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Hana Al Herz v The Dubai International Financial Centre Authority [2013] DIFC CA 004

Hana Al Herz v The Dubai International Financial Centre Authority [2013] DIFC CA 004

November 27, 2014

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Claim No: CA 004/2013

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

 

IN THE COURT OF APPEAL

BEFORE THE CHIEF JUSTICE MICHAEL HWANG, JUSTICE ROGER GILES AND H.E. JUSTICE OMAR AL MUHAIRI

 

BETWEEN

HANA AL HERZ

                                                                                                Claimant/Appellant

and

 

THE DUBAI INTERNATIONAL FINANCIAL CENTRE AUTHORITY     

                                                                                    Defendant/Respondent

 

Hearing:            18 May 2014

Counsel:           James Wynne and Layla Bunni (Starr & Partners) for the Claimant/Appellant

 Graham Lovett and Stefanie Szabo (Clifford Chance) for the Defendant/Respondent

Submissions:    12 June 2014, 30 June 2014 and 14 July 2014

Judgment:        26 November 2014


 

 JUDGMENT


 

 Summary of Judgment

The Appellant, Hana Al Herz sought an appeal from the lower court judgment of then Deputy Chief Justice Sir Anthony Colman that dismissed Appellant’s claim of reinstatement of employment, damages and compensation under DIFC Employment Law in favour of Defendant Dubai International Financial Centre Authority (“DIFCA”). The grounds for the appeal include failure to establish discrimination in the termination of her employment, failure to properly address Appellant’s breach of contract claim and incorrect application of Article 62 of the DIFC Employment Law of 2005.The Court of Appeal dismissed the Appellant’s appeal and upheld the decision of the lower court. With regard to unfair dismissal, the judges held that this principle did not exist in DIFC laws and that the lower court was correct to rule that any introduction of implied terms such as the duty of good faith, confidentiality, fair dealing and reasonableness, so as to justify the claim of unfair dismissal, would be problematic and that, if any such principle of unfair dismissal is to be introduced, it should therefore be by legislation and not by judicial innovation. As for discrimination, it was found that the Respondent did not terminate HAH’s employment or discriminate against her “because of her marital status” within the meaning of Article 56(2) of the unamended Employment Law. The Respondent was simply exercising its contractual right to terminate in accordance with the terms of her contract and the DIFC Employment Law. Furthermore, there is no entitlement under DIFC Law to statutory damages for breach of Article 56 of the unamended Employment Law. On the issue of gratuity, the Appellant is not entitled to receive an end of service gratuity because she was already enrolled in the UAE pension scheme in accordance with Federal Law No. 7 of 1999 as amended by Federal Law No. 7 of 2007, and Article 60(5) of the unamended Employment Law. Accordingly, the Appellant’s appeal and claim for relief was dismissed with costs.

 This summary is not part of the Judgment and should not be cited as such

ORDER

UPON hearing Counsel for the Appellant and Counsel for the Respondent on 18 May 2014

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. The Appellant’s appeal is dismissed.

2. Costs shall be paid to the Respondent by the Appellant within 14 days of the date of this order, the amount of which shall be assessed, if not agreed, by the Registrar.

 

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue:  26 November 2014

At: 4pm

H.E. JUSTICE OMAR AL MUHAIRI:

1. The Appellant in this matter is Hana Al Herz (“HAH”), a former employee of the Respondent, the Dubai International Financial Centre Authority (“DIFCA”).  HAH filed an appeal on 15 August 2013, requesting an oral hearing to appeal the judgment of the Deputy Chief Justice Sir Anthony Colman in the matter CFI-011-2012 dated 10 July 2013.Leave to Appeal was granted by the Chief Justice Michael Hwang on 3 October 2013.

2. HAH sets out multiple grounds for appeal including misdirection in finding that the Appellant failed to establish discrimination in the termination of her employment; the failure of the CFI Judge to properly address the Appellant’s breach of contract claim; the CFI Judge’s failure to properly consider and apply Article 17 of the DIFC Employment Law in respect to Appellant’s claim; and incorrect application of Article 62 of the DIFC Employment Law of 2005 by the trial judge.

Background

3. On 20 March 2012, HAH filed the initial claim form for reinstatement of her employment by the Respondent that gave rise to the first case, CFI-011-2012. HAH, in that claim form, was also seeking the following: (a) payment of wages lost; (b) damages for breach of contract; (c) punitive damages; (d) compensation pursuant to Article 68(2)(b) of the DIFC Employment Law of 2005; (e) any payments due and owing under Article 68(2)(e); and (f) compensation for unauthorized deduction from wages pursuant to Article 17 of the DIFC Employment Law.

4. HAH commenced employment with Respondent on 1 August 2005 as Senior Manager of the Governor’s Office. In January 2006, HAH was transferred to the Insurance Department and, in December 2007, she was promoted to Director of Insurance and Re-Insurance. In 2007 and 2008, and again in 2010, she received considerable salary increases.

5. In April 2010, Marwan Lutfi (“ML”) began working for the Respondent as Deputy CEO and Head of Business Development. He began a process of restructuring that resulted in HAH being appointed as Head of Insurance and Reinsurance with ML as her immediate line manager. ML, in turn, reported to Abdullah Al Awar (“AA”), the CEO of Respondent.

