Counsel: Daniel Brawn and Farida Sarah (Galadari Advocates and Legal Consultants) for the Claimant.
Bushra Ahmed and Sharon Lakhan (KBH Kaanuun) for the Defendant.
Judgment: 13 February 2014
JUDGMENT OF H.E. JUSTICE ALI AL MADHANI
Summary of Judgment
The governing law in the case was DIFC Employment Law No. 4 of 2005 and not amended DIFC Employment Law No. 3 of 2012 which had come into force six days before the Claimant had amended his Claim Form and Particulars of Claim and which did not apply retrospectively.
The Claimant had submitted his 3 months’ resignation notice during his extended period of Probation, and the Defendant had terminated the Claimant’s employment during that notice period. The question in issue was whether the Claimant had committed misconduct warranting instant, summary dismissal as provided for by Article 60 (4) of Employment Law No. 4 of 2005.
The 25 reasons cited by the Defendant as grounds for having terminated the Claimant’s employment during his three months’ resignation notice period and without notice, roughly one month after the latter’s resignation were not the real reasons behind his termination. Two main factors had led to the Claimant’s instant dismissal: (i) His resignation and finding of alternative work in another law firm; and (ii) his bringing proceedings against the Defendant in the DIFC Courts. As the afore-mentioned actual causes of the Claimant’s termination did not qualify as misbehaviour warranting instant dismissal without notice as provided by Clause 9.9 of the Employment Contract (Agreement), the Defendant had been in breach in terminating the contract without notice.
The Claimant was entitled to his salary until the date of termination (AED 36,733.30); payment in lieu of notice equivalent to one month’s salary (AED 38,000); and compensation for untaken annual leave (AED 8,866).
As regards the Defendant’s counterclaim, the Claimant was liable to pay the Defendant $12,000 USD as a result of his having missed the deadline for lesser court filing fees in a case for which he was responsible. The Court did not accept the Defendant’s argument that the application of Article 18 of DIFC Employment Law No. 4 of 2005 which precludes the charging of fees for “employing or obtaining employment for the person seeking employment…” was limited to prospective employees and therefore allowed them to deduct a recruitment fee from the Claimant’s entitlements. Moreover, Clause 6.9 of the Agreement which required the Employee to repay, inter alia, the recruitment fee if the latter gave notice of termination prior to 12 months from the start date of employment did not apply in situations such as this where it was in fact the Defendant who had effectively terminated the employment (without notice) and not the employee. The Defendant was also entitled to deduct a further AED 30,035 from the Claimant’s remuneration, comprising of AED 30,000 for an outstanding loan and AED 32 and AED 3 for mobile telephone bills.
This summary is not part of the Judgment and should not be cited as such
UPON hearing the Claimant and Defendant
IT IS HEREBY ORDERED that:
In the Claimant’s Claim:
1. The Defendant shall pay the Claimant the sum of AED 36,733.30 (July salary), AED 38,000 (in lieu of Notice) and AED 8,866 (unpaid Holidays) amounting to a total of AED 83,599.30.
2. All other remedies sought by the Claimant are denied.
3. The parties are hereby requested to file short submissions on costs, to be not longer than 3 pages each.
In the Counterclaim:
1. The Claimant shall pay the Defendant the sum of US$ 12,000 (AED 44,076) in damages AED 30,000 (outstanding loan) and AED 35 (mobile telephone bills), amounting to a total of AED 74,111 to be deducted from the Claimant’s entitlements given in the original claim above.
2. All other remedies sought by the Defendant are denied.
1. The Claimant in this case, Mr Christopher McDuff (“Mr McDuff”) is a Solicitor who has practiced in Australia, England, the Cayman Islands and, latterly, with Galadari Advocates in Dubai.
2. The Defendant, KBH Kaanuun Limited, is a firm of Solicitors based in the Middle East with an office in the DIFC.
3. The Claimant, Mr McDuff, entered into a contract of employment (the “Agreement”) with the Defendant dated 16 February 2012 and began working for the Defendant from 25 March 2012 until 29 July 2012. On 10 June 2012 (during his Probation Period), he received an offer of employment from his present employer, Galadari Advocates. On 1 July 2012 (during his extended Probation Period), he gave the Defendant his notice of resignation and was required to work his 3 month notice period until 30 September 2012. However, within his resignation letter, the Claimant raised the possibility of “a shorter time frame for my last day” and in a further letter of 8 July 2012 sought to unilaterally vary his last day of service to 31 July 2012.
4. The Claimant was provided with a Leaving Certificate dated 22 July 2012 (the “First Leaving Certificate”), showing that his last day of employment would be 30 September 2012 and that his salary would be paid for July, August and September at the rate of AED 38,000 per month, which amounted to a total of AED 114,000. The First Leaving Certificate also showed that, after various deductions, Mr McDuff would actually receive AED 8,955.
5. The Claimant considered what was offered to him to be insufficient to support his family for the following 3 months and he tried to negotiate a better settlement. “This did not prove possible.“
6. The Claimant referred to the Agreement which provides at Clause 10.1 that “The Firm does not have a formal grievance procedure. Any grievances the Employee may have can be addressed to either the Director of Employment Standards or to the DIFC Courts, with a copy to the Practice Manager“. As a result, the Claimant commenced proceedings on 25 July 2012 against the Defendant seeking an interim injunction to compel the Defendant to make payment of the 3 months’ salary to him.
