• Legal Update

    UAE set to introduce ‘Good Samaritan’ law in 2019

    Good Samaritan law 2019

    The Rescuer Protection Law, recently approved by the UAE Ministry of Health and Prevention, will allow bystanders to offer aid in medical emergencies without fear of legal punishments.

    With Abu Dhabi Police previously stating that it is an offence to provide assistance without being trained in first aid, medical professionals in the UAE have advised that the general public are often reluctant to intervene in emergency situations for fear of prosecution. It is therefore hoped the law will boost survival rates and encourage the public to provide assistance in life-threatening situations.

    A large public campaign to raise awareness of the new law is expected and community services centres will be introduced to train UAE residents in providing lifesaving assistance in emergencies.

    The law will be sent to the UAE Cabinet for final approval within the next two weeks and is expected to be introduced shortly after.

  • Employment/ Legal Update

    Terminating an unlimited term contract under Article 117

    Terminating an unlimited term contract under Article 117

    Federal Law number 8 of 1980 (as amended), colloquially known as the UAE Labour Law, regulates all employment contracts in the UAE, with the exception of certain ‘offshore’ jurisdictions such as the Dubai International Financial Centre or Abu Dhabi Global Market. It is therefore a fundamental piece of legislation, the understanding of which is essential to both employees and employers alike.

    The UAE Labour Law distinguishes between two types of employment contracts; limited term and unlimited term. In their basic forms, the contracts are as the name suggests; limited term contracts specify a fixed term and an end date, and unlimited term contracts are open ended and therefore seen as more flexible. Different articles relate to the termination of the two separate contract types, and for the purposes of this commentary, we will review one of these articles – article 117 – one of the two main ways in which an employer may lawfully terminate an employee’s unlimited term contact.

    Article 117 stipulates that there must be ‘valid grounds’ by which either an employer or employee can terminate an unlimited contract. These ‘valid grounds’ are not defined, although the UAE Labour Law does specify that they must be work related when seeking to be relied upon by the employer, and from previous judgments, the Labour Courts have been willing to accept poor performance or misconduct as a ‘valid reason’. Where an employee is terminated for a valid reason, they are entitled to their full end of service gratuity and other entitlements under the law.

    Where a company fails to comply with the UAE Labour Law provisions regarding termination, they may be found to have arbitrarily dismissed the employee, and subject to a penalty of between 1-3 months compensation based on an employee’s full final salary. The penalty is at the court’s discretion, usually having regard to the specifics of each case; eg. length of employment, seniority etc.

    Under the terms of article 117, a minimum mandatory notice period of thirty days is also prescribed, during which an employee is entitled to their full pay and benefits, and are still bound by the terms of their employment contract. Failure to abide by the notice period, by the employer or employee, opens up the possibility for a payment in lieu of notice. Whether the employer wishes the employee to remain an active part of the business during the notice period, or decides that gardening leave is more appropriate, is a matter of company policy. The requirements of an employee on notice should be set out clearly so as to avoid dispute, and should ensure that handover, and any other company requirements, happen during the notice period and specifically while the employee is still contracted with the company.

    The legal obligations on an employer do not end once article 117 has been satisfied, but having a coherent and well-drafted company policy that expands upon what ‘valid grounds’ are, provides for company work standards and details procedure on termination, can ensure that the termination process is as straightforward as possible. The best outcome in any termination is one whereby both the employer and employee know the process, and are committed to it.

    Where an employer is looking to rely on article 117 to terminate an employee, it is extremely important that the correct procedure is followed and the necessary paperwork is in place.

    For further information on article 117 or any other employment advice

    Christopher Chipperton
    caschipperton@davidsoncolaw.com
    +971 4 343 8897

  • Employment/ Legal Update

    New labour insurance initiative to enhance rights of employees and free up cash liquidity for UAE companies

    New labour insurance initiative

    From 15 October 2018, the UAE Cabinet has announced a new labour deposit scheme initiative which will enhance the rights of employees and free up cash liquidity for UAE companies.

    Currently, for each new employee hired, a company is obliged to pay an AED 3,000 deposit to the Ministry of Labour as a way of securing that employees receive all or part of their entitlements due and payable at the end of their termination of employment, such as end of service gratuity, holiday pay and payment in lieu of notice, if a company is unable to pay,

    Typically however, the structure of the current deposit scheme is limited to the value of the deposit and as a result, those employees who are owed significantly more than AED 3000 on the termination of their employment, are left with a substantial shortfall in the event that their employer is unable to meet the applicable payments.

