17 May 2021

Hadef in the Courts: Successful outcome for 950 employees in the Ras Al Khaimah courts

Authored by: Rachel Hill

In Brief:

  1. Hadef & Partners advised a large conglomerate in respect of the liquidation of its subsidiaries in the Emirates of Dubai and Ras Al Khaimah due to bankruptcy.

  2. We successfully exited all 950 employees from our client’s subsidiaries.

  3. The Ras Al Khaimah courts, after a two-day negotiation, accepted the signed settlement agreements under which the employees partially waived their rights and entitlements under UAE Labour Law No. 8 of 1980 (as amended) (‘UAE Labour Law’) in lieu of enforcement of the execution.

Hadef & Partners assisted and advised a large conglomerate in respect of the liquidation of its subsidiaries in the Emirates of Dubai and Ras Al Khaimah (‘RAK’) due to bankruptcy. We were instructed to advise on the UAE Labour Law implications of exiting its 950 employees and to assist in the implementation.

From an employment law perspective this involved the redundancy of all employees, which required meticulous planning for a town hall group redundancy meeting and preparation of the termination documentation. Thereafter, each employee, as expected, filed a labour case against our client for payment of their labour dues and successfully secured judgments against the client’s RAK and Dubai entities. The employees then commenced execution court proceedings for recovery of their end of service dues preventing the client from completing its liquidation proceedings and causing suspension of the business licenses and accrual of various fines.

Our team’s effective strategy brought the employees to the negotiation table in order to arrive at individual settlements with the limited funds available. With substantial penalty fines accruing daily for the client in respect of court related interest on all judgments, and further overstay immigration penalty fines on those visas delayed due to the Covid-19 pandemic, time was of the essence. Following numerous meetings and discussions with the employees over a two-week period, terms were agreed with each individual employee. We drafted bespoke settlement agreements detailing the separation packages together with preparing the relevant court application paperwork to be signed by each employee. This allowed us to make an exceptional and unusual court application requesting the court’s assistance in resolving the execution matters due to the client being financially unable to satisfy the judgments due to the bankruptcy.

We attended the RAK courts with the relevant paperwork and negotiated, over a two-day period, with the presiding Judge, an agreement whereby the court would accept the signed settlement agreements in lieu of enforcing the execution of the judgments against our client – this was an exceptional action from the court and a testament to the skill of our Partner and litigator Omar Al Heloo.

During the court negotiation, our team attended meetings with the client and its bank to negotiate a cash loan from the client’s sister entity in order to fund the settlements agreed with the employees. We reached agreement, received the funds, and ensured that each employee was paid their agreed dues at the client’s office premises in RAK.

Simultaneously, as an express part of the court’s agreement to release the execution files, we liaised directly with the relevant immigration department to arrange exit permits for all employees, prepared all the repatriation paperwork and assisted the client to commission flights to repatriate the employees to their home countries.  

Subsequently, we collated all employee immigration exit reports and copies of each exit stamp to return to the court to confirm that employees had left the country allowing the closure of all employee related matters. Our Corporate team was then able to move the bankruptcy matter forward and concluded closure of the client’s UAE business while ensuring no further liability remained.

For further information on labour related issues in the UAE, please contact Rachel Hill, Partner, Head of Employment r.hill@hadefpartners.com or Dilini Loku, Senior Associate, Employment d.loku@hadefpartners.com.

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.