7. On 29 July 2012, the Defendant terminated the Claimant’s employment. The Defendant’s letter of that date states that this is “with immediate effect pursuant to Clause 9.9, alternatively for breach/anticipatory breach of your Employment Agreement dated 16 February 2012, specifically Clauses 9.6 and 9.14“.
8. The second paragraph of the Defendant’s letter of 29 July 2012 reads: “In particular, you have failed to perform your basic duties under your Employment Agreement despite being reminded and warned to do so. In particular, the following matters have raised serious concerns about not only your attitude to your work but your competence.” The letter went on to set out 25 allegations against the Claimant.
9. Attached to the letter was a Leaving Certificate dated 29 July 2012 (the “Second Leaving Certificate”) showing salary due from 1 July 2012 to 29 July 2012 of AED 36,230 plus 3 days’ holiday pay and that, after deductions, the Claimant owed to the Defendant the sum of AED 64,588. The Defendant provided another Leaving Certificate dated 8 August 2012 (the “Third Leaving Certificate”) showing the Claimant now owed the Defendant the sum of AED 67,155.
10. On 8 January 2012, the Defendant served its Defence and Counterclaim, together with a further Leaving Certificate dated 8 January 2013 (the “Fourth Leaving Certificate”) from which the 3 days’ holiday pay had been deleted and which purported to show that Mr McDuff now owed the Defendant the sum of AED 70,650.
11. Following the Defendant’s refusal to release the Claimant’s visa after the termination of the Agreement, on 9 August 2012 the Court ordered that the visa be released upon the Claimant’s application.
12. On 7 July 2013 I heard both parties’ submissions and evidence on the merits and reserved my judgment.
The Claimant’s Claim
13. The Claimant contends that the DIFC Employment Law No. 4 of 2005 applies to the Agreement and the dispute, and that the 2012 Amendment Law came into force after his employment had been terminated and does not state that it is to apply retrospectively.
14. In this connection, the Claimant’s first and foremost argument is that he submitted his resignation during his extended probation period with three months’ notice in accordance with Clause 9.3 of the Agreement, under which “he was not obliged to give his reasons” and the Defendant was not entitled to dismiss him. As a result, the Claimant claims that he is entitled to 3 months’ pay as shown on the First Leaving Certificate.
15. In his Amended Claim Form and Amended Particulars of Claim dated 24 December 2012 the Claimant claims the following breaches of the DIFC Employment Law No. 4 of 2005:
(a) Article 16: failure to pay wages within 7 days of termination of employment;
(b) Article 17: unauthorised deduction of wages;
(c) Article 18: charging for hiring or providing information.
16. The Claimant also claims that the Defendant acted in breach of an implied term of mutual trust and confidence in dismissing him summarily and depriving him of his earnings for the following two months. The Claimant’s position is that at no time did he engage in any misbehaviour, let alone misbehaviour that warranted termination, and that all alleged accusations of anticipatory breach are not accepted and are denied. The Claimant further suggests that Clause 9.6 referred to by the Defendant did not apply and that Clause 9.14 which refers to the Defendant’s “Good Leaver/Bad Leaver” policy upon notice of termination did not entitle the Defendant to terminate him.
17. The Claimant also argues that the Defendant was not entitled to make any deductions other than the amount of AED 30,000 which is the amount outstanding on the housing loan he received upon joining the Defendant. It is argued that the appropriate interpretation of Clause 9.6 of the Agreement is that if the Claimant had been permitted to resign, the Defendant could have made some of the deductions claimed, but Mr McDuff had not been permitted to resign and therefore the Defendant was not entitled to any deductions beyond the loan amount.
18. The Claimant asserts that the deductions, apart from the AED 30,000 loan, are not “amounts owed” under the definition of Clause 9.15 of the Agreement and that the Defendant is therefore not entitled to them. He further maintains that if the Court finds his position to be correct, that is to say that his employment was terminated wrongfully, then Clauses 9.14 and 9.15 of the Agreement are irrelevant.
19. In his response to the counterclaim, and to the list of deductions in particular, the Claimant argues that the Practicing Certificate and the Personal Information Report are not items listed in Clause 6 as employees’ benefits and the Defendant would therefore not be entitled to reclaim those costs in any event.
20. As regards health insurance and life insurance, the Claimant alleges that the Defendant has not shown that these amounts were actually paid for, nor how much was refunded when the relevant policies were terminated after his employment ceased
21. In relation to the recruitment fee, the Claimant asserts that the Defendant is in breach of Article 18 of the DIFC Employment Law No. 4 of 2005 as KBH Kaanuun purported to make the Claimant pay the recruitment fee, to which it was not entitled under the terms of the Agreement and, moreover, was unlawful. The Claimant added that even assuming (which he denied) that the Defendant was entitled to reclaim this, the Defendant had submitted no evidence of the amount of the fee or that such amount was ever actually paid. The Defendant has submitted evidence that there would be a full refund if the employee left during the probation period, and a 50% refund if he left in the following month.
22. The Claimant further argues that the Defendant had not been entitled to dismiss him, and it would follow that the Defendant’s action amounted to a repudiatory breach of the Agreement, which he had no alternative but to accept. The Claimant alleges that he is therefore entitled to damages.
The Defendant’s Defence and Counterclaim
23. According to the Defendant, the current dispute is governed by the DIFC Employment Law No. 4 of 2005, as amended by DIFC Employment Law No. 3 of 2012, which came into force on 23 December 2012, six days before the Claimant amended the Claim Form and Particulars of Claim. Therefore, it is argued that the Claimant cannot rely upon Law No. 4 of 2005.