    From 15 October 2018, the proposed new deposit scheme will drastically reduce the deposit payable by employers to just AED 60 for each new employee, thereby significantly reducing the upfront costs of recruiting staff, together with releasing liquidity which is currently tied up in the Ministry of Labour.

    Furthermore, the new system entitles employees to payouts of up to AED 20,000 by raising the insurance coverage, a marked increase on the current deposit amount, and fantastic news for all workers in the region, particularly vulnerable blue-collar workers.

    As with any insurance policy, successful claims may lead to increased premiums however for now, both businesses and employees alike will benefit from the new deposit scheme.

    For more information on company set up in the UAE or any other legal requirements please contact:

    Finlay Donaldson on +971 4 343 8897

  • Corporate Law/ Family Law/ Legal Update/ Wills

    DIFC Wills Service Centre launches new Business Owners Will

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    The DIFC Wills Service Centre (DIFC WSC) has launched a new Business Owners Will to encompass both free zone and UAE onshore company shares (including RAKICC registered companies). The Business Owners Will replaces the DIFC WSC’s Free Zone Company Will, which was previously available to encompass only free zone company shares.

    The new purpose Will can encompass up to five separate shareholdings in any free zone or UAE onshore company incorporated in the Emirates of Dubai and/or Ras Al Khaimah, and will enable non-Muslim testators over the age of 21 to designate which beneficiary(ies) they wish their company shares to be transferred to on their passing. There are many advantages to ensuring that there is a succession plan in place with regards to the ownership and management of any company, including business continuity, sustainability, and reassurance that the business will be left in capable hands.

    The introduction of the Business Owners Will is intended to allow testators to take advantage of the proposed changes to the foreign ownership system of UAE based enterprises, announced by the Cabinet early this year. Once implemented, the new law will allow certain foreign investors to have 100% sole ownership of their enterprise, bringing the position of onshore LLC companies in line with existing free zone and offshore entities.

    The Business Owner Will is available to both UAE residents and foreign investors, and can be registered in person or via the DIFC WSC’s online Virtual Registry.

    For further information on the Business Owner Will or any of the DIFC WSC’s wills, please contact Victoria Smylie or Finlay Donaldson on +971 4 343 8897.

     

  • Corporate Law/ Family Law/ Legal Update/ Private Client

    Davidson & Co admitted to prestigious Legalink global network

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    Davidson & Co is delighted to announce that the firm has been admitted into the prestigious Legalink network, a global legal network comprising more than 60 individually approved and selected law firms from around the globe.

    Davidson & Co prides itself in its ability to offer a full service to clients, and by becoming a member of Legalink, Davidson & Co is now in a position to not only offer clients in-depth legal knowledge of proceedings in the UAE, but also access to dependable, first-hand legal advice from over 3,000 professionals worldwide.

    Davidson & Co recognises that in our ever expanding and internationalised economy, our clients’ private wealth and assets are no longer confined to one jurisdiction, and this most recent accolade cements the firm’s goal to understand the needs of its clients, add value whenever possible, and to ensure ongoing development and success.

    Further information on Legalink or its members can be found at https://www.legalink.ch.

    Alternatively, please contact either Victoria Smylie at vsmylie@davidsoncolaw.com, or Yousif Ahmed at yahmed@davidsoncolaw.com, both of whom would be delighted to answer any questions you may have on the network.

  • Uncategorized

    6-month UAE visa announced for job seekers

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    The UAE Cabinet have recently announced plans for a six-month visa which provides for individuals who have overstayed their current visa but wish to continue working in the country.

    The move will be welcomed by residents looking for employment and will replace the current system whereby individuals are either provided with a grace period of only 30 days to change their visa status or are required to exit the country and re-enter on a new visa.

    Individuals wishing to adjust or renew their current visa will be able to do so for a fee without also having to leave and re-enter the country.

    Further proposed amendments include a free 48-hour visa for transit tourists and the option for individuals who entered the UAE illegally to leave voluntarily with a “no entry” stamp for two years.

    The new visa rules are intended to be introduced in the fourth quarter of 2018 with the specific costs and procedures to be announced in due course.

    To find out more about visas in the UAE and for help with employment law or any other legal requirements please get in touch.

  • Uncategorized

    Davidson & Co Featuring in The Legal 500: Private Client Country Comparative Guide

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    Davidson & Co are delighted to announce that Andrew Young (Head of Private Client Services) and Victoria Smylie (Associate) were asked to contribute to the prestigious Legal 500 and The In-House Lawyer Country Comparative Guide, for the UAE.  For an overview of the most FAQ’s with regards to private client law in the region, with a specific focus on Dubai, please click here.