6. In February 2011, further re-structuring by ML caused the Insurance and Business Entities department to be combined with the Retail and Events Department. HAH was appointed to re-organize the combined departments and in the course of 2011, the retail department’s level of business occupancy rose from 66 to 98 percent.

7. Amongst other important responsibilities undertaken by HAH was contact with overseas clients and potential clients in order to develop the DIFC’s business with foreign companies. In that capacity, she travelled to New York and Sao Paulo in April/May 2011. On 26 May 2011 she and ML travelled together to South East Asia on a business development trip, where they both visited Seoul. At the end of that trip, HAH flew to Bangkok for a medical check-up. She treated this as part of her annual leave, with ML’s authority, and made a formal application to DIFCA for the same. She arrived in Bangkok on 3 June 2011 and left on 8 June 2011. She and ML returned from Bangkok to Dubai on the same flight. In the meantime, on 6 June 2011, HAH was awarded a salary increase of AED 20,000, bringing her salary to AED 85,000, which AA approved.

8. In June 2011, ML proposed marriage to HAH, which offer she ultimately accepted. They performed the Melcha before the Dubai Courts on 27 July 2011. ML discussed the issue of marriage with AA, who expressed the view that one of them would need to leave the DIFCA if they were to proceed with the marriage.

9. Following discussions between AA and ML in an attempt to reconcile the issue relating to the marriage, ML agreed to step down from the position of Deputy CEO and become Advisor to the CEO (i.e. AA), a position specially created for ML. This would mean that HAH would no longer report to ML, as he would no longer be her line manager, and she would instead report directly to AA. An e-mail was sent by AA on 6 September 2011 to all the staff announcing this new change in roles and congratulating HAH and ML on their upcoming marriage, which took place on 30 September 2011.

10. At no point was it seriously proposed to HAH that she should leave her employment with DIFCA while ML remained in DIFCA’s employment, either in the position of Advisor to the CEO or any other position than that of her line manager.

11. On 4 September 2011, Badr Buhannad, Chief Audit and Risk Officer at the DIFCA Audit and Risk Department produced a report on HAH and ML, the purpose of which was to “Investigate conflict of interest surrounding the issues, [and] potential misuse of power.” The matters investigated were:

(1)   the finding that HAH and ML took 25 days matching leave in the previous 12      months;

(2)   that salary increases for HAH and promotions recommended by ML were not carried out impartially by ML because they exceeded what was given to others in the DIFCA; and

(3)   ML shared with HAH business-related matters outside her scope of work including high level matters involving the CEO.

12. Unknown to HAH, a closed meeting took place on 11 October 2011 by the DIFCA Audit Committee to consider the case of HAH and ML. The meeting recommended that both HAH and ML be suspended from work and that a senior executive should interview both of them and give them two options;

(1)   both to resign peacefully or

(2)   both be subject to a special investigation to look into the matter and face consequences up to termination.

13. On 29 November 2011, Hussain Al Qemzi, Chairman of the Audit Committee, wrote to AA and Mr Buhannad as a follow-up to the recommendations of the Audit Committee and recommended that both HAH and ML be immediately suspended. On the same day, AA met with ML and called for ML’s immediate resignation, accusing him of “making allowances” to HAH. These allegations were denied by ML, who formally refused to tender his resignation.

14. On 30 November 2011, HAH and ML received telephone calls from Hani Hirzallah, Head of Human Capital, on the instructions of AA given in the presence of Mr Buhannad and Roberta Calarese, Chief Legal Officer of the DIFCA, after Mr Al Qemzi instructed AA to immediately suspend HAH and ML from work and to confiscate all company assets including their laptops. Mr Hirzallah informed both HAH and ML that they must either submit their resignations immediately or be suspended. HAH was unwilling to resign and, 15 minutes after the telephone call, she and ML received separate emails from Hani Hirzallah informing them they were suspended from the office with immediate effect; their access to the premises and emails were suspended and they were to return all DIFCA assets. HAH immediately replied expressing surprise and inquiring as to the reasons for her suspension, which she believed to be in violation of DIFC Law and the DIFCA’s regulations.

15. On 4 December 2011, DIFCA terminated ML’s employment without notice on the grounds that employment of relatives as per DIFCA Employment Policies and Procedures was generally not allowed. His notice period would be paid in full.

16. On 8 December 2011 Buthaina Al Tayer, Manager of Human Capital Business Partner, informed HAH (in response to her inquiry) that she had been suspended in order to review her conduct in the past year based on internal policies and procedures. Further requests from HAH to Ms Al Tayer and AA elicited no further information. On 29 December 2011, the Audit Committee approved an extension to the period of suspension until 31 January 2012. In the meantime, DIFCA appointed Ernst & Young (“EY”), to conduct an investigation into the following matters:

(a)   Whether, and if at all, the relationship between ML and HAH may have led to them making decisions that were not in the best interests of the DIFCA, by virtue of the conflict of interest caused by their relationship; and

(b)   To provide specific factual examples of the above (if any) and of decisions taken, or transactions passed, in respect of which the benefit, by virtue of the conflict of interest, may not have been optimal for DIFCA;

(c)   To seek to determine the period over which inappropriate practices, if any, took place as a result of the relationship.