24. As a result, the argument is put forward that the law applicable to the instant dispute is the DIFC Employment Law No. 3 of 2012. Consequently, the jurisdictional basis for the Claimant’s case under DIFC Employment Law is unsound. The Claimant brings his claims under DIFC Employment Law No. 4 of 2005 when his claims should properly be based on Employment Law No. 3 of 2012. The Defendant therefore argues that the claim has been brought under the wrong law.
25. The Defendant then argues that gross misconduct on the basis of negligence and/or gross negligence entitled it to dismiss the Claimant under both the Agreement and the DIFC Employment Law. As such the Defendant employed the Claimant as a Senior Associate; therefore he had been expected to perform to a standard of someone with skill, experience and knowledge. The Claimant by missing deadlines as described in the termination letter had failed to perform to the standard of even the most junior person. The Claimant’s behaviour was not acceptable as not only had it caused loss to the Defendant but had also opened it up to potential litigation and reputational damage.
26. The second paragraph of the Defendant’s letter of 29 July 2012 reads: “In particular, you have failed to perform your basic duties under your Employment Agreement despite being reminded and warned to do so. In particular, the following matters have raised serious concerns about not only your attitude to your work but your competence.“
The letter went on to set out 25 allegations against Mr McDuff:
1) “Failure to address the queries raised by Mark Vikeroy of Overtons in his email dated 24 June 2012;
2) Failure to reply to Kaashif Basit’s email dated 24 July 2012 where he specifically asked as to when he intended to revert on the queries at paragraph 45.3.1 above, which had been pending for one (01) month;
3) Failure to take any steps for two (02) weeks to draft the Points of Claim in the “Orion Inquiry into Damages” despite being specifically instructed to do so by 31 July 2012 at the latest;
4) Failure to reply to Kaashif Basit’s email dated 25 July 2012 as to the status relating to paragraph 45.3.3 above;
5) Failure to serve Justice Chadwick’s Order dated 12 July 2012 on the Inquiry Defendants;
6) Failure to address the issue of service of the Order in paragraph 45.3.5 above and documents on the Inquiry Defendants despite being specifically asked by Kaashif Basit to do so;
7) Failure to respond to the client’s query dated 16 July 2012 as to the timetable for the preparation of the Points of Claim in the Orion Inquiry into Damages;
8) Failure to comply with Practice Direction No. 1 of 2012 in submitting documents to the Registry on time in CA 001/2012 resulting in a late filing fee being applied and stating the wrong CA case number on documents eventually submitted;
9) Failure to file with the Registry the skeleton argument in support of Application No 009/2012 in CA 001/2012;
10) Failure to report to the client on the status of proceedings in CA 001/2012 – either prior to or after the appeal hearing on 09 July 2012;
11) Failure to prepare a Summary Statement of Costs for the hearing of Application No 009/2012 and/or CA 001/2012;
12) Failure to meet own internal deadlines in the Khorafi litigation;
13) Failure to commence enforcement proceedings in the “Babu Pothen” matter (P1104);
14) Failure to follow Kaashif Basit’s instructions in his email to him dated 24 July 2012 to liaise with Basem Al Muthafer in relation to the “Global Security Group” matter (G1204);
15) Failure to progress the Qtelmedia/Sinead O’Sullivan matter (Q703) in particular not replying to the client’s email query dated 22 May 2012;
16) Failure to do any follow up and/or any proper follow up with Edward Davies of Counsel, including failure to provide instructions, in preparation for the 10 July 2012 hearing in CFI 020/2010;
17) Failure to review and/or advance the matters set out in the Property Matters List;
18) Causing substantial material loss to the firm by failing to undertake proper handover from Natalie Jones and/or ensuring timely payment of the filing fee for DIFC Courts Case No. 026/2012 resulting in the firm having to absorb an additional US$ 12,000 in filing fees on re filing;
19) Causing substantial material loss to the firm by failing to cap the fees payable to Messrs Stuarts (a Cayman Islands law firm) in the “Tadhamon” litigation and acting negligently in preparation of evidence resulting in a liability to the firm of circa US$ 34,000;
20) Failure to agree a cap, alternatively a revised fee in advance, with Jeffrey Gruder QC of Counsel for revised limited advice in relation to the “Tadhamon” matter;
21) Failure to follow instructions of the Partners/Directors of the Defendant in relation to seeking pre-approval before issuance of letters to clients and/or third parties;
22) Failure to pay attention to correspondence in the “Wheatley dispute” leading to delay and complaints from the DIFC Courts Registrar;
23) Failure to deal responsibly with and promptly respond to emails from Kaashif Basit in relation to time sensitive advice to “Premier Oil” on jurisdiction matters;
24) Failure to promptly discharge his obligations in on boarding new clients and managing property related matters;
25) Failure to properly or on time or at all record his chargeable time in the firm’s electronic time recording system despite repeated reminders from the Practice Manager and instructions from the Partners.”
27. The Defendant claims that it was an implied term of the Agreement that the Claimant was bound to act with reasonable care and skill. As defined in Jackson and Powell on Professional Liability (7th Ed.) at paragraph 11-085:
“Reasonable care and skill: The solicitor, in common with other professional men, is required to exercise reasonable care and skill. At this level of generality, the law is unchanged since the nineteenth century. However, lack of reasonable skill and care was then identified with “gross negligence” or crassa neglentia, and the courts tended to be more indulgent to practitioners in the degree of error which they allowed.”