    For further information on how Davidson & Co can assist you with regards to wealth planning and asset protection, please do not hesitate to contact either Andrew Young on ayoung@davidsoncolaw.com or Victoria Smylie on vsmylie@davidsoncolaw.com.

  • Uncategorized

    UAE Labour Law – FAQ’s

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    UAE Labour Law – FAQ’s 

    With an expat community making up over 80% of the total population of the UAE, Federal Law No.8 of 1980 otherwise known as the UAE Labour Law, is one piece of legislation that every employee in the private sector should familiarise themselves with.  To assist, we answer some of the most frequently asked questions.

    What type of contract is available?

    There are two forms of contract available under the UAE Labour Law:-

    1. Limited/fixed term contract – Generally a start and end date is provided for in the body of the contract up to a maximum of 2 years. Unless the contract is renewed by mutual consent prior to the end date, the contract is cancelled automatically. A renewed fixed term contract may only be for a maximum of 2 years service. An employer faces penalties for terminating a limited/fixed term contract before the end date unless it can be proved the employee breached one of the grounds provided for in Article 120.
    2. Unlimited term contract – An open ended contract with no specified end date. Generally seen as more flexible, an unlimited term contract may be terminated by either party provided that the notice period provisions as outlined in the contract have been correctly adhered to (UAE Labour law provides for a minimum notice period of 30 days). Similar to a limited/fixed term contract, an employee may be dismissed without notice if it can be proved that one of the grounds provided for in Article 120 has been breached.

    What are the maximum working hours?

    The maximum normal working hours for adult workers are 8 hours a day or 48 hours a week, although there are exceptions depending on the nature of your employment. During the holy month of Ramadan, normal working hours are reduced by 2 hours a day.

    What is the maximum probationary period?

    Any probationary period must not exceed 6 months and an employer is unable to place an employee on any subsequent probationary period. The probation period counts towards continuous service for purposes of gratuity calculation (see further below).

    What is the annual holiday entitlement?

    Employees are entitled to 2 days of annual leave per month having served between 6 months and 1 year of employment. 30 days annual leave if the employee has completed over 1 year of employment. Any annual holiday entitlement is in addition to a number of UAE official holidays.

    What is the annual sick leave entitlement?

    Employees are entitled to a total of 90 days sick leave a year calculated as follows:-

    • Full pay for the first 15 days
    • Half pay for the following 30 days
    • Unpaid leave for remaining 45 days

    Sick leave is not applicable during an employee’s probationary period.

    Who is eligible for end of service gratuity and how is it calculated?

    If an employee has completed at least twelve months in continuous employment with an employer, then they are entitled to payment of an end of service gratuity upon the termination of their employment. The end of service gratuity is calculated as follows:-

    • 21 days wages for every year of employment completed, and for each year of the first five years of employment (calculated pro rata for any additional days served).
    • 30 days wages for each additional year of employment after five years, (calculated pro rata for any additional days served) subject to the limitation that the total of the gratuity does not exceed two years salary.

    There are several restrictions on the payment of the end of service gratuity and the amount due depending on what grounds the contract was terminated on, and whether the contract is unlimited or fixed.

    What happens if there is a dispute between an employee and employer?

    In the event of a dispute between an employee and their employer, a complaint must be lodged by either party at the Ministry of Human Resources and Emiratisation, in the Emirate where the company is situated. On the submission of a complaint, the Ministry will summon both parties in an attempt to amicably settle matters. In the event that the dispute is unable to be settled at the Ministry, the case is referred within two weeks to the local courts to resolve.

    Any complaint must be submitted within one year from the date on which the amount or entitlement was due.

    This article is intended to be an introduction to the Labour Law in the UAE and a brief summary of some of the most frequently asked questions. In any situation, the individual facts of the employment and the circumstances surrounding the termination would need to be fully explored.

    For further information on how we can assist you in your enquiries regarding Labour Laws, or to discuss in more detail any of the general principles raised above, please contact us on 04 343 8897 where one of our team will be delighted to assist you.

    Please note that the DIFC has a separate legal framework for Employment matters.

     

  • Family Law/ Legal Update/ Private Client

    Enactment of the DIFC Foundations Law 2018 – enhancing succession planning and wealth structuring platforms in the region.

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    The long-awaited Dubai International Financial Centre (DIFC) Foundations Law 2018 (DIFC Law No 3 of 2018) has now come in to effect as of 21 March 2018. The new law, which is in addition to the pre-existing DIFC Companies Law and the newly reformed DIFC Trust Law, is intended to provide an enhanced framework for succession planning and wealth structuring platforms in the region.

    What is a Foundation?