17. A meeting took place on 18 January 2012 between HAH, the investigating committee, and EY. Despite her request, HAH was not permitted to be accompanied by a legal representative. During the meeting, HAH was closely questioned about the part she played in the selection of Events to Remember, as the caterer for the DIFCA reception at the International Bar Association (“IBA”) Conference in November 2011; their quoted price and the fact that this same company provided the catering at her wedding reception. A major area of investigation was whether the DIFCA Procurement Department was involved in the selection of the caterer and exercised independent judgment. Her response was that she had been instructed by AA to organize the catering for the IBA as quickly as possible, and that she had acted in conjunction with the Procurement Department. She was also asked about her whereabouts after the trip to Seoul with ML and her subsequent visit to Bangkok.

18. On 25 January 2012, EY produced their report (“the EY report”) and focused on four key issues:

(a)    The appointment of Events to Remember to organize and cater for the IBA reception on 3 November 2011;

(b)    HAH’s rapid career progression and concomitant salary increases in September 2010 and May 2011;

(c)    Complaints about HAH’s conduct by two junior members of staff who alleged she had been aggressive and rude, and that ML always supported her against the complainants; and

(d)    HAH’s conduct in taking allegedly unapproved leave from 6 to 8 June 2011 in Bangkok with ML’s simultaneous presence there.

19. With regard to the engagement of Events to Remember, the EY report drew attention to three “potential” breaches of the DIFCA Procurement Policy:

(a)  Only the Procurement Department was permitted to procure services relating to the IBA reception;

(b)  Quotations should have been obtained only from suppliers registered on DIFCA’s database;

(c)   Quotations must be obtained in respect of identical requests for proposals, thereby reducing the risk of lack of comparability.

The EY report, at paragraph 3.3.1, indicated that, nine days after she recommended Events to Remember for the IBA reception, the same company provided catering and event set-up services for her wedding. Her evidence to EY was that she did not regard this as resulting in her having a perceived or actual conflict of interest; as she kept the two transactions separate in her mind.

20. With regard to HAH’s trip to Bangkok from 3 to 8 June 2011, from which she returned to Dubai on 8 June with ML, there was no evidence in DIFCA’s records other than her assertion, according to the report, that HAH had applied to DIFCA for this period as annual leave, and there was no evidence of any defect in the online leave application system.

21. Paragraph 5.1.3 of the EY report sets out a number of facts which EY suggest may indicate that, over time, the relationship between ML and HAH, “may have ceased to be an arms-length business relationship,” although there was no identifiable watershed date for when this occurred. These events included;

(a)   ML approving the largest pay raises in the Business Development Department in September 2010 and May 2011 for HAH;

(b)   in the year July 2010 – July 2011 HAH’s and ML’s vacation days overlapped for a total of 39 days and;

(c)   ML’s strong support for HAH in the face of complaints against her by employees and, finally, the coincidence of HAH and ML’s overseas business trips in April-July 2011.

22. The EY report also identified various instances of HAH’s unpopularity with the staff of her department, starting with complaints of the employees in August 2010 and examples of other staff members being antagonized by her methods of addressing them as well as  comments of staff as to the detrimental affect her return would have on staff morale.

23. On 26 January 2012, the day following the receipt of the EY report, a meeting took place with the Audit Committee of the Board of Directors of DIFCA. Upon viewing the report, termination of HAH’s employment was decided, provided that DIFCA had a right to terminate under the contract.

24. On 30 January 2012, Ms Al Tayer sent a message to HAH asking her to attend a meeting on the following day (the last day of her suspension) at which time she would be informed of the conclusions of fact following the investigation of her conduct. HAH replied on the same day, indicating she was not prepared to attend unless she was first provided with specific details of the allegations against her. Ms Al Tayer replied that such information would be provided at the meeting. Subsequently, HAH did not attend the meeting.

25. As a result, on 31 January 2012, Ms Al Tayer sent a message to HAH stating that as she had failed to attend the meeting, DIFCA’s decision was attached. It was stated in a message from Nabil Ramadhan that;

 “Based on the outcome of the investigation, the DIFC Authority no longer wishes to continue this employment relationship and therefore terminates your employment in accordance with the Employment Law and the Employment Contract.”

DIFCA felt that HAH’s conduct in the past year had not been in line with the DIFC Code of Values and Ethics and the DIFCA Employee Policies and Procedures. She was to receive all her entitlements under the Employment Contract and she was not required to serve her notice, which would be paid in full together with any other applicable benefits.

The Parties’ Submissions before the Trial Judge

26. As outlined in paragraph 3 above, HAH filed claim number CFI-011-2012 seeking the following:

(a)   Her claim requested reinstatement of employment together with payment of wages lost;

(b)   damages for breach of contract;

(c)    punitive damages;

(d)    compensation pursuant to Article 68(2)(b) of the DIFC Employment Law of 2005;

(e)    any payments due and owing under Article 68(2)(e);

(f)    and compensation for unauthorized deductions from her wages pursuant to Article 17 of the DIFC Employment Law.

27. HAH alleges unlawful dismissal on substantive and procedural grounds; unlawful discrimination on the grounds of marital status pursuant to Article 56 of the DIFC Law Employment No. 4 of 2005 (the unamended Employment Law) and unlawful deduction of wages. HAH based the Defendant’s alleged breaches of express contractual terms on provisions of the Defendant’s Employee Policies and Procedures incorporated into the contract of employment under Clause 1. HAH also claimed that she was entitled to end of service gratuity under Article 60 of the unamended Employment Law. Finally, HAH claimed that the Defendant should not have deducted the value of a BlackBerry which was originally provided to her by the Defendant, even though she did not return it to the Defendant upon termination.

