NEWS FROM THE UAE
SOURCE : THE NATIONAL

Workers' legal complaints rise amid financial crisis

DUBAI - Feb 01: Lawyers in Dubai are being inundated with inquiries from workers who are being forced to take pay cuts, seeking severance pay and unpaid wages, or suing for unfair dismissal.

Several law firms said a high number of people were seeking advice about suing their employer, especially in the building, property and financial services sectors – businesses hardest hit by the global financial crisis.

The Advocates, a Dubai-based law firm, said its number of labour cases had more than tripled and their office was currently putting together 31 separate cases against a single company.

Kavitha Panicker, the chief executive at Ace Consulta Juris, said her firm was taking on four labour cases a day, double the usual number. She said most of them concerned the property sector.

Thousands have lost their jobs over the past three months as a lack of credit has hit demand in the property sector and frozen debt markets have forced companies to postpone or cancel projects. Nakheel cut 500 jobs, or 15 per cent of its workforce, in December. Banks and construction companies have also shed jobs.

“There’s definitely been a sharp increase in the number of threatened litigations and consequently settlements,” said Stuart Walker, a partner at Afridi & Angell. He said he had advised several “very senior” heads of investment banks in disputes over the past few months.

“However, most disputes won’t go all the way to court as the parties will settle before,” he said.

His firm has also had “significantly more” inquiries from companies about their legal obligations when making staff redundant.

Tony Maalouli, the managing director of ProConsult Advocates, whose firm is handling 20 per cent more labour cases, said more than a third had been lodged by workers whose employers were trying to force them to take pay cuts.

“This is a particular problem within the construction industry. Contractors right now are advising their employees to accept a reduction of as much as 50 per cent in salaries, saying that otherwise they would not be able to afford to pay them and would have to fire them,” Mr Maalouli said.

Most employees are accepting such ultimatums rather than be laid off and face a long court battle and legal fees, he said.

There is no concept of redundancy in UAE labour laws, meaning that employees can sue for unfair dismissal if they have been let go for what they feel are insufficient reasons. According to the law an employee’s service can be considered “arbitrarily terminated” if the reason for a contract being ended is “irrelevant to work.” Under these circumstances a former employee can sue for up to three months’ wages.

Mr Walker said that although unfair-dismissal cases lodged by employees released because a company was under financial pressure were unlikely to succeed, he might advise a client to take such action because it was relatively inexpensive to do so and there was a chance it might result in a financial settlement.

Cynthia Trench, a senior partner at the law firm Trench and Associates, said her firm had not experienced a “huge surge” in labour inquiries. But she believes many people are reluctant to approach lawyers because of the lack of legal aid in the UAE. Earlier this week the Ministry of Interior warned expatriates to follow proper legal procedures if they wanted to sue their former employees, or risk fines or deportation.

The Government advises workers to take their case first to the Ministry of Labour’s disputes division. If they fail to work out an amicable resolution there within two weeks, they may turn to the courts. If they have a legitimate case pending, they are entitled to an extension of their residency visa while awaiting a ruling.

The Justice Department said it could not immediately provide statistics on labour litigation.

Some lawyers say that while headlines often concentrate on redundancies in large companies, many smaller businesses are closing down and owners fleeing the country, leaving unpaid workers and debts behind. These workers often have no recourse to compensation.

“There are some real tragedies happening,” Mr Maalouli added. “Small to medium businesses are simply closing down and management is running away because of their liabilities. What they are doing is illegal, they are escaping their obligations. This is happening a lot.” Most of these companies, he said, had something to do with the property industry.

Even with extradition agreements in place it could often to be hard to track down those who had fled abroad. Any company facing insolvency is legally obliged to apply for bankruptcy in the courts.

Drivers given chance at clean slate

ABU DHABI - FEB. 01: Officials are planning a driving course that, once completed, would wipe black points from traffic violators’ licences.

As it stands there is no way for drivers awarded black points to redeem themselves, and 928 motorists have had their licences suspended for being issued with 24 points since the system was introduced in March.

Representatives of Abu Dhabi Police, the Ministry of Interior and the Emirates Driving Company will meet this week to work out the details of the new course.