28. As further explained at paragraph 11-161:
“As a general rule, if a solicitor errs in carrying out a straightforward task of the kind customarily undertaken by the profession, he is unlikely to escape a finding of negligence. He is also unlikely to escape liability if he causes the client loss through failing to maintain adequate office procedures.”
29. The Defendant’s alternative reference to breach is that there was an implied term of mutual trust and confidence between the parties. By such, the parties to the contract would not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence which should exist between the employer and employee (as held by the House of Lords in Malik v BCCI SA (in liquidation)  ICR 606).
30. The implied term of trust and confidence is fundamental to the employment relationship and any breach of it is likely to be repudiatory (Morrow v Safeway Stores Plc  IRLR 9).
31. Accordingly, the Defendant asserts that each of the above-cited 25 breaches and examples of the Claimant’s conduct amounted to negligence and/or gross negligence which entitled the Defendant to summarily terminate the Employment of the Claimant without notice in accordance with Clause 9.9 of the Agreement and Article 57 of the DIFC Employment Law No. 3 of 2012. Furthermore, the Defendant alleges that they were entitled to seek remedies.
32. As a result of the Claimant’s breaches and conduct mentioned above in paragraph 26 above, which constituted gross negligence or alternatively failure to perform to a standard required by a competent senior lawyer such as the Claimant with his qualifications and experience, the Defendant claims losses to be assessed at not less than AED 300,000.
33. The Defendant in their counterclaim also seek repayment of monies due from the Claimant as set out in the Leaving Certificate dated 8 January 2013, with reference to Clauses 9.6 and 9.15 of the Agreement.
34. The Defendant considers the Claimant to be a “bad leaver” within the meaning of Clause 9.14 of the Agreement and, as a result, the Defendant is entitled to deduct amounts owed to it by the Claimant from the final financial settlement.
35. The benefits which the Defendant claims are to be repaid, which are referred to in the Leaving Certificate of 8 July 2012, are as follows;
1) Sponsorship for a Work Permit and Residence Visa;
2) Medical and Dental Insurance Cover;
3) Life Insurance Cover;
4) Blackberry cell phone, SIM card, and connection charges and reimbursement;
5) Reasonable costs of local calls and business calls;
7) End of Service Benefits;
8) Reasonable accommodation for a period not expected to exceed 14 days from the Start Date;
9) Ex gratia reimbursement of one economy class return airfare from Cayman Islands to Dubai up to a maximum of AED 13,000
36. The Defendant asserts that although Clause 9.3 permitted the Claimant to resign upon providing 3 months’ notice, Clause 9.14 allowed for a “Good leaver / Bad leaver” policy to be applied to the Claimant’s employment as follows:
“The Firm operates a “Good leaver/Bad leaver” policy which required the Employee to act in a professional and honest manner, without compromising in any way the interests of the Firm, upon notice of termination of employment being given to or received from the Employee”.
37. Furthermore, the Defendant relies on Clause 9.15 that provides the following:
“Pursuant to 9.14 above and where appropriate, the Firm may in its sole discretion deduct any amounts owed to it by the Employee from the Employee’s final financial settlement.”
In response, the Claimant’s argument is that an employer is barred from seeking payment from an employee seeking alternative employment with reference to Article 18 of the DIFC Employment Law No. 4 of 2005. The Defendant argues that the Claimant should have referred to Article 20 of the 2012 law, as the prohibition at Article 18(1) of the 2005 law has been replaced by Article 20(1) of the 2012 Law and now prohibits an employer requesting, charging or receiving, directly or indirectly, payment “from a person seeking employment.” The measure is clearly designed to protect prospective, as opposed to existing or former, employees. For instance, Article 20(1)(b) concerns payment for “providing information about employers seeking employees”. Plainly, this can only apply to prospective employees. Furthermore, the exclusion for “payment for any form of advertisement” at Article 20(2) again makes it clear that the payments in question apply to prospective employees.
38. Finally, the Defendant argues that the list of 25 breaches have either been admitted by the Claimant or rejected without reasons and/or evidence in support.
The Applicable Law
39. The first matter to be resolved in this case is which law is applicable to the dispute. The Claimant argues that the DIFC Employment Law No. 4 of 2005 is the applicable law and that the amended DIFC Employment Law No. 3 of 2012 came into the force after the proceedings began, with no power to be applied retrospectively.
40. On the other hand, the Defendant asserts that the latter law is the applicable law as it came into force on 23 December 2012, six days before the Claimant amended his Claim Form and Particulars of Claim. As a result, it is argued by the Defendant that the Claimant can no longer rely upon the DIFC Employment Law No. 4 of 2005.
41. The general rule is that unless the contrary appears either explicitly or by necessary implication, it is a presumption of any law that the legislative authority intends to regulate future matters only. In other words, in the absence of contrary intention appearing from the law itself, it cannot be treated as affecting/effective in regards to completed transactions and matters which are the subject of pending litigation.
42. The reasoning in the decision of Phillip v. Eyre  LR 6 QB 1, was and still is supportive of that view which says as follows:
“Retrospective laws are, no doubt, prima facie of questionable policy, and contrary to the general principle that legislation by which conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law.”
43. Notwithstanding, it is clear from the Agreement at Clause 1.2 that the DIFC Employment Law No. 4 of 2005 is the applicable law just as it is evident that the new Amended Employment Law No. 3 of 2012 is not stated to apply retrospectively and nothing in the language of the new Law indicates that the purpose and intent of the legislative authority is for it to apply in any other manner.