28. On the other hand, the Defendant claims that, with regard to the circumstances of the Claimant’s contract being terminated, there was no concept of unfair dismissal in the law of the DIFC. With regards to her discrimination claim, it is submitted by the Defendant that there was no discrimination due to marital status as the entirety of the Defendant’s conduct in its dealings with HAH including her suspension and termination was based on conflicts of interest which took place before her actual marriage (Melcha), albeit they were issues which arose from or were connected to her preceding close personal relationship with ML.

29. According to the Defendant, the instances of conflict of interest included the criteria for bonus allocations, for which ML was directly responsible, as well as salary increases. The Defendant further relies on alleged discrimination in treatment. Following staff complaints, HAH received no more than an oral warning about the use of bad language while the staff, on the other hand, were blamed and punished with reprimanding letters. These decisions were made by ML as the Claimant’s line manager.

30. The Defendant further relies on the circumstances surrounding the selection of Events to Remember for the IBA Reception and caterer for HAH and ML’s wedding reception, in spite of alleged internal advice that Events to Remember’s quote was higher than others submitted. Further reliance is placed on the conduct of HAH and ML in spending periods of time together in Bangkok in the course of returning from Korea, which is said to support the existence of a close personal relationship before their marriage.

31. The Defendant claims that the marriage merely triggered the Audit Committee’s own investigation conducted by EY. The underlying subject of the latter investigation was whether there existed a conflict of interest arising out of this professional personal relationship. The Defendant alleges that it was their reliance on the EY Report, not discrimination based on marital status, that allowed the Audit Committee to make the decision to terminate HAH’s contract.

32. As to the claim for entitlement to gratuity upon termination of HAH’s contract, it is submitted that, as the Claimant was enrolled in the DIFCA Pension Scheme in accordance with Article 61 of the unamended Employment Law, she is therefore not eligible to receive end of service gratuity under Article 62 of the unamended Employment Law. The Defendant submits, finally, that, because the BlackBerry issued to HAH is the property of the Defendant, it is permissible to deduct from the amount paid to Claimant as wages in lieu of the three months’ notice period an amount which is equivalent to the value of the BlackBerry.

The Findings of the Trial Judge

Unfair Dismissal

33. With regards to unfair dismissal, the Deputy Chief Justice (as he then was) Sir Anthony Colman (“DCJ Colman”) in his Judgment dated 10 July 2013 ruled that any introduction of implied terms such as the duty of good faith, confidentiality, fair dealing and reasonableness, so as to justify the claim of unfair dismissal, is problematic as the terms are difficult to define and uncertain in terms of application. DCJ Colman elucidated, “Further, it would introduce an area of uncertainty with regard to the right of employers to terminate employment and lead to a significant increase in wrongful dismissal claims.”

34. It was held in paragraph 84 of DCJ Colman’s judgment that the authorities relied upon by the Claimant did not justify the introduction into DIFC Law any general principle of unfair dismissal, and that the introduction of any such principle other than by legislation would be wrongful. Further, it would be inconsistent with the fundamental principle of the primacy of the express terms of a contract, subject only to the introduction of inconsistent implied terms by legislation.

Discrimination

35. In order to establish an employer is in breach of the duty not to discriminate under Article 56(1) or 58(1) of the unamended Employment Law, it must be proved that, in at least one of the circumstances set out in these articles the employer was relying either exclusively upon, or was influenced by, one or more grounds from (a) to (f), or was relying upon, or was influenced as much by, one of those grounds as any other grounds.

36. Were it to be established that there was discrimination on the ground of (b) “marital status”, the Defendant could avoid liability by bringing itself within the exception of a bona fide occupational requirement (Article 56(2) and Article 58(2) of the amended Employment Law), but the Defendant does not rely on this defence and rather confines its arguments to its treatment of HAH during the period of employment in which she was not yet married. DCJ Colman therefore pointed out in paragraph 100 of his judgment that the question of whether there was a bona fide occupational requirement for termination does not arise. Additionally, this issue can only be triggered if it is first established that the employer’s conduct has been discriminatory.

37. As for the overall claim of discrimination, DCJ Colman concluded in paragraph 99 of his judgment that the Claimant failed to establish discrimination in the termination of her employment on the grounds of her marital status. Her termination was merely an exercise of the contractual right to terminate her contract by giving the requisite notice or to pay her salary in lieu of notice, even if its reason for doing so might have been misconceived.

Implied Terms in Contracts and Unfair Terms Law, Gratuity and BlackBerry Deduction

38. Article 38 (1) of the Implied Terms and Contracts and Unfair Terms Law applies “as between contracting parties where one of them deals on the other’s written standard terms of business”.  In this case the contracting party (Claimant) , “cannot by reference to any contract term:…claim to be entitled to render a contractual performance substantially different from that which was reasonably expected of him…except in so far as…the contract term satisfies the requirement of reasonableness” (Article 38 (2) (b)).

