THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE SCT JUDGE SHAMLAN AL SAWALEHI
JUDGMENT OF JUDGE SHAMLAN AL SAWALEHI
UPON hearing the Claimant and the Defendant
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS ORDERED THAT:
1. The Defendant pay the Claimant the sum of AED 96,507 as a gratuity payment and in lieu of termination notice of the Claimant’s Employment Contract.
2. Any other claims are dismissed.
1. The Claimant, Cale, is a former employee of the Defendant, residing in Dubai, United Arab Emirates.
2. The Defendant, Callan LLP, is a DIFC law firm operating from the Gate Building.
Background and Preceding History
3. The Claimant was employed by the Defendant as an Advocate from October 2007 until her Employment Contract was terminated on December 2011.
4. The Claimant requested the Defendant to pay her what she believed she was entitled to under the Employment Contract and DIFC Employment Law. The Defendant refused to pay the Claimant which, consequently, led the Claimant to file this claim before the Court claiming the following relief:
(a) Compensation for unlawful termination
(b) Compensation for gratuity payment
(c) Compensation in lieu of termination notice
(d) Compensation in lieu of vacation leave
5. No settlement was reached by the parties at the end of the consultation and consequently the case was sent for adjudication.
6. On April 2012 I heard both parties’ submissions and I directed the Defendant to submit any further Witness Statements, supported by evidence, and the Claimant to file any further reply to such statement only. At the end of the hearing, I reserved my judgment to be handed down after receipt of any further submissions.
7. On April 2012, the Defendant submitted a Second Witness Statement of xxxx and the Claimant filed a reply to the statement on April 2012.
The Defence and Challenges
8. On February 2012 the Defendant submitted a written Defence and then on March 2012 submitted a Skeleton Argument attaching supporting documents that included the Employment Contract, an article on Unfair Dismissal, Employment Tribunal case law (Great London Authority v Mr S J Leach), Letter of Termination and emails regarding the Claimant’s absence from the office and disrespect of working hours and a warning email relating to the Claimant’s performance.
9. In its submissions and Witness Statement, the Defendant argued that the Claimant’s Employment Contract was reasonably and legally terminated, as any reasonable employer would have terminated the Claimant’s employment as a consequence of her acts which constituted misbehaviour.
10. The Defendant further argued that the Claimant is not entitled to any Employment Contract benefits as she was terminated for misbehaviour under Article 60(4) of the DIFC Employment Law No.4 of 2005. The same reads as follows:
“An employee is not entitled to a gratuity payment where the employee has been terminated for misbehaviour. A termination for such case exists in circumstances where the employee’s conduct warrants termination and where a reasonable employer would have terminated the employee. An employer may dismiss an employee without notice in such circumstances.”
11. The Defendant maintained the position that the Claimant had persistently breached her obligations under the Employment Contract, specifically as follows:
(a) Pursuant to Clause 3.1 of the Employment Contract, the Claimant was required, as part of her duties to: “… provide legal services primarily through the litigation practice of the Firm, by attending to the clients’ instructions and requirements as these are conveyed to you”.
(b) Pursuant to Clause 5 of the Claimant’s contract, which related to working hours, the Claimant was explicitly made aware that normal working hours were from 8.30am to 6.30pm Sunday to Thursday inclusive of a one hour lunch break.
12. To substantiate its Defence, the Defendant outlined a number of incidents that constituted, according to the Defendant, contractual breaches or at least misbehaviour for the purpose of Article 60(4). These instances were confirmed by the Witness Statement submitted on behalf of the Defendant by Mr CBA, General Manager of Callan on April 2012 who further asserted that the Defendant had undertaken fair and proper disciplinary procedures before the decision was finalised.
13. The Claimant has maintained the position that the Defendant has not furnished its allegations of contractual breach with sufficient evidence and that proper disciplinary and termination procedures were not adequately taken or followed. Consequently, the Defendant has not established a legal or contractual right justifying termination; therefore, the Defendant had breached its duties under the Employment Contract and the applicable Employment Laws.
14. The Claimant challenged the Defendant’s arguments by contending that the Defendant has no legal or contractual right to terminate her contract without first undertaking internal investigations on the alleged misconduct and, therefore, such termination is unlawful.
15. The Claimant further alleged that the evidence that the Defendant had submitted was insufficient to rebut the Claimant’s case which concerned unlawful dismissal. The evidence relied on had not established “unacceptable misconduct” which would imply damaging the business or the organisation of the Defendant and the evidence put forward had not been enough to be considered to amount to misbehaviour.
16. The Claimant argued in her reply to the Defendant’s Witness Statement that UAE Federal Labour Law No.8 of 1980 should be applied by the Courts as follows:
(a) Article 8.2 of DIFC Employment Law No.4 of 2005 states that “nothing in this law precludes an employer from providing in any contract of employment terms and conditions of employment which are more favourable to the employee than those required by this Law”.
(b) It has been agreed upon between the parties that the applicable law is UAE Federal Labour Law, because its terms are clearer and more favourable to the Claimant and the Defendant.
17. The questions that need to be answered are whether the Claimant’s contract was fairly or unfairly terminated and whether the Claimant’s acts constituted misbehaviour or not?
18. Before I start finding answers to these questions, I have to note that I disagree with the Claimant’s argument to apply UAE Federal Labour Law, as Federal Law No.8 of 2004 concerning financial free zones excludes the application of the federal civil and commercial laws to financial free zones.
19. It seems to me that DIFC Employment Law No.4 of 2005 lacks provisions governing a claim of unfair dismissal. Notwithstanding, it should not be inferred that the drafters of the legislation intended to preclude recourse to such a claim by not addressing the matter in the legislation.