44. The signing of the Agreement, the resignation, the termination and the proceedings before this Court all commenced before Law No. 3 of 2012 came into force on 23 December 2012, and therefore the new law cannot be applied to the dispute retrospectively. Therefore, the old Employment Law, being Employment Law No. 4 of 2005, is to remain the applicable Law in the context of this dispute.
45. In my view, it is not helpful for the Defendant to rely on the section of Schedule 1 to the Employment Law No. 4 of 2005 entitled “Rules of Interpretation”, Article 1(a) of which the Defendant says is identical in both DIFC Employment Laws and which provides as follows: “a statutory provision includes a reference to the statutory provision as amended or re-enacted from time to time.” Any legislative amendment or re-enactment must be subject to the Retrospectivity Rule as to hold otherwise would mean that parties would be governed by a law which did not exist at the time the actions or transactions occurred.
46. In order to resolve the dispute between the Claimant and the Defendant, namely whether the termination was based on justifiable grounds, the Court shall take into consideration the reasons provided by the Defendant in the termination letter dated 29 July 2012 and will then question whether or not they are capable of justifying summary dismissal during the Resignation Notice Period in light of the tests of fairness and reasonableness as follows below.
47. There is no question that the Claimant submitted his 3 months’ Resignation Notice on 1 July 2012 (during his extended Probation Period), and it is not disputed that the Defendant had terminated the Claimant’s employment during that notice period, namely on 29 July 2012.
48. In my view, nothing in the law or in the Agreement barred the employer from terminating the Employment relationship during the Notice period on notice or without Notice in the event that the employee had committed conduct (misconduct) that warranted instant termination. The Notice period is still part of the contractual timeframe and the contract only comes to an end at the end of the Notice period if the Notice applies.
49. The Defendant’s position is that the Claimant, during his course of employment, has committed 25 acts of misconduct that raised questions as to the Claimant’s performance and competence and were a breach of the following common law duties:
(a) A duty of good faith to the Defendant;
(b) A duty to obey the Defendant’s reasonable instructions and to carry out work conscientiously and honestly;
(c) A duty to take care in the performance of his functions.
The above had entitled the Defendant to terminate the Agreement instantly in accordance with Clause 9.9 which set out the following:
“The Firm may at any time terminate the Employee’s employment forthwith without notice in writing and without prejudice to any rights or claims the Firm may have against the Employee if at any time the Employee shall commit any act which provides a basis for Article 60(4)1 of DIFC Employment Law to apply.”
50. Article 60(4) of Employment Law No. 4 of 2005 provides that: “an employee is not entitled to a gratuity payment where the employee has been terminated for misbehaviour. A termination for such cause 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”
51. The general principle is that either party may terminate the contract following an agreed notice period. In accordance with the Agreement, either party could bring the
employment relationship to an end by giving notice. During the probation period the Claimant was required to give 3 months’ minimum notice as per Clause 9.3 while Clause 9.1 allowed the Defendant, “the Employer” to terminate without cause by giving one month’s notice.
52. If an Employer wishes to terminate a contract thereby depriving the Employee of his rights to minimum notice or gratuity, he must prove a fundamental breach on the employee’s side that would warrant instant dismissal
53. Clause 9.9 of the Agreement gives the Defendant the right to dismiss the Claimant without notice in the event that the Claimant “shall commit any act which provides a basis for Article 60(4)1 of DIFC Employment Law to apply”.
54. As such, Article 60(4) shall be the reference to identify what kind or level of conduct the employee must commit to be deprived of the right to minimum notice. Article 60(4) refers to misbehaviour which would lead a reasonable employer to have terminated the employee, which effectively leads us to the test of reasonableness.
55. The Defendant has provided the very long list of 25 alleged breaches on the Claimant’s part, which no doubt are serious in light of what was expected from an expert lawyer such as the Claimant and could give grounds for instant termination.
56. However, my finding after reading the submissions and both parties’ evidence is that the reasons provided by the Defendant in the termination letter are not the true reasons behind the termination.
57. I say that for the reason that the Defendant was during all material times aware of those breaches and took no serious action against the Claimant. If the reasons provided by the Defendant in the termination letter were true, the Defendant should have taken serious action, such as instant dismissal, at the time when the incidents occurred or should have at least provided him with a warning. The only warning I have seen during the probation period is with reference to filling out the time sheet.
58. Furthermore, once the Claimant had submitted his resignation letter on 1 July 2012, the Defendant made no mention of the breaches recorded in the latter termination list beyond reminding him of Clause 9.14 of the Agreement which explained the “bad leaver policy” and referred to Clause 9.15 which deals with deduction of any amount owed to the Defendant as mentioned in the email sent from the Defendant on 1 July 2012 at 1:30pm.
59. The Claimant was even provided with the First Leaving Certificate dated 22 July 2012 stating that his last day of employment would be 30 September 2012 and that his salary would be paid in respect of July, August and September at the rate of AED 38,000 per month, which amounted to AED 114,000, and which showed that after various deductions he would actually receive AED 8,955.
60. Not until 29 July 2013 did the Defendant decide to terminate the Claimant’s contract, which suggests that the breaches listed in the termination letter were never considered to be fundamental to the Defendant during the course of the Claimant’s employment. Therefore, in the given circumstances, these breaches cannot be described as misbehaviour for which a reasonable employer such as the Defendant would have terminated a contract.
61. In my view, there are two other reasons why the Defendant terminated the Claimant’s employment during the three months’ notice period without Notice, roughly one month after his resignation.