39. DCJ Colman concluded in paragraphs 104-105 of his judgment that the Claimant could not deploy Article 38 in order to mount a claim for unfair or wrongful dismissal. If the Defendant terminated the Claimant without notice, it would be under a secondary obligation to compensate the Claimant for the lack of notice by paying her an amount equivalent to one month’s salary. HAH was paid an amount well in excess of one month’s salary subsequent to termination and, moreover, the contract term itself could not be said to have failed to satisfy the requirement of reasonableness.

40. As for the gratuity claim, DCJ Colman found that the Claimant, a UAE national, was enrolled in the UAE pension scheme by the Defendant in accordance with Federal Law No. 7 of 1999 and Article 61 of the unamended Employment Law and was accordingly not eligible to receive an end of service gratuity.

41. As for the BlackBerry, because the Claimant was paid three months’ salary, it was decided she suffered no loss by the deduction of the value of the BlackBerry if that deduction still left her with a payment equivalent to one month’s salary. Even if she, and not the Defendant, was the owner of the BlackBerry, she suffered no recoverable loss by way of the deduction.

42. In conclusion, DCJ Colman dismissed the claim for discrimination on the grounds of marital status, damages for unfair dismissal and for damages for dismissal otherwise in breach of the Claimant’s contract of employment. He also dismissed the claim for defamation, failure to pay a gratuity and wrongful deduction of the value of a BlackBerry.

Appellant’s Arguments for Appeal

Discrimination on Grounds of Marital Status

43. The Appellant argues that DCJ Colman’s finding in regards to discrimination on grounds of marital status was perverse given the evidence put forth by AA at trial that indicated that had the Appellant and ML not married, they would both have remained in their positions.

44. Additionally, the Appellant claims that DCJ Colman failed to consider and apply the proper tests that discrimination need only be a significant influence on the way in which the Appellant was treated and that, in answering the question whether the treatment was because of marital status, the decision was overreaching as it is only necessary that marital status be a significantfactor.

45. Finally, the Appellant alleges that there was no evidence to support the finding of fact concluded by DCJ Colman that it was due to the Audit Committee’s belief that past conflicts of interest might have occurred and therefore it was undesirable that the Claimant should continue working for DIFCA, and accordingly her marital status was not a material consideration. The Appellant submits that the Respondent did not produce any evidence from any person who made the decision to terminate the Claimant consistent with this finding.

Breach of Contract Claim

46. In regard to the breach of contract claim, the Appellant argues that DCJ Colman failed to ask the proper legal question, and accordingly failed to consider the Appellant’s breach of contract claim.

47. The Appellant further argues that the Court failed to properly consider necessary relevant matters when it failed to appreciate the implied terms argued for by the Claimant implied by statute in the breach of contract claim. Specifically, whether or not the Defendant complied with its obligations of good faith, reasonableness and mutual trust and confidence both at termination and before.

48. Lastly, the Appellant claims that there was a misunderstanding of the law by DCJ Colman in considering the concept of constructive dismissal as an issue in the Appellant’s breach of contract claim and submits that the concept of constructive dismissal has no bearing in this case.

BlackBerry Deduction & End of Service Gratuity Claims

49. The Appellant contends that there has been a failure to apply Article 17 of the unamended Employment Law of 2005 with respect to the deduction of the value of the BlackBerry from the Appellant’s wages, and that no consideration has been given as to whether or not the Respondent had the authority to make the deduction from the Appellant’s final salary.

50. As for end of service gratuity, the Appellant submits that DCJ Colman incorrectly concluded that the Appellant was not eligible to receive an end of service gratuity and further alleges that he incorrectly applied Article 61 of the unamended Employment Law, which was only enacted on 16 December 2013 and is not stated as having a retroactive effect. The Appellant further claims that the unamended Employment Law is the correct law to apply in the Appellant’s claim, and that it does not contain any provisions mirroring Article 61.

The Hearing

51. On 18 May 2014, both parties attended a Court of Appeal hearing before the Chief Justice Michael Hwang, Justice Roger Giles and H.E. Justice Omar Al Muhairi.

52.At the hearing, both parties reached a mutual agreement to remove the BlackBerry deduction claim from the appeal.

53. Upon the direction of the presiding judge, Chief Justice Michael Hwang, it was ordered that both parties should file and serve further submissions in regard to HAH’s entitlement to gratuity and entitlement to damages in breach of Article 56 of the unamended Employment Law.

54. Additionally, should there be an entitlement to gratuity, the Appellant and the Respondent should file an agreed statement of quantum, or if not agreed separate statements on these issues.

55. On 20 May 2014 the Registry issued the direction order arising out of the hearing. On 12 June 2014 both parties filed their statements of quantum and submissions on gratuity and damages. On 30 June 2014 the parties exchanged and filed submissions, and on 14 July 2014 the parties filed their reply submissions.

The Appellant’s Further Submissions

56. On the question of gratuity, the Appellant maintains her argument that the amended Employment Law governing pension for UAE Nationals was not in existence nor in force at the date of termination and therefore should not apply. Rather than the amended Employment Law, the Appellant submits that Article 60 of the unamended Employment Law should apply to grant the Appellant entitlement to gratuity.

57. The parties were unable to agree on a statement of quantum for the calculation of gratuity. However, the Appellant relies on the English decisions of Leisure Leagues UK Ltd v Macconnachie [2002] IRLR 600 (EAT) and Yarrow v Edwards Chartered Accountants UKEAT/0116/07 which held that, for a person who works 260 days in a year, one day’s salary should be calculated as 1/260th of salary.

