As part of a new legal provision, Dubai Courts can issue an order to freeze companies' assets that fail to pay the salaries of more than 100 workers.
The direction, followed by the Labour Court, is part of the efforts to tighten legal measures against employers involved in unpaid wages of a large group of labourers and safeguard employee rights.
Ghassan El Daye, Partner and Head of Litigation Middle East at Charles Russell Speechlys, said freezing a company's assets through the execution court guarantees employee rights even before a final verdict.
"Previously, this kind of measure was taken after a final judgment was issued. Under the UAE Civil Procedures Law, the Court of Appeal would issue a final verdict, which meant workers had to pass through first and second-degree courts before reaching a final settlement – a process that may take up to one year, giving employers with bad faith enough time to shift all their assets."
He added, “Now with the court’s immediate freeze order, the execution court takes action so workers would have their rights secured before the final verdict.”
The new provision gives the court the authority to freeze a company’s assets until a resolution with the employer is reached whether on amicable terms or through a court verdict.
El Daye noted that if no resolution is reached with the employer, the company’s assets are dissolved to...
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