On Your Side: Ownership change can complicate employment issues

It appears to be a fairly standard practice for banks to put a stop on accounts that have been inactive for 12 months.

I have been with my employer for two years, but it seems that the owners will be leaving the country and selling the company to another organisation. Although they will be operating from the same premises and will apparently be keeping most of the staff on, it is unclear as to whether they are actually taking over the company itself. We don't know if they will keep our name or change that, too. We have had some issues with late payment of salaries and many of the staff are concerned about their rights in relation to both the current company and the new one. Should we get new contracts and be paid a gratuity, so we start again? And who is responsible if the current company does do this? I don't know where I stand legally and would welcome your advice. JW, Abu Dhabi

If the new company is not taking over the company or staff contracts, then the existing employer is liable to pay wages in full and also end-of-service gratuities. It is then up to the new company to decide whether to offer employment to existing staff, but unless it makes an agreement to actually take over the company and retain jobs, I do not believe that it has a legal requirement to do so, apart from in accordance with the provisions of the UAE Labour Law. Article 126 states: "If any change takes place in the form of the establishment or in its legal status, valid contracts at the time of change shall continue to exist so between the new employer and the employees of the establishment, and service shall be deemed to be continuous. Both the former and the new employers shall jointly be liable for a period of six months for the fulfilment of obligations arising from contracts of employment in the period before such change and after the lapse of the said period the new employer shall be solely responsible." The issue is whether the new company does actually take over the company or simply buys the premises and starts again. The situation will depend on the agreement that is made, how the new company operates, including such factors as to whether it retains the name, which is a de facto takeover as opposed to a new start. I would not consider it unreasonable for an employee to ask for clarification in this situation.

I have had an account with a local bank for many years and I keep about Dh30,000 in it as an emergency fund. As this is a secondary account, I have not made any withdrawals or payments for over a year, but recently I had some unexpected expenses and I wrote a cheque from this account that was then bounced by the bank. As a result, I have had to pay additional charges for something that was not my fault and was highly embarrassed. I know that bouncing a cheque is a criminal offence, but I wrote the cheque in good faith as I knew I had more than enough money to cover the payment. The account has now been "reactivated" in the bank's terms, but I am still seeking an explanation as to why banks in the UAE do this? Is it common practice or just from my own bank? AD, Dubai

I have spoken to a number of UAE banks about this. It appears to be a fairly standard practice for banks to put a stop on any accounts in which there has been no transactions for a period of 12 months. If the account holder does not contact their bank about this specific account, it will be deemed dormant and then frozen. This is the case even if the account holder has other accounts with the same bank that are active. To reactivate an account that has been deemed dormant, a fee is usually charged and account holders may be required to produce their passport with a valid residency visa. If an account is not used for more than two years, it can be marked as "unclaimed" and thereafter it can be difficult to reactivate the account. While this practice is common in the UAE, perhaps due to a somewhat transient population, it appears to be in the bank's interest and not that of the customer's. This can be the case with any type of bank account, so I would suggest that readers make a point of making at least one transaction a year on all local bank accounts, both current and savings accounts, to ensure that they do not have the same problem as AD recently experienced.

I work for a company in a factory that employs hundreds of people. We are not close to anywhere else, so the employer set up a small shop and canteen a few years ago so that we could easily buy some lunch or other basic requirements without spending time travelling. This was our choice to use it, but there is now a new supervisor who is telling us that we cannot leave the building or the area in our lunch break and that we have to buy our lunch from the canteen. Many of us do this, but sometimes we also like to go somewhere else for a break and to have more choices. When I explained this, the supervisor was angry and told me that there was no choice. I would like to know if he can do this and force us in this way. KM, Sharjah

Your supervisor is acting illegally by insisting that employees must use facilities provided by the company. You may like to point out to him that Article 59 of the UAE Labour Law states: "No worker shall be obliged to buy food or other commodities from specific shops or products manufactured by the employer." I hope that this man is simply not aware of the law, but if he continues to try to impose this rule, you have the right to make a formal complaint with company management and then the Ministry of Labour.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai. Contact her at [e-mail]