted to citizens, with some provisions for nationals of other countries in the Gulf Cooperation Council.

So international banks involved in a state-linked corporate restructuring would not be able to take control of assets and sell them on to realise their dues, as would happen in the West.

The new law will not apply to government entities or entities operating in a financial free zone such as the Dubai International Financial Centre, which has its own insolvency laws, experts have said.

It takes just over five years to resolve insolvency in the UAE, one of the world's top five oil exporters, with a recovery rate of only 11 cents on the dollar, which puts the country at 151st place globally, according to a World Bank survey. (Reporting by Martin Dokoupil and David French; Editing by Susan Fenton)

How much rent be hiked in Dubai- Rent hike slabs as per law

Rents are going up in Dubai and are likely to go up further by the end of the year. Many residents in Dubai, who were breathing easy as rents came down, fear a repeat of 2008, when greedy landlords would jack up the rents arbitrarily.

However, this should not be the case as there are legal clauses in place for rent hikes in the city. According to legal experts with top firms in Dubai, landlords are allowed hikes which are set out as per government guidelines.

For those tenants who can foresee rent hikes on the property they are living in, this is what they should consider. First, they need to look at the time when they signed the lease of the property.

According to Andrew Thomson, Senior Associate at Clyde & Co, the hikes will depend on when the tenant moved into the property and there are two slabs for this.

“For properties leased prior to January 2011, no increases will be permitted if the rent is less than 25 per cent of the average rent for similar property in the same area. If it is more than 25 per cent, then there is a staggered permitted increase ranging from 5 per cent to 15 per cent.

“For those leased after January 2011, if a landlord wants to increase the rent, he has to inform the tenant at least 90 days before expiry of the current tenancy period (unless the parties agree otherwise).

“The increase of rent in Dubai is governed by Amiri Decree 2 of 2011,” Mohammed Kawasmi, Head of Property, Northern Emirates at Al Tamimi & Company told this website.

However, in case of a dispute, the parties should approach the Rent Committee, which has been set up to resolve such cases.

“If the landlord requests an increase in violation to the said Decree, then the tenant has the right to file a case at the Rent Committee which will decide on this based on the said Decree,” added Kawasmi.

“If the parties do not reach agreement on this, the Rent Committee may decide a fair rent and have consideration to the RERA rental index calculator.  The RERA rental index calculator currently states that no increases will be permitted if the rent is less than 25 per cent of average rent for similar property in the same area. If it is more than 25 per cent, then there is a staggered permitted increase ranging from 5 per cent to 15 per cent. Ultimately, however, the Rent Committee is not bound by the RERA rental index, and can make awards on the basis of the particular circumstances of each case,” said the Clyde & Co expert.

Rent hike slabs as per law

According to Decree No. 2 of 2011 on rentals in the Emirate of Dubai, the landlords can increase the rent as below.

Article (1)

The maximum rent increase percentage of property units in the Emirate of Dubai leased before the enforcement of this Decree shall be as follows:

A - There should not be any rent increase, if the rent for the real estate unit is up to 25% below the average similar rent.

B - If the rent value was 26% to 35% less than the average similar rent; the maximum rent increase shall be equal to 5% of such value.

C -If the rent value was 36% to 45% less than the average similar rent; the maximum rent increase shall be equal to 10% of such value.

D - If the rent value was 46% to 55% less than the average similar rent; the maximum rent increase shall be equal to 15% of such value.

E - If the rent value was less than 55% of the average similar rent; the maximum rent increase shall be equal to 20% of such value.

Article (2)

For the purpose of this Decree the similar rent value of the property unit means pursuant to “The Rent Index of the Emirate of Dubai” approved by RERA.

Article (3)

This Decree shall be enforced from the date of its issuance and shall be published in the Gazette.

Issued in Dubai on 10 January 2011.

Ramadan may start on July 21 and Eid Al Fitr holidays from August 19 UAE Astronomer

A UAE astronomer has forecast the Muslim's fasting month of Ramadan might start on Saturday, July 21, and the Eid Al Fitr would be on August 19.

Ibrahim Al Jarwan, Astronomy Researcher and Supervisor of Sharjah Planetarium, said that the birth of the crescent moon will be on Thursday, 19th July 2012, at 8:24 am (UAE time), and the sunset will be at 5:09 pm, while the moon will set two minutes after sunset.

''The crescent moon of Shawwal 1433 will born on Friday 17th August 2012, at 5:54 pm local time, and the sunset will be at 6:49 pm same day," he added.

Al Jarwan said sighting the crescent would be impossible on Thursday night, but it would be visible on Friday night.

Therefore Saturday, 21st of July would be the first day of Ramadan, he anticipated.