20. I am of the view that unfair dismissal is an uncontroversial and recognised claim that seeks to remedy a disciplinary action that is established to be unfair and improper. Where an employer dismisses or summarily dismisses an employee for misconduct without taking the proper disciplinary procedure1, the logical recourse for the aggrieved employee is to raise a claim of unfair dismissal. Similarly, where an employer dismisses an employee without substantiating the allegation of misconduct, the logical and reasonable recourse for the employee is to lodge a claim of unfair dismissal.
21. There is no reason why a Judge or Judicial Officer of the DIFC Courts and Tribunals should be hesitant to consider a claim of unfair dismissal even when such a claim is not explicitly provided for in the relevant law. Addressing this matter signifies judicial activism which is the benchmark and a recognised phenomenon in all common law courts and tribunals.
22. Misbehaviour under Article 60(4) that warrants summary dismissal constitutes instances amounting to “gross misconduct” in common law.
23. Gross misconduct is any such conduct on the part of the employee that is serious enough to break or destroy the contractual relationship between that employee and his/her employer.2 Accepted instances of gross misconduct include (but are not limited to) theft, intoxication, gross insubordination3, offensive behaviour4, and repeated absenteeism without due cause (although a minor misconduct, but can cumulatively amount to a more serious offence).
24. In cases involving minor misconduct (e.g. poor timekeeping, negligence or sub-standard work) an employer will have to issue verbal and written warnings before dismissing the employee and will have to serve notice or pay in lieu of notice.
25. Instances that amount to “general misconduct” or “gross misconduct” are subjective and vary according to the type of job concerned.5
26. In both instances (i.e. gross misconduct and minor misconduct), however, the employer must follow fair and reasonable disciplinary procedures before dismissing an employee.6
27. ACAS Code of Practice on Disciplinary and Grievance Procedures7 is the leading source of employers’ obligations in England and Wales. The Supreme Court (then House of Lords) of England and Wales has attested to the ACAS Code’s authority in cases of disciplinary dismissal.8
28. Proper procedures are:
i. To carry out necessary investigation9, such as an investigatory meeting, to establish the facts of the case. The investigation must be through10 and conducted promptly without unreasonable delay.
ii. Where a disciplinary case arises, the employee should be notified in writing. The notification must contain comprehensive and sufficient information11 about the alleged misconduct, copies of any written evidence (such as Witness Statements),12 time and venue of the disciplinary hearing and possible outcomes if the employee is proved to be at fault. Failure to give the employee access to such documents constitutes an improper disciplinary procedure.
iii. Reasonable time must be given to the employee in order to prepare his/her case.
iv. At the disciplinary meeting, the employee must be given an opportunity to present his/her case, answer any allegations put forth, raise questions, submit evidence and call witnesses.13
v. During deliberation of appropriate courses of action, the employer must account for any mitigating circumstances (e.g. previous disciplinary record, length of service, performance record etc) and consider all possible disciplinary measures (e.g. warning, demotion, loss of seniority).
vi. After a disciplinary decision is made, the employee must be notified in writing of such decision and the employer should ask for an acknowledgement of receipt. The notice must contain all necessary information, the nature of the misconduct, the change in behaviour expected (with timescale), the disciplinary measure and its effective duration, consequences of further misconduct and procedure and timescale for lodging an appeal.
vii. If an employee wishes to contest the disciplinary action the employer must set up an opportunity to appeal against the decision.
29. Where an employer dismisses an employee on the grounds of belief of misconduct the test is reasonableness. A tribunal or court has to consider (a tripartite test):14 whether there was a genuine belief on the part of the employer that the employee was guilty of the alleged misconduct; whether that belief was reasonably founded (i.e. whether the employer had carried out a reasonable investigation15 as the basis for its conclusions); whether a reasonable employer could have dismissed for that misconduct and whether the dismissal was unfair is determined by an objective approach; was the dismissal within the range or “band of reasonable responses” of a reasonable employer?16
30. In the present case, I am satisfied that the Defendant has submitted evidence that is sufficient and reasonable and which shows that proper procedure was followed to terminate the Claimant’s employment as required in the context of a fair dismissal. However, I find that the evidence submitted by the Defendant is neither sufficient nor reasonable to establish that the Claimant’s conduct warranted her termination for misbehaviour.
31. The Claimant is entitled to compensation for a gratuity payment in the sum of AED 47,007 under Article 60(1) of the DIFC Employment Law that is calculated as 21 days’ wage for each year of the first 5 years of service as the Claimant served 4 years, 49 days. The sum breaks down as follows:
(a) AED 198,000 per annum ÷ 365 days = AED 542 per day.
(b) 21 days x 4 years = 84 days x 542 = AED 45,528 for the 4 years.
(c) 21 days ÷ 365 days = 0.057 day’s wage per day.
(d) 49 days ÷ 365 days = 0.13 x 21 x 542 = AED 1,479 for the additional 49 days.
(e) AED 45,528 for the 4 years + AED 1,479 for the additional 49 days = AED 47,007.
32. The Claimant is entitled to compensation in lieu of termination notice in the sum of AED 49,500 under Article 57(2) of the DIFC Employment Law and Clause 12.1 of the Claimant’s Employment Contract calculated as follows:
(a) AED 16,500 per month x 3 months = AED 49,500.
33. The Claimant is not entitled to compensation in lieu of vacation leave, as she declared at the hearing that she had zero days remaining at the time of the termination of her employment.
34. The Claimant’s total compensation is the sum of AED 96,507 being a gratuity payment and in lieu of termination notice of the Claimant’s Employment Contract.
35. Accordingly, I dismiss the Claimant’s compensation claim in respect of unlawful termination and any other claims.
Shamlan Al Sawalehi
Small Claims Tribunal Judge
Date of Issue: June 2012