Due to default and disputes, employers prevent employees from organizing “financial associations.”

Employees of Emirates Today reported that government and private employers issued internal circulars prohibiting their employees from carrying out commercial activities within the work environment, most notably organizing monthly associations, stressing that collecting money without a legal permit is a violation that requires accountability and punishment, in addition to that practicing any activity, especially during work time, is considered a violation of disciplinary regulations.

The employees confirmed that the decision was caused by the large number of complaints and disagreements between co-workers, due to the associations that were organized, and many of them turned into lawsuits, which harmed collegial relations and affected the work environment.

In detail, an employee at a local government agency, Mustafa Youssef, confirmed that a decision was issued by the administration prohibiting the organization of any participatory financial activities among employees, against the backdrop of one of the resident employees organizing more than one association at the same time, and the occurrence of problems in the time of receiving dues, as a result of some failing to pay their obligations after receiving the full total amount of the association, which prompted some to file complaints with the association organizer and file lawsuits that harmed the reputation of the place.

Meanwhile, the engineer at one of the factories, Mohamed Mubarak, indicated that the factory management prevented the organization of monthly assemblies and warned whoever did so to refer them to legal affairs and take disciplinary measures against him. This happened after a workers’ supervisor organized an association among his colleagues for a period of 24 months, with each participant paying 5,000 dirhams per month, and that more than one person participated in one role, and he distributed the roles starting from the eleventh name and seized for himself the total amount of the roles from the first to the 10th, after which he fled and returned to his country, and confusion ensued. The factory had a significant impact on the work environment.

The doctor in one of the private hospitals, Maryam Hosni, participated in a monthly association organized by an employee at the hospital, with a total value of 120 thousand dirhams, and she paid 110 thousand dirhams until her due date. However, when she was due for the value of the association, the association organization handed her only 30 thousand dirhams, and she explained that she had an emergency situation and offered to pay the rest of the amount to her in installments at the rate of 3000 dirhams per month. It turned out that The matter was repeated with more than one participant under different pretexts, which prompted them to file a complaint against her to the administration, which opened an investigation with all the participants and drew attention to them due to being busy with personal matters during their work time and issued a decision to prevent these practices and refer those who repeat them to accountability and punishment. In the end, they had no choice but to file a report with the association’s organization.

The teacher at a private school, Hind Hassan, also reported that the school has been preventing the organization of any type of fundraising in the school, including participatory associations, for more than two years, after a teacher organized a monthly association, and problems occurred between her and the participants, especially since they were not all school employees and she was unable to fulfill her obligations and more than one participant came to the school to demand his money, and the matter eventually turned into a lawsuit, which made the school take a decision after renewing its contract after the end of the school year, and preventing the organization of such associations again. others among its employees.

Employees attributed the widespread spread of monthly financial associations in work environments, despite the lack of a clear legal cover for them, to the need for money to arrange priorities and achieve stability, away from resorting to commercial banks and paying additional interest, as these associations are an outlet and an alternative solution to profit-making financing, as each participant determines the date of receipt of the full value of the association according to his obligations, whether housing rent, education fees, or even some kind of savings.

Meanwhile, the administrative official in one of the private institutions, Muhammad Moatasem, attributed the decision to prevent employees from organizing associations among themselves to the employers’ keenness to avoid problems that may arise in the event that any participant violates his obligations, in addition to the fact that personal activities should not take place inside the workplace, indicating that using work hours to engage in private activities and collecting money within the official working hours conflicts with behavioral discipline regulations and policies, especially since if the association’s organizer or one of the employee participants fails to pay, it leads to tension in relations, and affects Negatively in the work environment, and circulating the name of the employer in complaints and lawsuits harms its reputation commercially and socially, in addition to the attempt of some employees to involve the employer in the problem and request that the amounts owed to them be deducted from the salary of the complainant against him or from his end-of-service gratuity.

Emirates Al-Youm monitored, for consideration by the state courts, many cases related to monthly association coordinators seizing subscribers’ funds or receiving subscribers’ full amount in the first rounds and evading their obligation to pay the rest of the subscription, including a lawsuit filed by an employee against a colleague in which he demanded that she be obliged to return to him an amount worth 220 thousand dirhams, the rest of his dues from a monthly association organized by the defendant in a monthly installment of 20 thousand dirhams, for a total of 20 months. 400 thousand dirhams, and after paying 11 installments, at the rate of 20 thousand dirhams per month, for a total of 220 thousand dirhams, he was surprised that the defendant took the association’s money from the subscribers, and did not transfer it to the owners who had the right to receive it.

