Abu Dhabi, UAESunday 21 July 2019

'Can I force a friend to return a security cheque?'

The Sharjah resident borrowed money from his pal a few months ago

The borrower wants the security cheque returned as he no longer owes the amount stated on it. istockphoto.com
The borrower wants the security cheque returned as he no longer owes the amount stated on it. istockphoto.com

I gave a cheque to a friend as security for an amount of money they lent me a few months ago. I have now paid back nearly 75 per cent of the money and will pay the rest soon. I have asked my friend to return the cheque as I no longer owe that amount. He said no so I want to know where I stand and whether I can make him give the cheque back? Or can I tell my bank not to cash it if he tries to pay it in? GK, Sharjah

This is a tricky situation and unless there is a proper agreement in writing, which I don’t believe there is, is impossible to prove what was agreed and the terms. Under UAE law, if a cheque has been signed and given to someone, it is not permitted to request the return of a cheque or to ask for it to be cancelled or rejected by a bank.

Article 401 of Criminal Law 3 of 1987, commonly known as the UAE Penal Code, clearly states that it is illegal to give a cheque in bad faith or knowing it cannot be honoured but is also goes on to say, ‘(he) shall be sentenced to detention or to a fineif he orders a drawee not to cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed ‘ This remains the case even if the bulk of the monies owed have been repaid.

I suggest that GK tries to come to an amicable agreement with his friend and that once they have agreed how to proceed that they put this in writing to protect both of their interests.

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'I was made redundant via WhatsApp. What payout am I due?'

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I have been with my company for just two months but business is not good and there are rumours that staff will be made redundant. This is a worry as I only moved to Abu Dhabi a few months ago and need the job. If I was to lose my job does the company have to pay me anything? Do I have any rights even if I have only been there a short period? I don’t know how the law works and my colleagues are all saying different things. PW, Dubai

I have established that PW is on a two-year fixed contract and his employer is a mainland company. Under UAE Labour Law, properly known as Federal Law no 8 of 1980, there are distinct differences between someone whose employment is terminated when they are on a fixed-term contract and someone on an unlimited contract.

While a company can terminate employment for legitimate financial reasons without any issues or having to pay anything more that the usual salary over the agreed notice period, if an employee is on a fixed term contract there is an additional liability. Article 115 of Labour Law states: "Should the employment contract be of a determined term … he shall be bound to compensate the worker for the damage incurred thereto, provided that the compensation amount does not exceed in any case the total wage due for the period of three months or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract."

Whether the employer is liable for the cost of a flight to a home country depends on the circumstances of the employment. PW was hired when already in the UAE so is on a ‘local contract’; this means the employer is not obliged to pay the cost of a flight to a home country. The employer, however, is obliged to pay a sum equivalent to three months’ salary if he is made redundant.

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I have returned home after spending several years working in and maintaining a bank account in Dubai. My resident visa expired in April and I have initiated the required procedure to have a new resident visa. As a result of my current status, my bank said it will freeze my account. Would you consider that following the issuance of my new resident visa this will result in reversing my account to the normal status? AD, Greece

It is standard practice for banks in the UAE to freeze accounts when notified that a customer is leaving their job so it is unusual that the account was not frozen at the time AD left his employment. Residency visas should also be cancelled at the time that employment ends so it is somewhat irregular that this appears not to have been the case here. Where a bank account has been frozen, this is usually reversed within days if there are no debts such as personal loans or credit cards. Where there are debts, the common practice is to unfreeze the account once the customer provides sight of a new employment visa, proof of income, and the first month’s salary has been paid in.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

Updated: December 29, 2018 12:59 PM

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