Will my company be liable for an employee’s debts from a business they previously owned?

Hello,

In the UAE, your company will generally not be responsible for the debts of an employee that he incurred from a previous business he owned.

Creditors of his previous company typically cannot make a claim against your company simply because he is now employed there.

Your company and the employee's previous company are distinct legal entities. Debts incurred by one entity are not automatically transferred to the other.

If you need further clarification, you may ask us.

Dear Inquirer,

Your company is generally not responsible for the personal debts of an employee, even if they previously owned a company.

However, creditors may seek to recover debts from the individual’s personal assets. As long as the debts are not tied to the new company (such as personal guarantees or legal obligations from the previous business), your company should not be affected.

For a detailed review of your situation and to ensure there are no potential liabilities, we recommend booking a consultation with us.

Dear Client,

Thanks for your question! I hope you are doing well. I will assist you in this matter.

Your company generally won't be responsible for a new employee's debts, including those from a previous business they owned. These debts remain the individual's responsibility. Key points:

1. Your company is a separate legal entity from the employee.

2. Debts don't automatically transfer to new employers.

3. Exceptions are rare and require specific legal procedures like wage garnishment.

4. Implement clear employment agreements and avoid involvement in personal finances.

While creditors may pursue repayment from the individual, they can't legitimately claim against your company for these personal debts.

To minimize risks, maintain a clear separation between company and personal finances. If concerned, consult with a legal professional for specific advice.

You can contact us via WhatsApp for further clarification or additional support. We are dedicated to providing professional, timely, and comprehensive assistance tailored to your situation.

Thank you!

ABDUL WAHIED

Dear Questioner,

Good evening!

Your company will not be responsible for the debts of your new employee, as personal debts or liabilities from a previous business do not transfer to a new employer. However, consider the following:

1. If there are ongoing legal claims, such as civil or criminal cases, it could impact his ability to work, including potential travel bans or asset seizures.

2. In some cases, creditors may obtain a court order to deduct a portion of his salary, but this does not affect your company’s finances.

3. If the employee was involved in fraud or misrepresentation, it is advisable to conduct thorough due diligence before hiring.

To ensure no legal risks to your company, we recommend reviewing any court cases or financial claims against the employee.

We can assist in verifying any potential liabilities before you proceed with the hiring.

Dear Inquirer,

We are pleased to serve you and address your inquiries.

If they obtain an enforcement order, the court may contact you to seize a quarter of his salary.

Kindly contact us via email or call our offices in Dubai or Sharjah.

Jasim Al Haddad Advocates & Legal Consultants