The Emirates Driving Company is responsible for training and licensing drivers in the emirate. Its general manager, Dr Gehad Y Esbaita, said the details included what type of violators would be eligible, how many points could be wiped and how many times a driver could attend a course to reduce points.

“As soon as all of the material has been approved, we will specify the lessons and dates and time and the cost, which will be a very simple cost,” Dr Esbaita said.

He said he would propose that the course should include lectures and practical training, either behind the wheel of a car or in the company’s driving simulator. Dr Esbaita said similar programmes are expected to run across the country.

“The course would focus on safety,” he said. “It contains a lot of videos just to show these speedy guys how to take care of themselves, how to take care of their families and why they had these black points.”

Drivers who are given 24 points in a year lose their licences for three months. If they gather 24 points again, their licences are taken for six months. After a third time, the licences are seized for a year and they have to complete a course before they are returned.

Licences can be taken immediately for such offences as driving under the influence of alcohol, which carries 24 black points.

Dr Mohamed el Sadig, a research fellow at the Roadway Transportation and Traffic Safety Research Centre, said the course was a good way to retrain drivers who have developed bad habits.

“It is a chance for them to go back and learn about defensive driving methods,” said Dr el Sadig, who is leading a study into Abu Dhabi road accidents. “It will give them a chance to correct their attitudes and any bad driving habits.”
Some motorists yesterday approved of the plan, although Houssam Gharzeddine, 23, worried that the behaviour of some drivers would not improve unless course standards were high.

“It is a good idea but after they take the course, that is what we should look at,” said Mr Gharzeddine, from Lebanon, said. “To drive carefully, that’s what they should teach at the driving school the first time. If you are not going to respect the law after you take your licence, you are not going to respect it even after you take this course.”

Australian Sam, 25, who declined to give his last name, said the course could particularly help new drivers.

“It can be an extra help because a lot of people here get their licences and don’t know how to drive,” Sam, who has earned 12 points, said. But he said he would not attend the course unless he was forced to.

Banks reduce lending for buyers of older vehicles

ABU DHABI - FEB. 01: Major UAE lenders are refusing to grant loans for customers buying old cars, a restriction that is denting low-income earners’ hopes of owning a cheap vehicle.

Several banks state in their conditions that they will not finance the purchase of cars that will be more than 10 years old when the loans mature. With loans typically maturing after four years, the condition rules out cars built more than six years ago.

The tight lending criteria in a market where financing is becoming harder and more expensive to secure makes it difficult to find affordable second-hand cars. Residents in the market for an old car would have to have to pay cash.

A six-year-old Toyota Camry costs up to Dh40,000 (US$10,890), which is the equivalent of half a year’s pay for many low income earners.

HSBC Bank Middle East and Abu Dhabi Commercial Bank (ADCB) said the age of the vehicle may not exceed eight years and nine years, respectively, at the maturity of the loan. Some banks imposed a three-year limit, while others extended the limit to 10 years.

The conditions could also restrict growth in the UAE’s classic car market, one that enthusiasts believe would flourish given the country’s warm and dry climate.

“I’ve never heard of anybody financing a classic car in the UAE – it’s just cash buying,” said Jamal Musallam, the co-founder and vice president of the Abu Dhabi Classic Cars Club.

In the US, where many of the UAE’s classic cars originate, securing finance is a simple procedure involving an assessment of the vehicle’s condition and a valuation, he said.

“They’ll finance the amount for you, knowing that the car will only increase in value over the years so they’ll have some equity in it,” he said. “But as far as the UAE is concerned it’s a tough market.”

Mr Musallam said the trade and ownership of classic cars would rise if banks relaxed their lending criteria and familiarised themselves with the classics market.

“If people could own a classic car with monthly payments of about Dh1,600 a month, they’ll just go for it,” he said.

Despite the recent threat of legislation restricting vehicle trade, it is still legal to buy and sell cars older than 10 years in the UAE. A law announced early last year would have barred the transfer of ownership of these vehicles, affecting at least 420,000 vehicles, and banned cars more than 20 years old from roads.