The Abu Dhabi Family, Civil and Administrative Claims Court also ruled that a woman be obliged to pay another 42 thousand dirhams, the value of “association” installments that she collected from her and did not return them on the agreed upon date. In a third case, the court ruled that a woman was obligated to pay 20 thousand dirhams to a man, the value of “association” installments that she obtained from him, but did not return them on the agreed upon date, indicating that the defendant did not commit to paying the agreed upon amount of 100 thousand. dirhams, when it was due, and I delayed returning what I had paid in advance.

The court obligated a woman to pay another 65,000 dirhams, the value of monthly installments for an “association” in which she participated and stopped paying. The Al Ain Court of First Instance also ruled that a woman be obligated to pay a man 320,000 dirhams for the rest of his dues from an association she managed, and she refused to hand over his dues to him on the specified date, as he was supposed to receive the amount of 400,000 dirhams, but she did not fulfill her obligation to him and paid only 80,000. A dirham of the value of the association, and refrained from paying the rest of the amounts owed to him without any legal justification.

For his part, the lawyer, Salem Obaid Al-Naqbi, explained that in light of economic pressures and increasing living obligations, quite a few individuals are resorting to alternative means of financing away from bank loans, the most important of which is what is known as “financial associations”, which are based on collecting monthly sums of money from a group of people with each participant receiving the total amount at a pre-agreed date. Despite the prevalence of this practice and its spread in various social circles, it raises multiple legal problems, especially in the event of a breach. commitments or the emergence of disputes between participants, pointing out that the legal systems that regulate financial transactions between individuals in the UAE are strict and clear and it is not permissible to resort to irregular mechanisms to collect funds without adhering to the law.

Al-Naqbi stressed to Emirates Today that what is known as (financial associations), although on the surface they appear to be a cooperative means to reduce financial burdens, they may involve serious legal risks if they are organized or managed outside the legal frameworks approved in the UAE. Collecting funds without a license, breaching agreed upon obligations, or exploiting funds for a personal account are all acts that place their perpetrators under civil and criminal accountability, and therefore legal awareness is the first line of defense to protect rights and avoid conflicts.

He said: “Collecting funds from the public without a license is an illegal procedure and is considered a financial crime, especially since in such systems there is no formal legal framework that regulates the rights and obligations of participants, such as contracts approved by the competent authorities. Therefore, the association organizer who collects money from others can be held responsible for managing the money honestly, and he may face a criminal or civil lawsuit if he breaches his obligation, or seizes the money, because collecting and managing money without a license exposes him to legal accountability.

Al-Naqbi added: “If a person receives his share from the association but does not complete the fulfillment of his contributions or there is a dispute in implementation, then this is treated as a civil dispute between its parties unless a criminal ruling is issued regarding it proving fraud or bad faith. However, the lack of a license exposes everyone to legal accountability, as the law does not recognize illegal contracts,” indicating that when any dispute arises between the parties in such an informal situation, there is recourse to the judiciary, whether civil or criminal.

He continued: “If a person collects money without a license and then seizes it for himself or uses it for his benefit illegally, he may be brought to justice on charges of financial fraud, or collecting money illegally in accordance with the provisions of the federal law regulating donations, which leads to imprisonment and a fine, in addition to the confiscation of money acquired illegally. In addition, if it is found that the actions included deliberate deception, forgery in contracts, or exploitation of individuals’ contributions, criminal charges may also be brought.”

Illegal contracts

The bankers: Mohamed Shazly, Mohamed Nadim, and Marwa Shaheen confirmed that “financial associations” are an informal means of financing and saving, and provide cash liquidity to the subscriber without interest. However, they include many risks, most notably the safety of those responsible for them, the regularity of members in paying their obligations, and the withdrawal of some of them in the middle of the term, in addition to disputes over the arrangement of who will receive the total amount each month, pointing out that monthly associations are considered an inherited custom, but they do not have a legal cover to protect them, even if Commitment contracts were written between the association’s organizer and the subscribers, so that these contracts remain in violation since the collection of funds takes place outside the banking scope, in addition to the failure of any member to pay, turning it into a criminal case because there is no party guaranteeing the rights of the rest of the subscribers.

Bankers:

Financial associations are an informal means of financing and saving that provide cash liquidity to the subscriber without interest, but they include several risks, most notably the safety of the person responsible for them.

• A foremen supervisor organized a 24-month association, seized for himself the total amount of the first to the 10th floors and fled to his country.

• A teacher organized an association in which she involved people from outside the school. She was unable to fulfill her obligations, and more than one participant came to the school to demand their money.