Host
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Host
It’s Drive Live, Claire and Tim with you this evening through till 7 o’clock. It’s that time of the week when we discuss all things legal. A very warm welcome, as usual on a Monday, to Ludmila Yamalova, managing partner at HPL Yamalova & Plewka. She’s here in the hot seat to answer any questions you can throw at her. Welcome, Ludmila. How are you doing?
Ludmila Yamalova
Good afternoon, good to be here.
Host
Lovely to have you with us, as always. The questions are already flooding in, as they do. 4001 if you want to add yours to the list. We always run out of time, so do get them in early. But before we dive in on those, Ludmila, let’s start with a topic that’s often in the news because we see these cases come through the courts. A recent example of damages and compensation involved a businessman suing a hotel in Dubai for 50 million dirhams. The case alleges that during a business dinner, he found what was described as a bloody bandage in the food. He’s suing the hotel, claiming reputational damage and financial loss due to losing a business deal. Fifty million dirhams seems like a huge figure. Is that something the courts here would even entertain?
Ludmila Yamalova
You’ve summarized the article well. The bloody bandage is indeed a graphic detail, and we can empathize with the individual involved. From a legal standpoint, however, the UAE’s system for damages and compensation differs significantly from places like the US. In the US, there’s a concept of punitive damages, often calculated as a multiple—sometimes treble—of the actual damages. That’s why you see large figures like 50 million being awarded in US cases.
Here in the UAE, the courts focus on actual damages. To claim compensation, the individual must prove tangible losses—like medical bills, invoices, or documentation showing the financial impact of the incident. Emotional distress can also be considered, but it requires substantiation through medical records or similar evidence. Reputational damage, such as losing a business deal, would need clear proof of causation, which is challenging. For example, they would need documentation explicitly showing that the deal fell apart because of this incident.
Host
So, reputational damage is recognized, but proving it requires strong evidence. What about cases involving physical harm?
Ludmila Yamalova
We’ve handled cases like that. For instance, we had a case where an explosion in a villa caused the ceiling to collapse, injuring children. The court required us to provide medical reports and bills to quantify the damages. However, future damages—like the long-term psychological impact on the children—are nearly impossible to claim here because the UAE courts lack a mechanism to calculate them.
In the US, experts would estimate future damages based on professional reports, research, and algorithms. Here, compensation is limited to actual, documented expenses.
Host
Interesting. So, no concept of punitive damages here, but the process is evidence-driven. Let’s take some questions. 4001 if you have one for Ludmila.
Host
This is from someone with a free zone visa. They’ve been employed for over 10 years and are part of a European pension scheme through their multinational company. They’re asking about their end-of-service gratuity entitlement when they leave the company.
Ludmila Yamalova
As long as you’re employed in the UAE, you are entitled to end-of-service benefits under the UAE Labor Law, regardless of other agreements. Employers can provide additional benefits, like a pension scheme, but they cannot remove or replace the gratuity entitlement unless the pension is of higher value and the employee agrees to opt for it.
For gratuity, the law calculates 21 days of basic salary for each year of service for the first five years and 30 days for each additional year.
Host
What if there are inconsistencies between contracts?
Ludmila Yamalova
Any inconsistencies are interpreted in favor of the employee. If, for example, a secondment agreement specifies fewer benefits than the UAE Labor Law, the law takes precedence.
Host
Let’s take a question on maternity leave. Thomas called earlier but got cut off. He mentioned that his wife applied for maternity leave, took annual leave alongside it, and extended her leave due to health issues. The employer verbally agreed to this extension but later requested her to return immediately. When she couldn’t, she resigned. The employer is now demanding reimbursement for her license costs, insurance, and notice period. They’re also refusing to issue an experience letter.
Ludmila Yamalova
First, employers cannot legally deduct costs for licenses or insurance, as these are the company’s responsibilities. Second, notice period reimbursement applies only in limited contracts and must correlate to actual damages suffered by the company, which they must prove in court. Third, refusing an experience letter violates the law, as employees are entitled to one upon leaving.
Finally, given the circumstances, your wife may have grounds to claim constructive dismissal, as she was forced to resign due to the employer’s unreasonable demands.
Host
Great insights. We’ve got more questions to get through, including one on property investment and another on bounced cheques. Stay tuned.