62. The first reason is in relation to the Claimant’s resignation and his finding of alternative work with another law firm. The Defendant has articulated that they were shocked by the Claimant’s resignation and his connection with another law firm. The Defendant made it clear in their submissions that the Claimant’s intention had always been to use them as a “stepping stone” into the legal market in Dubai. This reflected very poorly on the Claimant’s credibility as he had misled the Firm regarding his true intentions and commitment.
63. According to the applicable Employment Law and the Agreement, there is nothing unlawful in the Claimant seeking alternative employment and therefore resigning, as long as he provides the required notice. The Claimant’s movement to another firm, therefore, cannot be regarded as a breach that warranted instant dismissal.
64. The second underlying reason is that when the Claimant commenced the proceedings against the Defendant, in the latter’s submission, it seemed that by pursuing instant litigation during the notice period the Claimant had cynically attempted to avoid his legal obligations to the Defendant pursuant to the Agreement and in accordance with the DIFC Employment Law.
65. This too cannot qualify as a breach that warrants instant dismissal. The Claimant commenced proceedings because in the Agreement it was provided at Clause 10.1 that “any grievances the Employee may have can be addressed to either the Director of Employment Standards or to the DIFC Courts.”
66. The Claimant was told that he would be paid only AED 8,000 out of his 3 months’ salary as there was disagreement with regards to the final settlement between himself and the Defendant, so he chose to follow the grievance procedure referred to at Clause 10.1 of the Agreement. Regardless of whether the Claimant was right or wrong on the merits, no breach in this action is found to have been committed by the Claimant as he was merely exercising his contractual legal right.
67. I have decided that the 25 breaches in the termination list were not the actual causes of the termination and that the actual causes were in fact (i) the Claimant finding alternative employment and (ii) the commencement of proceedings against the Defendant which do not qualify as misbehaviour warranting instant dismissal (without notice) in accordance with Clause 9.9 of the Agreement. The Defendant is therefore in breach in terminating the contract without notice.
68. The only question left to be answered in the original claim before moving on to deal with the counterclaim is what remedies are available to the Claimant against the Defendant for breach in terminating without notice or cause that meet the description in Article 60(4) of the DIFC Employment Law No. 4 of 2005.
69. The Claimant in his submission is seeking to recover unpaid salary for July, August and September 2012 on the grounds that his resignation and three months’ notice were effective and that he should therefore be paid all salaries until 30 September 2012, being the last date of his notice, as well as 7 days’ holiday pay.
70. The general principal is that if an employee or an employer terminates the contract by giving notice to the other party, the final date of the employment relationship is the final date of the notice period, unless they agree a shorter notice or payment in lieu of notice. The Claimant submitted his resignation and notice of three months on 1 July 2012 and therefore the last date of employment in this case was 31 September 2012. This means that the Defendant unlawfully terminated the Agreement during the course of the employment.
71. Clause 9.1 of the Agreement requires the Defendant to give one month’s notice if they want to terminate the employment contract during the probation period, and hence the only sanction to be imposed upon the Defendant is to pay in Lieu of one month’s Notice.
72. The situation would be different if the termination by the Defendant had occurred after the probation period. However, this is not the case as there was an agreement between the parties that the probation period had been extended.
73. Accordingly, the Claimant is entitled to his salary amounting to AED 36,733.30 until the date of termination, being 29 July 2012, in addition to payment in Lieu of notice equivalent to one month’s salary of AED 38,000.
74. With regards to untaken holidays, and in accordance with Clause 7.1 of the Agreement, the Claimant is entitled to 7 days only, equivalent to AED 8,866 up to the effective date of termination, being 29 July 2012.
75. As summarised in paragraphs 32-33 above, the Defendant asserts that each of the above listed 25 breaches and examples of conduct amounted to negligence and/or gross negligence which qualify as entitling the Defendant to seek the remedies set out. The Defendant argues that the breaches constituted gross negligence or alternatively failure to perform to a standard required by a competent senior lawyer such as the Claimant with his qualifications and experience, and therefore the Defendant claims losses to be assessed at no less than AED 300,000.
76. The general rule is that the party who is claiming remedies has the burden of proving before the Court both the facts and the exact amount of damage that he or she suffered, as stated in Bonham-Carter v Hyde Park Hotel(1974) 64 T.L.R 177 at 178 where Lord Goddard C.J held: “a Plaintiff must understand that if they bring an action for damages it is for them to prove their damages; it is not enough to write down the particulars, and, so to speak, throw them at the head of the court, saying; “This is what I have lost, I ask you to give me these damages, they have to prove it”.
77. It is also established that even if the Defendant fails to deny the allegation of damage or suffered default, the Claimant must still prove his loss. (McGREGOR ON DAMAGES 18th Edition 45-1 page 1810).
78. In the counterclaim filed by the Defendant, the employer, against the Claimant, its former employee, the Defendant has listed 25 different breaches some which have been admitted as breaches whilst others not, some supported by evidence and others not. The Claimant in his defence to the Counterclaim, in his witness statement and in his submissions, has denied that these breaches have caused any damage to the Defendant as “no loss is pleaded and it is denied that the Defendant suffered any loss”.
79. Although the Defendant asks for AED 300,000 as a general remedy against the 25 above listed breaches, none of the said breaches were linked with certain damage that resulted from each of the Claimant’s acts of alleged misconduct. For instance, when the Defendant referred to the breach of “Failure to address the queries raised by Mark Vikeroy of Overtons in his email dated 24 June 2012;” they did not establish that this kind of conduct resulted in certain damage to the firm that the Court can see, measure and award.