58. This is in accordance, the Appellant argues, with the unamended Employment Law in force at the date of HAH’s termination:

“60. End of service gratuity

(2) “The gratuity payment shall be calculated as follows: (a) Twenty one (21) days’ wage for each year of the first five (5) years of service. (b) Thirty (30) days’ wage for each additional year of service…”

59. As for damages, the Appellant rejects the Respondent’s argument that no other law should apply other than the Employment Law because there is no express limitation of Employment Law within any Laws, and also because the Employment Law itself implicitly relies upon the Contract Law for such matters as (inter alia) the formation of a contract and, identifying its terms.

60. Accordingly, the Appellant invites the Court to apply the principles set out within the Law of Damages and Remedies, DIFC Law No. 7 of 2005; Part 3: Damages in the Law of Obligations, and, in particular Article 23 (Right to Damages), Article 24(Full Compensation) and Article 25 (Measure of Damages) in order to support a finding of unfair dismissal.

The Respondent’s Further Submissions

61. On the issue of gratuity, the Respondent maintains that HAH is not entitled to end of service gratuity because she was automatically enrolled in the Federal Pension scheme provided for by Federal Law No. 7 of 1999. The Respondent asserts that applicable Federal and DIFC laws point to the legislature’s intention for an employee to “opt in” to one scheme only, and that it could not have been the intention of the legislature for employees to be entitled to receive benefits under multiple schemes.

62. The Respondent argues that financial obligations would be unduly onerous on employers if UAE Nationals were given the option to additionally “opt in” to also receive DIFC gratuity when enrolment in the Federal Pension Scheme is mandated by Federal Law. This would amount to double recovery for the Appellant to seek payment of gratuity when she is eligible to receive only the Federal Pension.

63. Furthermore, the Respondent contends that it is not required that the amended Employment Law be stated as being retrospective for it to have retrospective effect. It is sufficient that both the unamended and amended versions of the DIFC Employment Law contain an identical provision at Article (1)(a) of Schedule 1 “Rules of Interpretation,” which states that provisions in the law are inclusive of future amendments, “a statutory provision includes a reference to the statutory provision as amended or re-enacted from time to time.”

64. As for damages, the Respondent maintains that there is no entitlement under DIFC Law to statutory damages for breach of Article 56 of the DIFC Employment Law. The Respondent asserts that a claim for discrimination has not been established on the facts and that there is no breach of the discrimination provisions in the DIFC Employment Law, and accordingly, entitlement to damages, statutory or otherwise, do not arise. The Respondent also maintains that, had a claim for discrimination been made (which it denies), there is no authority under DIFC legal principles that offers a statutory right to damages arising from a breach of the DIFC Employment Law.

65. Furthermore, the Respondent claims that the Appellant was dismissed lawfully and in accordance with the terms of her contract and the DIFC Employment Law. The Respondent made payment in lieu of the notice period resulting in no loss suffered by the Appellant.

Discussion

Unfair Dismissal

66. The unamended Employment Law makes no provision for an employee to claim unfair dismissal, although it recognises an employee’s right to claim discrimination on the grounds of sex, marital status, race, nationality, mental or physical disability and religion under Article 56.  However, the Employment Law gives power to the Director of Employment Standards to administer the Law and propose regulations under Article 63(1)(g) which provides as follows.

“(1)The Director may propose Regulations to the Board of Directors of the DIFC Authority in respect of any matter that facilitates the administration of the Law or further the purpose of the Law, including but not limited to:

 …

(g)   the maximum compensation for discrimination or unfair dismissal.”

…”

67. The relationship between the Appellant and the Respondent is regulated by the unamended Employment Law, which is a DIFC Law.  It sets out at Article 3 all the statutory rights and protections of the employee, and at Article 8 the minimum standard and requirements of employment which the parties cannot contract out of. In substance, then, the Employment Law has a regulatory content and is the only law that governs the employee who works for any entity having a place of business in the DIFC. Therefore, there is no basis to adopt any other law than the DIFC Employment Law to determine the rights of the Appellant, and her contractual relationship with the Respondent is regulated by the DIFC Employment Law. In any event the Appellant further fails to provide a right to compensation for unfair dismissal.

68. A similar situation arose before the Deputy Chief Justice (as he then was) Michael Hwang in the case of Forsyth Partners Global Distributors Limited, Forsyth Partners Group Holdings Limited and Forsyth Partners (Middle East) Limited, (CFI 005-2007,CFI 006-2007, CFI 007-2007) where he had to decide as to the applicable law relating to preferential debts.  The DIFC Insolvency Law provides for Regulations to be issued providing for the order of preferential debts, but no such Regulations had yet been issued.  The Liquidators invited the Court instead to apply either UAE Law or English Law.  The learned Judge declined to do so, on the grounds that failure on the part of DIFCA to establish which debts were preferential did not mean that UAE Law or English Law applied in default of an express choice of law.  Accordingly, he concluded that, since the legislation intended to establish a regime for preferential debts under DIFC law but the list of preferential debts had not yet been promulgated, he was not supportive of the idea of applying another legal regime relating to preferential debts.

69. Likewise, since the DIFC Employment Law makes provision for Regulations to be issued to provide rights for claims of unfair dismissal, and in the absence of such a Regulation, I consider that the Appellant cannot contract out of this DIFC Law.