Host
Next question is from someone keen to invest in property in the UAE. They’re asking whether it’s better to invest directly in their personal name or through a company. They also want to know if investing through a company decreases liability and whether residency visas are available for company-based investments. Lastly, they’re curious if property investment visas are available in Abu Dhabi or only in Dubai.
Ludmila Yamalova
Good question. Let’s break this down. First, regarding investing under your name or through a company—it depends on your goals. If you want a property visa, the property must be owned in your personal name because the visa is tied to individual ownership, not corporate. This applies only in Dubai, as property investment visas are not currently available in Abu Dhabi or other emirates.
Investing through a company can have its advantages, such as separating personal and business liabilities. However, it’s more complex. If the company is not UAE-based, you’ll need to go through a lengthy process to attest and legalize documents like incorporation certificates and shareholder agreements. Additionally, if the company has foreign ownership, you’ll need to disclose ultimate beneficiaries, which adds another layer of complexity.
Investing personally is simpler and more straightforward, particularly if you’re looking to obtain a residency visa and avoid administrative hurdles.
Host
That’s helpful. Let’s move on to another property-related question. Tori asks, “If my apartment is destroyed in a fire, will building insurance cover at least what I paid for it? Do I need to insure the apartment separately beyond home contents insurance?”
Ludmila Yamalova
This is a very timely question, given recent events involving fires in residential buildings. Building insurance typically covers structural damage and repair costs, but it doesn’t automatically cover the market value or purchase price of your property. To ensure you’re compensated for the value of your property, you would need a separate property insurance policy that includes replacement value.
When taking out insurance, it’s crucial to clarify whether the replacement value is based on the purchase price, current market value, or some other calculation. Most policies don’t include replacement value by default, so you’ll need to negotiate it into the contract. Also, home contents insurance only covers personal belongings and not the property itself.
Host
Good advice. Let’s pivot to a bounced cheque case. Kiran says he loaned money to a friend to start a business. His friend has now left the country, and the cheque Kiran received has bounced. He has additional cheques he hasn’t deposited yet. What are Kiran’s legal options?
Ludmila Yamalova
This is a tough situation but not uncommon. You have two potential legal avenues: criminal and civil.
For the bounced cheque, you can file a criminal complaint with the police. This will result in a case against your friend for issuing a cheque without sufficient funds. However, since your friend has already left the UAE, pursuing a criminal case may not yield immediate results unless they return to the country.
On the civil side, you can file a case to recover the outstanding amount, including amounts not covered by the bounced cheque. If your friend owns assets in the UAE or another jurisdiction, you may be able to enforce the judgment there. Enforcement of foreign judgments is complex but worth considering if the sum is significant.
It’s also important to check whether other creditors are pursuing your friend. If multiple claims exist, the situation may become even more complicated.
Host
Let’s squeeze in a quick employment question. Jamal asks, “My employer is changing my agreed rest days from two days a week to one day. Can they do that? What are my options if I don’t agree?”
Ludmila Yamalova
Under UAE labor law, employment contracts cannot be unilaterally changed without mutual consent. If your employer changes your rest days and you disagree, you have the right to refuse.
However, if you continue working under the new terms, this could be interpreted as your acceptance of the change. If the issue is significant enough for you to resign, you could claim constructive dismissal, arguing that the employer forced you to leave by altering the terms of your contract.
In such cases, it’s crucial to document everything—emails, notices, or any communication from your employer—so you have evidence if you pursue a labor dispute.
Host
Great advice. Let’s move to Thomas’s follow-up question. He asks if his wife, who is a speech therapist, can recover unpaid maternity leave and annual leave after resigning. He also wants to know if the company can legally deny an experience letter.
Ludmila Yamalova
Thomas, your wife is entitled to maternity leave pay and any accrued annual leave under UAE labor law. If the company hasn’t paid these amounts, she can file a complaint with the Ministry of Human Resources and Emiratisation (MOHRE).
As for the experience letter, the company is legally required to issue one upon request. This letter must include her dates of employment and job title, but it doesn’t need to provide a recommendation. Refusing to issue an experience letter violates labor law.
Finally, as mentioned earlier, the company cannot deduct license or visa costs from her dues, as these are the employer’s responsibility. I recommend filing a labor complaint to recover the outstanding amounts and address the experience letter issue.
Host
We’re almost out of time. Thank you, Ludmila, for answering so many questions. It’s always a pleasure having you with us.
Ludmila Yamalova
Thank you. Always a pleasure to be here.