80. Apart from allegations nos. 18 and 19 of the Defendant’s list of breaches, the Defendant did not plead the damages suffered and since they have been denied by the Claimant, the Court concludes that the Defendant has failed to plead their case adequately, and consequently no damages are awarded in respect of those 23 alleged breaches as they have not been discussed in detail. However, the breaches listed under nos. 18 and 19 of that list, where the Defendant has quantified certain damages, shall be dealt with in the following paragraphs.
81. Dealing first with breach no 18 of the list, the Defendant alleged “Causing substantial material loss to the firm by failing to undertake proper handover from Natalie Jones and/or ensuring that timely payment of the filing fee for DIFC Courts Case No. 026/2012 resulting in the firm having to absorb an additional US$ 12,000 in filing fees on re filing”. The Claimant’s Defence to this point is that although he did receive the Handover from his former colleague, he knew nothing about the US$12,000 as it was never
brought to his attention before he resigned. He further stated, in his sixth witness statement, that he was not the only one dealing with this matter.
82. The Defendant on the other hand has established that the matter of payment of the fees amounting to US$8000 within eight days before the DIFC Courts applied a new higher fee schedule, was the Claimant’s duty as it was clearly stated in the Handover Note which is not challenged by the Claimant. The Defendant has also established that the firm then paid US$20,000 as a result of the Claimant having missed the deadline for the lesser fees. The evidence of Mr Daleep Kumar Singh showed that the firm (the Defendant) “was not able to recover the sum from the client, who had agreed to and paid disbursement based on the original filing fees”.
83. In light of the Claimant having failed to challenge the evidence or the amount of damages claimed in respect of this particular breach, the Court finds that the Claimant is liable to compensate the Defendant for their loss amounting to US$ 12,000.
84. Second, the breach listed under no. 19 of the Termination list refers to “Causing substantial material loss to the firm by failing to cap the fees payable to Messrs Stuarts (a Cayman Islands law firm) in the “Tadhamon” litigation and acting negligently in preparation of evidence resulting in a liability to the firm of circa US$ 34,000″.
85. This part of the Defendant’s Counterclaim is advanced only in the third Witness statement of Mr Singh where he stated that “Mr Basit had agreed to a quotation in the sum of US$ 16,000 that was obtained by Mr McDuff from Messrs Stuart for an urgent application in the Cayman Island Court. However Mr McDuff not only failed in his duty to cap the fees of Messrs Stuarts, he has also sent an inadequate brief and first draft of evidence which meant that Messrs Stuarts had to undertake more work than was necessary or envisaged under the agreed quote. Mr McDuff’s fundamental failure as to the aspect of this role, particularly given his purported experience in the Cayman Islands, meant that KBH became liable for the fees of Messrs Stuarts, which were unnecessarily incurred“.
86. The Claimant, on the other hand, denies that this is his fault, avers that the matter was supervised by Mr Basit and asserts that Messrs Stuarts Law Firm had tried to make money out of this case
87. In the letter sent from the Stuarts Law Firm of Cayman Islands dated 15 June 2012 to the Defendant it was stated that “with reference to the first fees cap, KBH had failed to appoint a London QC to advise in the case, the cap of US$16,000 was based on the presumption that the Leading Counsel would prepare the draft pleadings“. The letter went further to explain the reason behind the significant increase in fees by stating that;
“If KBH had informed us the application would have been contested, our fees quote would have doubled, to US$24,000.
If KBH had informed us we would have to review 400 pages of documents…would have amounted to US$13,500.
If we had known we would never receive any advice or draft pleading from leading Counsel and had we been told that we would be obliged ourselves to draft the necessary pleading under significant time pressure, our fees quote would have included US$ 25,000 for all such work”.
88. Having reviewed the above mentioned letter, I find that the fees have been increased not due to the Claimant’s negligence in managing the cap fees but for other reasons such as the contesting of the application and the lack of a leading Counsel pleading which was discussed between the Claimant and the Defendant during the month of April as it appears from the correspondence between the Claimant and Mr Basit at that time.
89. Although the letter from Messrs Stuarts Law Firm dated 15 June 2012 refers to the Claimant’s inadequate drafting of pleadings, it does not however show the exact amount of work that was carried out by the Cayman Island Firm as a result. No certainty has been established by the Defendant as to how much the Claimant’s negligence cost them, beyond the other factors cited as causes for the increase in the fees referred to in that letter.
90. Furthermore, I am not in a position to determine whether the affidavit written by the Claimant at that time was in fact inadequate as it has not been put before this Court.
91. I am not satisfied by the level and standard of evidence in this regard that the Claimant has committed any sort of negligence that would have led to the increase in Messrs Stuarts Law Firm’s fees and accordingly I dismiss the Defendant’s application for a remedy in this connection.
92. In this part of the counterclaim the Defendant considers the Claimant to be a “bad leaver” within the meaning of Clause 9.14 of the Agreement, and that the Defendant is consequently entitled to deduct amounts owed to it by the Claimant from the final financial settlement.
