x Abu Dhabi, UAESaturday 22 July 2017

What to do if I fall out with my free-zone business partner?

On your side: Keren Bobker answers questions on employee-employer disputes and business partnerships.

I own a business in equal shares with a partner whom I have known for many years. The business was set up in a free zone and has been operating successfully for some two years now. Although relations between us are good and I am not expecting any problems, I would like to know what I can do to protect myself should we have a major disagreement, want to go our separate ways, or if one of us dies. Can you tell me what steps I should take and how I can best protect myself? TM, Ras Al Khaimah

As with any relationship, business relationships can fail, so it is important to have formal written agreements in place in the event of disagreements, separation or death. You and your business partner need to agree the options now while all is going well and have these written up formally so that there can be no dispute at a later date. Generally, should one partner want to leave the business the other gets first choice to buy out their share and you need to ensure that one half of the company cannot be sold without the approval of the other party. I strongly recommend that you obtain professional legal advice regarding a partnership agreement so that all is properly formalised and there is no future confusion. If you both decide how you want matters to be arranged then it should not be costly to have this drawn up. I would also suggest that you consider taking out life assurance, and possibly critical illness cover as well on each other's lives. This can be used to "buy out" the inheritor of the shares should your business partner die, so that you do not end up in business with someone who knows nothing about the business, has no interest or who could become a potential liability. There are a number of ways in which this can be set up and costs will vary, so again I recommend that you take professional advice from an independent adviser who understands the implications.

 

I am in the middle of a dispute with my previous employer and the case will soon be going to the Labour Courts. I am now looking for another job and have been asked to attend interviews abroad. Will I have a problem if I leave the UAE for a few days, or am I even allowed to? LA, Sharjah

If there is a pending legal case with an employer and you leave the country, they could claim that you have absconded and the case may go against you. My advice would be not to leave the country until the case is over.

 

I have recently resigned from my company in the UAE after working for more than two years. This is a small branch office of a US company and while they are aware they will have to pay me the end of service gratuity, this is their first experience doing so. My situation seems odd because I looked back at my official UAE contract - submitted to the free zone in October 2010 - and it says it was for a renewable one-year period but a maximum of two years. However, my UAE contract was never renewed after the two years, which puts me in a funny position as to whether my employment contract is considered unlimited or limited on a yearly basis? If it was indeed unlimited, technically I have not had a contract for a while now. My question to you is, assuming I started in October 2010 and leave on April 30, 2013, how many days of pay am I owed for my gratuity? My Dubai manager believes I should be paid 52.5 days but the human resources department in the United States is asking questions. MA, Dubai

If someone is employed on a limited contract and they carry on working for the same company after the end of the set term it is assumed that they are now on an unlimited contract on the same terms as before, with service dating back to the start date. If you started on a limited contract, but this rolled over into an unlimited one, your first date of employment is the date from when the end of service gratuity is calculated, based on your current salary. This is ordinarily 21 days' pay for each year of the first five years of service, but is reduced to seven days pay per year of service if you resign within three years. So if you have worked for two and a half years, you are entitled to gratuity of 17.5 days of final basic salary.

 

Can you tell me if the law has changed regarding employers retaining passports? My boss says it has and that he will keep all our passports in the company safe unless we have a good reason to need them. RC, Dubai

It is against the law for an employer or sponsor to retain people's passports and there has been no change. If your employer will not release your passport, I recommend that you contact the Ministry of Labour.

 

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at keren@holbornassets.com