Wills, Inheritance, and Employment in the U.A.E.

Tim Elliott
Welcome to this webinar edition of the Yamalova & Plewka podcast, Lawgical, hosted here in partnership with Council Bar. My name is Tim Elliott, and I’m joined by Ludmila Yamalova, the Managing Partner of Yamalova & Plewka, based in Dubai.

Today, we’ll discuss two major topics: employment and wills & inheritance, particularly in light of the COVID-19 pandemic and its impact here in the UAE. These are unprecedented times, but Ludmila, as always, it’s good to see you.

Let’s begin with employment. COVID-19 has brought global economies to a near standstill. Social distancing measures are strictly enforced, and businesses have had to adapt rapidly. New guidance and legislation are being introduced frequently, leaving both businesses and employees with growing concerns about the long-term effects.

Before we address employees, let’s start with the perspective of business owners. Ludmila, given your experience operating your own practice during these past five to six weeks of near-total lockdown, how have things been for you, particularly within the DMCC Free Zone?

Ludmila Yamalova
The DMCC, or Dubai Multi-Commodities Centre, is the world’s largest free zone, making it an interesting case study. It attracts a variety of businesses, from commodities and energy to law firms, accounting firms, and other service providers. As such, it provides a representative snapshot of how businesses are experiencing COVID-19 and how governments and authorities are responding to assist them.

Businesses within the DMCC, like others, are acutely aware of and affected by the day-to-day consequences of the pandemic. The immediate impact was felt when the UAE closed its borders. Tourism, events, and trade—key components of the UAE economy—came to a halt. People could no longer travel to conduct business or run their companies. Events, conferences, and trade shows, which usually attract significant global attendance, were canceled.

Tourism also shut down, affecting airlines, hotels, restaurants, and the F&B sector. The ripple effects were significant, impacting businesses that rely on foot traffic and customer engagement. Without revenue, many companies struggled to meet their obligations, including servicing loans, paying salaries, and covering operational costs.

Compounding this challenge is the uncertainty of how long this situation will last and the extent of its impact. It’s truly unprecedented.

Tim Elliott
Indeed, it’s hard to respond to something with no clear timeline. Let’s talk about government intervention. What measures have been introduced to support businesses during this time?

Ludmila Yamalova
The UAE government has been swift in rolling out measures to ease the burden on businesses. A few key examples include:

1. Financial Obligations:
   The Central Bank directed banks to freeze the enforcement of bank guarantees. This provides businesses with a grace period to meet their financial commitments, such as corporate loans and mortgages.

   Typically, missing even one loan payment could result in severe consequences, including bounced checks—which are criminal offenses in the UAE. This initiative has been a significant relief for businesses.

2. DMCC-Specific Measures:
   The DMCC introduced discounts and extensions for license renewals, visa renewals, and rent payments for businesses renting directly from the government.
3. Immigration Relief:
   Residence visas expiring between March and December 2020 have been automatically extended to January 2021. This is crucial as residence visas are linked to health insurance, which is another significant cost for businesses.
4. Eviction Protection:
   Dubai and Abu Dhabi courts have issued directives to halt eviction cases for the time being, providing businesses and individuals with some breathing room.

While these measures provide interim relief, the big question remains: What happens when these grace periods expire?

Tim Elliott
Exactly. With measures in place until June or the end of the year, what’s your perspective on the longer-term implications, particularly if businesses face significant financial backlogs?

Ludmila Yamalova
That’s the million-dollar question. Once grace periods end, businesses will face the challenge of resuming obligations they may have defaulted on during this period. For example, unpaid rent or loan installments from the past few months will need to be addressed, along with current and future obligations.

This could lead to a significant financial strain. However, it’s worth noting that the government continues to assess the situation and may roll out additional measures as circumstances evolve.

Tim Elliott
Let’s shift to the employee perspective. Ministerial Resolution 279 was introduced to address employment concerns. Could you walk us through its key provisions?

Ludmila Yamalova
Ministerial Resolution 279 provides a framework for businesses to adjust employee terms during the pandemic. Key points include:

1. Temporary Adjustments:
   Employers can reduce salaries or place employees on unpaid leave, but only with the employee’s consent. These adjustments must be registered with the relevant government authority and include a specific end date.
2. Gradual Measures:
   Employers are encouraged to explore alternatives before terminating employees, such as paid leave, unpaid leave, or salary reductions.
3. Termination Guidelines:
   If termination is unavoidable, employers are required to register affected employees in a virtual labor market to facilitate reemployment opportunities. There is also language suggesting that employers remain responsible for housing allowances, though this requires further clarification.

While these measures aim to balance business needs with employee rights, the practical challenges cannot be overlooked. For instance, if a company lacks funds, even court judgments may prove unenforceable.

Tim Elliott
Before we move on to wills and inheritance, we have a couple of audience questions:

1. What’s the impact of postponing Expo 2020?
2. What employment opportunities might emerge post-pandemic?

Ludmila Yamalova
Postponing Expo 2020 is certainly a setback, but it’s not a cancellation. It provides an opportunity to regroup and reimagine the event in a way that unites the world post-pandemic.

As for employment opportunities, certain industries—such as healthcare, e-commerce, and logistics—are likely to grow. Businesses that adapt to new technologies and online platforms will also see increased demand. While there will be challenges, history shows that recovery often brings new opportunities.

Tim Elliott
Thank you, Ludmila. Let’s move on to wills and inheritance—a critical topic during these uncertain times. Why is having a will so important, particularly in a diverse jurisdiction like the UAE?

Ludmila Yamalova
In a multicultural society like the UAE, inheritance laws can be complex, particularly for families with assets in multiple jurisdictions. A will provides clarity, simplifies the probate process, and ensures your wishes are respected.

Non-Muslims can register wills through the DIFC, Dubai Courts, or Abu Dhabi Courts, each with unique benefits and costs. Muslims, on the other hand, are subject to Sharia law and may need to explore alternative asset structuring to align with their wishes.

For families with minor children, wills are especially crucial for appointing guardianship. Without a will, guardianship decisions may be delayed, causing additional distress.

Tim Elliott
Thank you, Ludmila, for shedding light on these important topics. This concludes our special webinar edition of Lawgical in partnership with Council Bar.

As always, you can find Lawgical wherever you get your podcasts. For more information, visit LYLawyers.com. Thank you for joining us, and stay well.