93. The benefits claimed by the Defendant referred to in the Leaving Certificate of 8 January 2013 to be repaid are as follows:
1) AED 2,500 for Sponsorship for a Work Permit and Residence Visa;
2) AED 3,601 for his Medical and Dental Insurance Cover;
3) AED 2,567 for his Life Insurance Cover;
4) AED 7,800 for his Joining Accommodation;
5) AED 13,000 for his Joining Flight;
6) AED 45,000 for his Recruitment Fee;
7) AED 1,500 for his Practising Certificate;
8) AED 30,000 for the Outstanding Loan;
9) AED 32 for his Mobile Calls in May 2012;
10) AED 3 for his Mobile Calls in June 2012;
11) AED 280 for his Personal Information Report; and
12) AED 250 for his Residence Visa Cancellation.
94. In order to respond to the deductions issue, the Claimant argues that although the Defendant could have made some (but not all) of the deductions if it had allowed him to
resign, it is not correct in circumstances where he was not permitted to resign and was dismissed (wrongfully).
95. The Claimant accepts that the Defendant is entitled to deduct AED 30,000, being the outstanding amount of the Loan but the Claimant argues that the Defendant is not
entitled to make any of the other deductions claimed. The “amount owed” is the outstanding amount of the Loan of AED 30,000. However, the deductions are not “amounts owed” and the Defendant is therefore not entitled to the deductions under Clause 9.15 of the Agreement.
96. The Claimant further asserts that if the Defendant terminated his employment wrongfully, the Defendant cannot then fall back on the argument that he resigned. Either way, the Defendant is not entitled to the deductions. Regardless, it is argued by the Claimant that an employer is barred from seeking payment from an employee seeking employment with reference to Article 18 of the DIFC Employment Law No. 4 of 2005.
97. Finally, the Claimant argues that the Defendant would not be entitled to reclaim the Practicing Certificate and the Personal Information Report as they are not items listed in Clause 6 of the Agreement. The Defendant has not shown that the amounts listed in respect of health insurance and life insurance were actually incurred nor how much was refunded when the relevant policies were terminated after the employment ceased.
98. It is clear that the Defendant in this part of the Counterclaim is relying on both Clause 9.6 of the Agreement, which allows them to deduct the recruitment fee and all benefits under Clause 6 if the employee gave notice before the end of the first year of his contract, and Clause 9.15 which allows the Firm to deduct any amount owed to it if the employee is considered to be a “bad leaver” according to Clause 9.14 of the Agreement
99. Under Article 3(a) of the DIFC Employment Law No. 4 of 2005 (the applicable law in this matter), the law clearly states that its purpose is to provide the minimum standard of employment. In addition, Article 8 expressly holds a no waiver provision in that “an agreement to waive any of those requirements except where expressly permitted under this Law, has no effect.”
100. Article 18(1) of the DIFC Employment Law No. 4 of 2005 states:
“A person shall not request, charge or receive, directly or indirectly, from a person seeking employment a payment for:
(a) employing or obtaining employment for the person seeking employment…”
101. In the present matter, the Defendant is demanding a fee for employing the Claimant which runs counter to the said Articles of the aforementioned DIFC Employment Law No. 4 of 2005 and therefore the Defendant would have no right to acquire any fees related to the Claimant’s employment including: (i) AED 2,500 for Sponsorship for a Work Permit and Residence Visa; (ii) AED 45,000 for his Recruitment Fee; and (iii) AED 250 for his Residence Visa Cancellation.
102. This Court cannot accept the Defendant’s argument that the application of Article 18 of the DIFC Employment Law No. 4 of 2005 is limited to prospective employees, and that in this case they may charge a leaving employee. In my view, these are the same fees that were incurred during the signing of the Employment Contract and because of the employment itself, and it seems that the Defendant is merely trying to circumscribe it according to their situation or benefit, which is more presumptuous than this Court is willing to allow. This request, therefore, shall be subject to the restriction of Article 18 of the said employment law.
103. In any event, as it has been decided above that the termination by the Defendant was the effective incident that brought the Agreement to an end and not the Claimant’s resignation; the Defendant cannot rely on Clause 6.9 and demand a refund of the said benefits on the basis that they fall under the definition of Clause 6 of the Agreement.
104. It cannot also be argued that the submission of the Notice by the Claimant itself is a sufficient cause to apply Clause 6.9 regardless of how the employment was truly terminated, as the wording in Clause 6.9 provides “If prior to the end of twelve (12) months from the Start Date the Employee gives notice of termination pursuant to Clause 9.2 and 9.3 above, the cost of all benefits set out under Clause 6 and any recruitment fee incurred by the Firm will be repayable in full and deducted from any sums owing to the Employee.” In my opinion this suggests that the Clause shall apply if the party who brings the contract to an end is the employee by giving notice leading to the termination of the Agreement. This, however, is not the situation in this case where the notice was not effective due to the Defendant’s intervention by terminating without notice, and this Clause therefore cannot apply.
105. The Defendant has already benefited from the privilege of having a shorter notice period in the contract as discussed above and has been ordered by this Court to pay less than they would have if the Claimant had gone through with the Notice.
106. The AED 30,000 in addition to the mobile telephone calls (AED 32 plus AED 3) is an amount owed under Clause 9.15 and the Claimant has not challenged the Defendant’s entitlement to this amount. Therefore, the Defendant is entitled to deduct them from the Claimant’s remuneration.
107. Both the Practicing Certificate (AED 1,500) and the Personal Information Report (AED 280) are neither money owed under the definition of Clause 9.15 of the Agreement nor deductions under the definition of Clause 6. Accordingly, I see no grounds to compel the Claimant to pay them back.
108. The parties are hereby requested to file short submissions on costs, to be not longer than 3 pages each.
Date of re-issue: 4 March 2014