Breach of Trust in the Workplace: Internal Legal Safeguards for Companies
In today’s corporate landscape, threats to a business’s stability do not always stem from external competition or market fluctuations, in many cases, the greatest risks arise from within. One of the most serious internal threats is the breach of trust, a punishable offense under UAE law that can severely impact a company’s assets, reputation, and operational environment.
This article outlines the legal framework governing the crime of breach of trust under UAE law, highlights common forms of this offense in workplace, and offers practical legal measures that companies can implement to minimize risk.
Legal Framework for the Crime of Breach of Trust in the UAE
Federal Decree-Law No. 31 of 2021 on the Promulgation of the Crimes and Penalties Law addresses the breach of trust in Article 453, which provides for:
“Shall be sentenced to detention or to a fine, whoever embezzles, uses, or dissipates amounts, bonds, or any other movable property to the detriment of the rightful owner thereof, if it was delivered to him by way of deposit, lease, pledge, loan for use, or agency.
For the purposes of this Article, the following shall be considered as agents: a partner in jointly owned property, a person acting without authorization (officious agent), and anyone who receives property for a specific use for the benefit of its owner or others.”
Legal Analysis of Article 453
Article 453 criminalizes the act of misusing property that was legally entrusted to the offender but was later used in a manner that violates the trust and causes harm to the rightful owner.
Key Elements of the Offense:
- Lawful delivery of property
The property must have been voluntarily handed over to the offender under one of the following legal arrangements:
- Deposit: For safekeeping
- Lease: For temporary paid use
- Pledge: As collateral for an obligation
- Loan for use: For free use with the obligation to return
- Agency: Authorization to act on behalf of another
- Type of property involved
The offense applies only to movable property, such as money, equipment, or documents not real estate. - Unlawful conduct
This includes:
- Embezzlement: Treating the property as one’s own
- Improper use: Using the property for unauthorized purposes
- Dissipation: Causing loss or destruction through misuse
- Resulting harm
There must be actual or potential harm to the owner as a result of the conduct.
Definition of “Agent” under Article 453
The law expands the concept of “agent” to include:
- Partner in jointly owned property: A person who co-owns or manages shared property, and is treated as an agent only in relation to the jointly owned assets
- Officious agent: A person who interferes in another’s affairs without legal authority
- Anyone entrusted with property for a specific purpose
If an employee receives company funds for deposit but uses them for personal reasons, that constitutes breach of trust—even though the funds were initially handed over lawfully.
Common Forms of Breach of Trust in the Workplace
In practice, breach of trust can manifest in various ways within organizations, such as:
In practice, breach of trust can manifest in various ways within organizations, such as misappropriating company funds or collected payments; using company property for personal gain without approval; disclosing confidential information or trade secrets to a competitor; manipulating documents such as invoices or purchase orders; and creating unauthorized communication channels or external accounts for private benefit.
These acts are especially damaging when committed by employees in positions of trust or authority.
Legal and Preventive Measures for Companies
To effectively mitigate the risk of breach of trust, companies should implement a combination of legal and operational safeguards:
- Comprehensive Employment Contracts and Policies
Ensure contracts include:
- Confidentiality and non-compete clauses
- Clear reference to breach of trust as grounds for immediate dismissal
- Signed Legal Declarations
Require employees to sign standalone commitments related to:
- Non-disclosure of confidential information
- Proper use of company assets for work-related purposes only
- Internal Auditing and Monitoring Systems
Establish regular internal or external audits to detect irregularities early.
- Whistleblowing Channels
It is a secure internal reporting system that allows employees to report violations confidentially and without fear of retaliation.
Whistleblowing: Immediate Legal Action
Before initiating any legal proceedings, companies are strongly advised to conduct an internal investigation. Under UAE Federal Decree-Law No. 33 of 2021 Regulating Labour Relations, employers are required to formally investigate any allegation of gross misconduct “such as breach of trust” before proceeding with disciplinary actions or filing a criminal complaint.
The investigation must be documented, and the employee must be given an opportunity to respond to the claims. This step not only ensures compliance with labour regulations but also reinforces the credibility of any subsequent legal action.
Once the internal investigation confirms the misconduct, companies may proceed to:
- File a criminal complaint with the police
- Take precautionary measures (e.g., freezing accounts, recovering devices)
- Pursue a civil claim for damages before the competent court
Why Legal Safeguards Are Essential?
The impact of a breach of trust goes far beyond financial loss—it can erode workplace integrity, damage external reputation, and disrupt overall company operations.
Proactively implementing and enforcing internal legal protections is not a luxury, it’s a legal and operational necessity.
Legal Checklist to Protect Your Company
- Clear contracts addressing breach of trust and confidentiality
- Signed legal declarations from employees
- Regular financial and administrative audits
- Internal whistleblowing mechanisms
- Legal procedures in place for urgent escalation
In conclusion, the crime of breach of trust is not just unethical, it is a prosecutable offense under UAE law. Companies that overlook internal legal safeguards are more exposed to liability, loss, and reputational damage.
If your organization has not yet reviewed its internal contracts or implemented preventive legal policies, now is the time to consult with your legal advisor and build an internal system of protection that works.
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Mouza Alshehhi
Trainee Lawyer mouza.alshehhi@galadarilaw.com |