70. DCJ Colman was correct to rule that any introduction of implied terms such as the duty of good faith, confidentiality, fair dealing and reasonableness, so as to justify the claim of unfair dismissal, would be problematic as such terms are difficult to define and uncertain in terms of application, and that, if any such principle of unfair dismissal is to be introduced, it should therefore be by legislation and not by judicial innovation.

71. I therefore agree with and affirm DCJ Colman’s finding on the issue of unfair dismissal.

Discrimination

72. As explained in paragraphs 8 to 25 of this judgment, the Appellant was suspended as a result of a report produced by Mr Buhannad on HAH and ML, followed by termination on 31 January 2012 as a result on the outcome of the investigation held by EY. I will set out a brief recapitulation of the relevant paragraphs above for ease of reference.

73. The DIFC Audit Committee after the investigation, found that:

(1)   HAH and ML took 25 days matching leave in the previous 12 months;

(2)   salary increases for HAH and promotions recommended by ML were not carried out impartially by ML because they exceeded what was given to others in the DIFCA; and

(3)  ML shared with HAH business-related matters outside her scope of work including high level matters involving the CEO.

 74. On 11 October 2011, the DIFCA Audit Committee recommended that both HAH and ML be suspended from work and that a senior executive should interview both of them and give them two options; (1) “both to resign peacefully” or (2) both “be subject to a special investigation to look into the matter and face consequences up to termination.

75. The EY report, at paragraph 3.3.1 indicated that nine days after she recommended Events to Remember for the IBA reception, the same company provided catering and event set-up services for her wedding.

76. Paragraph 5.1.3 of the report sets out a number of facts which EY suggest may indicate that over time the relationship between ML and HAH, “may have ceased to be an arms-length business relationship,” although there was no identifiable watershed date when this occurred. These events included ML approving the largest pay raise in the Business Development Department in September 2010 and May 2011 for HAH; in the year July 2010 – July 2011 HAH’s and ML’s vacation days overlapped for a total of 39 days; ML’s strong support for HAH in the face of complaints against her by employees and finally the coincidence of HAH and ML’s overseas business trips in April-July 2011.

77. The report also identified various instances of HAH’s unpopularity with the staff of her department, starting with complaints of the employees in August 2010 and examples of other staff members being antagonized by her methods of addressing them as well as  comments of staff as to the detrimental affect her return would have on staff morale.

78. The Respondent did not terminate HAH’s employment or discriminate against her “because of her marital status” within the meaning of Article 56(2) of the unamended Employment Law. The Respondent was simply exercising its contractual right to terminate HAH based on the outcome of the investigation which was held by the Audit Committee and the EY report, as was stated in a message from DIFCA’s COO Nabil Ramadhan:

“Based on the outcome of the investigation, the DIFC Authority no longer wishes to continue this employment relationship and therefore terminates your employment in accordance with the Employment Law and the Employment Contract.”

79. Furthermore, there is no entitlement under DIFC Law to statutory damages for breach of Article 56 of the unamended Employment Law. I accept the Respondent’s submissions that a claim for discrimination has not been established on the facts and that there is no breach of the discrimination provisions in the unamended Employment Law. Nor is there any entitlement to damages, statutory or otherwise, and there is no authority under DIFC law principles that offers a statutory right to damages arising from a breach of the DIFC Employment Law.

80. I therefore agree with and affirm DCJ Colman’s finding on the issue of discrimination.

The Implied Terms in Contracts and Unfair Terms Law

81. As concluded above, the Employment Law has a regulatory content and is the only law that governs the employee who works for any entity having a place of business in the DIFC. There is therefore no basis or reason to adopt any other law to determine the rights of the Appellant and contractual relationship with the Respondent when it is regulated by the DIFC Employment Law.

82. Furthermore, the Appellant was dismissed lawfully and in accordance with the terms of her contract and the DIFC Employment Law. The Respondent made payment in lieu of the notice period, resulting in no loss suffered by the Appellant.

83. There is no authority under DIFC Law principles that offer a statutory right to damages arising from a breach of the DIFC Employment Law.

84. DCJ Colman was right to rule that the Appellant cannot deploy Article 38 of the Implied Terms in Contracts and Unfair Terms Law in order to mount a claim for unfair or wrongful dismissal because, under the terms of HAH’s contract with the Respondent, either the Respondent or the Appellant would be entitled to terminate by giving one month’s notice. If the Appellant was terminated without notice, the Respondent would be under a secondary obligation to compensate the Appellant for lack of notice, but the Appellant was paid an amount well in excess of one month’s salary.

85. I therefore agree with and affirm DCJ Colman’s finding on the issue of implied terms in contracts and unfair terms law.

Gratuity

86. Article 60(5) of the unamended Employment Law provides:

“Where an employer has established a pension scheme for his employees, he shall provide in writing to the employee, prior to the employee commencing work, the option to choose between participating in the pension scheme or receiving the end of service gratuity.”

This article, which provides a mechanism for employees to choose between their employer’s pension scheme or the gratuity provided by their employer under DIFC law, confirms that the intention of the legislature was such that employees have to choose between one scheme or the other, but cannot be entitled to receive both.