    A Foundation is an incorporated legal entity, viewed as a hybrid between a company and a trust. Similar to that of a company, a Foundation is deemed to have a separate legal personality however, rather than being owned by shareholders or members, a Foundation is self-owned and administered by its Council, in accordance with the Foundation’s by-laws.

    A Foundation is established when the Founder places assets in to the Foundation to be used in accordance with designated purposes and objects.

    DIFC Foundation Categories

    The DIFC Foundations law provides for four categories of Foundations based upon their objects; 1) objects which are exclusively charitable; 2) objects which are not charitable; 3) in order to provide benefits to persons identified in its Charter or By-laws and; 4) a combination of the above. For all categories of Foundations, commercial activities must not be carried out, except where deemed necessary for, and ancillary or incidental to. the Foundation’s objects.

    Different governance requirements will apply depending on which Foundation is created.

    Key Benefits

    • Flexibility
    • Degree of control maintained by Founder
    • Family involvement
    • Maintain family ties for geographically diverse families and/or assets
    • Continuity
    • Separate Legal Personality
    • Independent
    • Robust governance structure
    • Facilitates philanthropy

    Who will benefit from the DIFC Foundations Law?

    Foundations can be created for a variety of purposes, whether it be to assist the multi-generational family with asset protection, the High Net Worth individual with geographically diverse assets, an individual or family with philanthropic objectives, or a company or family office wishing to restructure, the DIFC Foundations regime is a welcome introduction for individuals, families, businesses, and entrepreneurs alike both locally and globally.

    For further information on DIFC Foundations please contact Victoria Smylie on +971 4 343 8897 or vsmylie@davidsoncolaw.com

     

     

     

  • Economy/ Legal Update/ Taxation/ Uncategorized

    Federal Tax Authority announce list of Designated Zones in the UAE

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    Cabinet decision No. (59) of 2017 on the Executive Regulations of the Federal Decree-Law No. (8) of 2017 (UAE VAT Law) has provided for 20 Designated Freezones in the UAE (as listed below), which will be treated for VAT purposes as being outside the UAE.

    Under the UAE VAT Law and Executive Regulations, a Designated Zone is defined as “a specific, fenced geographic area which has security measures and customs controls in place to monitor entry and exit of individuals and movement of goods to and from the area.”

    Subject to the below exceptions, in general, if a supply is deemed to have taken place in a designated zone, VAT should not be charged. The place of supply is generally determined by looking at the location of the goods, activities or parties to a transaction. The rules are as follows:

    • Goods that arrive into a Designated Zone from outside the UAE are not treated as imported into the UAE, and no VAT should be charged on the arrival of such goods; and
    • A transfer or sale of goods from a place in the UAE which isn’t a Designated Zone into a Designated Zone is not an export for VAT purposes, and therefore will not give rise to zero-rated VAT treatment.

    The transfer of goods between Designated Zones will not be subject to VAT, as stated in Article (51) of the VAT law, provided both of the following conditions are met:

    • The goods (or part of the goods) are not released, used, or altered during the transfer between Designated Zones; and
    • The transfer is in accordance with the rules for customs suspension pursuant to GCC Common Customs Law.

    The Federal Tax Authority may also request that, where goods are moved between Designated Zones, the owner of the goods provides a guarantee in respect of the VAT in case the conditions outlined above are not met.

    However, there are exceptions within the VAT Executive Regulations that state that certain types of supplies taking place in the Designated Zones are to be treated as if they actually took place within the UAE, and are therefore subject to VAT. These supplies include:

    • Any services provided;
    • Water and all forms of energy; and
    • Goods sold for use or consumption.

    Designated Zones:

    Abu Dhabi: Free Trade Zone of Khalifa Port; Abu Dhabi Airport Free Zone; and Khalifa Industrial Zone.

    Dubai: Jebel Ali Free Zone (North-South); Dubai Cars and Automotive Zone (Ducamz); Dubai Textile City; Free Zone Area in Al Quoz; Free Zone Area in Al Qusais; Dubai Aviation City; and Dubai Airport Free Zone.

    Sharjah: Hamriyah Free Zone; and Sharjah Airport International Free Zone.

    Ajman: Ajman Free Zone.

    Umm Al Quwain: Umm Al Quwain Free Trade Zone in Ahmed Bin Rashid Port; and Umm Al Quwain Free Trade Zone on Sheikh Mohammed Bin Zayed Road.

    Ras Al Khaimah: RAK Free Trade Zone; RAK Maritime City Free Zone; and RAK Airport Free Zone.

    Fujairah: Fujairah Free Zone; and Fujairah Oil Industry Zone (FOIZ).