The law was postponed in December by Sheikh Khalifa bin Zayed, the President of the UAE. More than 140,000 vehicles across the country would have been affected by the ban, which did not affect classic cars.

The Government said the regulations aimed to cut pollution, specifically carbon monoxide levels.

Banks with branches in the UAE said their loan conditions were partly motivated by the insurers’ aversion to old cars.

“It’s simply a matter of deterioration of the physical and mechanical condition of the vehicle that needs to be defined and controlled,” said Andrea Jaishankar, the manager of regional communications at HSBC Bank Middle East.

“In addition, insurance underwriters lack appetite to provide comprehensive insurance for vehicles beyond this benchmark.”

Yaser Mansour, a spokesman for ADCB, said the age-limit condition is necessary as the bank would want to monitor the quality of assets being financed.

“The older the car, the more the depreciation in terms of value and condition,” he said. “Resale of used cars is also a factor to be considered. The older the vehicle, the fewer the prospective buyers.”

Official figures show there are about 1.8 million cars throughout the Emirates, suggesting that the country has one of the highest rates of car ownership in the world.

Independent taxi drivers feel hounded

RAS AL KHAIMAH - FEB. 01: Transport officials have denied fining drivers of older taxis thousands of dirhams to force them off the roads and give the new private companies more business.

Angry drivers of the independent yellow and white taxis have said they were being fined Dh300 (US$82) to Dh400 at a time.

The drivers, who spoke on the condition of anonymity, said they did not dispute the fines because they feared it could jeopardise their licence renewal or have them branded as troublemakers, making it hard to find new jobs.

But the RAK Transport Authority said its inspectors mainly issued warnings rather than fines and were trying to make taxi travel safer.

The authority has been encouraging independent drivers to work for the private Al Hamra, Al Arabiya and Cars companies, which introduced 1,600 taxis to the emirate last year. But most independent drivers refuse to sign with the new company, saying it would cut their income by up to Dh4,000 a month.

Many people prefer the older taxis, whose drivers are better acquainted with the city and give illegal discounts to low-wage workers.

Drivers from private taxi companies earn a percentage of the meter fare and complain that they cannot make a decent living.

One independent driver said he was recently charged Dh300 by the Transport Authority for soliciting customers while leaving a restaurant with his friends.

“My friends and I came out of the restaurant after we finished eating,” he said. “We were talking together and a man came up, took our [ID] cards and fined us.
“I said, ‘Why did you fine us?’ He said, ‘Standing here is not allowed.’ I said, ‘We are not allowed to come out of the restaurant from eating?’ He said, ‘Don’t stand in this area, it is not allowed.’ Then he said, ‘If you talk more, I will make the fine more.’  “They are jealous of the old taxis. They want people to go in the new taxis.”

Another driver charged with soliciting customers said: “Like me, so many taxi drivers are getting fined. I am so unhappy and I don’t understand why they are doing this.” A senior official said the RAK Transport Authority was working to resolve transitional problems with the taxis and that drivers were welcome to lodge complaints if they felt they had been unfairly treated.

“We are not here to make money of out fines but we need drivers to be aware of the law,” said Jason Farhat, the authority’s director of commercial and investment affairs. “Sixty to 70 per cent of the time our inspectors only give warnings. We want to change the practices people are accustomed to. We don’t want a driver getting hurt. We want the practices to be legal and safe.”

Mr Farhat encouraged independent drivers to join the new taxi fleets. “They are well aware of RAK, so we can use their labour instead of importing people,” he said. “We will give them brand new cars, insurance, visas, and they can show RAK in its best image.”

A driver with one of the private companies said: “They made a law so old taxis won’t be seen and people must use a new taxi. Since they raised the meter last year, there are less passengers.

“Before a ride was three dirhams but now it’s almost double. And now the recession has started, how can the new taxis survive? They can give us everything, but where’s the work?”

Drivers who work for the new taxi companies said they had struggled with their low wages. An employee for a private taxi company said he worked 12-hour shifts six days a week and still could not afford rent and food.

“In a month I make 500 on commission and 500 on basic [salary]. I cannot live like this. One thousand dirhams a month? It is just not enough.”