'Am I liable for bounced cheques I wrote in my company's name?'

The Dubai resident used to work as general manager for a firm in financial strife

The former company head is concerned the bounced cheques will jeopardise his chances of securing a new job. istockphoto.com

I was general manager of a company that suffered deep financial troubles, basically due to weak collection from some clients, so many of our cheques bounced. Most have now been paid, but for a few we paid a fine on each cheque. No civil case has been filed as far as I know. Now I am trying to start anew. My concern is that if I apply to a new company, will the history of these bounced cheques become a hindrance? All were company cheques and none were in my own name. I was not the owner of the company, but my name was on the trade licence as the manager and I signed on the bank documents to open the company's account. If cheques bounced or a fine was paid, will I have a criminal record that might put off potential new employers? Additionally, if I decide to emigrate would this reflect badly on any visa applications? HH, Dubai

There are two parts to this query and for the part about the cheques I asked Pamela Haidat, solicitor and partner, Barker & Booth in association with Nasser Malalla Advocates, for comment. She said: “A general manager who knowingly signs a cheque which he reasonably suspects is unlikely to be honoured, is committing an offence. This offence may constitute a criminal offence due to its intent and also a breach of civil law by the damage inflicted or caused by the failure to honour the commitment. It is important for the general manager to seek to resolve the issues of the dishonoured cheques by way of amicable settlement prior to escalation, which may result in punitive action being taken against him personally. Despite the cheques being in the name of the company, the general manager carries a degree of legal responsibility for the issuance of those cheques and his actions may be deemed as gross misconduct for which he is personally responsible.”

The role of general manager, especially when named on a trade licence and signatory to a company bank account, carries a significant amount of legal responsibility that many do not fully appreciate when taking on the role. Ms Haidat said: “ Where a general manager becomes aware of severe financial difficulties within the company, he should take steps to mitigate the risk by refraining from entering into any new obligations where there is a reasonable suspicion the company will be unable to fulfil its commitment to third parties and thereby cause them to suffer loss or damage. The laws regarding a manager’s duties and responsibilities are enshrined in the Commercial Companies Law No 2 of 2015, Law No 9 of 2016 and the UAE Civil Transactions Law No 5 of 1985. General managers should be fully aware of their responsibilities and further, the implications of any violation or breach of duty on their part.”

It is impossible to say for certain whether these bounced cheques will cause an issue on future visa or job applications. Since December 2017, in the emirate of Dubai only, bouncing a cheque of up to Dh200,000 has been classified as a misdemeanour rather than a criminal offence, so the size of the bounced cheques will be relevant. HH will also need to answer any questions honestly and explain that there were not personal cheques but that he was signing on behalf of his employer and this may help with any application.

My unlimited employment contract was terminated at the end of last month. My notice period is 30 days, so my last day is October 30. My official employment commencement date was October 14 2018 so I will have been employed for a full year on October 14 2019, slap bang in the middle of my notice period. Will I still receive a gratuity? Does the one-year period include the notice period? MH, Abu Dhabi

UAE Labour Law applies in this case and Article 132 states: “The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service…” The period of service is the start date, when a work permit commences, until the final day of service and this includes all notice periods until the visa and/or work permit is cancelled.

In this situation, MH will be eligible to receive a gratuity payment as he will have been in employment for more than one calendar year, assuming he hasn’t had more than two weeks off work unpaid. He will be due the full amount calculated at 21 days of basic salary for each full year worked.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE

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