87. Article (2) of Federal Law No. 7 of 1999 as amended by Federal Law No. 7 of 2007  in respect of the Federal Authority for Pensions and Social Security states that:

“Without prejudice to any laws or regulations in the State, The employer in the private sector must –enrolled – Subscribes the UAE national employees to the Federal Authority for Pensions and Social Security pension scheme”

88. Article (4) of the Federal Law No. 6 of 1999 in respect to the establishment of  the Federal Authority for Pensions and Social Security provides that:

“The Federal Authority for Pensions and Social Security shall apply the Federal pension scheme to the Civilian employees who registered in to scheme”

89. It is clear that the UAE Government has established a compulsory pension scheme for UAE National employees which is run by the Federal Authority for Pensions and Social Security. There has been unchallenged evidence put before this Court by both the Appellant and Respondent, acknowledging that DIFCA has an account for UAE employees in The Federal Authority for Pensions and Social Security. Such account is to be held in the name of DIFCA, and will accrue to the employee until termination of employment but before and/or death or retirement.

90. Furthermore, the application in writing that enrolled HAH in the Federal Pension scheme can be established as the “writing” necessary for her to be opted into the Federal Pension scheme, satisfying Article 60(5) of the unamended Employment Law.

91. However, the legislature’s intent with regard to the Federal Pension and end of service gratuity afforded to employees in the DIFC was for an employee to opt in to only one scheme. This intent is manifest in Article 61 of the amended Employment Law, Article 60(5) of the unamended Employment Law and Article (2) of the Federal Law No. 7 of 1999 as amended by Federal Law No. 7 of 2007 in respect of the Federal Authority for Pensions and Social Security.

92. Accordingly, the Appellant is not entitled to receive an end of service gratuity because she was enrolled in the UAE pension scheme in accordance with Federal Law No. 7 of 1999 as amended by Federal Law No. 7 of 2007, and Article 60(5) of the unamended Employment Law.

93. However, the Appellant can claim an end of service gratuity from the Federal Authority for Pensions and Social Security according to the relevant Articles (38, 39, 40 and 41) of the Federal Law No. 7 of 1999 as amended by Federal Law No. 7 of 2007 and Article 60(5) of the unamended Employment Law.

94. For all of the above reasons, the Appellant’s Appeal and all claims for relief are dismissed. .

95. The costs of this appeal are granted to the Respondent as the successful party in these proceedings.  Such costs are to be assessed by the Registrar on the standard basis, if not agreed.

JUSTICE ROGER GILES:

96. The facts are outlined in the reasons of HE Justice Omar Al Muhairi, which I have had the advantage of reading in draft.  Drawing upon those reasons, I can explain without undue repetition my agreement that the appeal should be dismissed with costs.

97. Putting aside the BlackBerry, the Appellant’s position on appeal may be summarised as follows.

1.   The Respondent breached the employment agreement during its currency in the process it followed leading to termination of the Appellant’s employment.  The Appellant was entitled to damages for the breaches.

2.   The termination was invalid –

(a) because the exercise of the right to terminate the employment was fettered by implied terms as to mutual trust and confidence, good faith and fair dealing, cooperation and acting reasonably, and was contrary to those terms; and possibly also

(b)  because the termination was discriminatory against the Appellant contrary to Article 56 of the (unamended) Employment Law 2005, DIFC Law No 4 of 2005 (“the Employment Law”).

The Appellant was entitled to damages for wrongful dismissal.

98. Even if not invalidating the termination, the discrimination itself entitled the Appellant to damages.

99. In any event, the Appellant was entitled to a gratuity payment following termination pursuant to Article 60 of the Employment Law.

Breach of the employment agreement

100. The employment agreement provided in cl 1 that the Appellant was employed at a particular entry grade and that her employment was –

“…subject to the terms of [the Respondent’s] Employee Policies and Procedures in effect from time to time, which are hereby incorporated by reference as an integral part of this Agreement, related to grading…”

101. It appears to have been accepted by the Respondent that, through this provision, the full panoply of the Respondent’s Employee Policies and Procedures (“the Policies”), not just those concerned with grading, was incorporated into the employment agreement.  That may not be so, but I proceed accordingly.

102. The Policies included a disciplinary procedure, involving investigation and a progression of verbal and written warnings, a dismissal enquiry and (depending on the outcome) a sanction, and an appeal to a Grievance Committee.  It was made clear that, depending on the nature of the disciplinary matter, steps in the progression could be passed over.

103. The Appellant submitted that the trial judge failed to deal with her case that there had been breaches in failure to follow the disciplinary procedure.  The elements of the disciplinary procedure on which she relied were set out in her claim –

“13.1. “Disciplinary process must be initiated for transgressions which have been observed or brought to the attention of the management within the 30 calendar days period”.  (Progressive Discipline para 4.0)

13.2. “Human Capital Representative will be involved at all stages of the Disciplinary Process”.  (Progressive Discipline para 4.0)

13.3 “Any allegation or complaint about an employee’s conduct must be investigated as soon as reasonably possible before disciplinary action is taken”.  (Progressive Discipline para 4.0)

13.4 An employee may be suspended for a maximum of one month so that facts and evidence may be obtained (Progressive Discipline para 4.0).  It is implicit within this that the allegations already exist.

13.5 “Employees may be placed on an investigation leave (for a maximum period of one month) pending the determination of further disciplinary action, if any.”

13.6 “Employee will be informed of the disciplinary hearing at least five working days before it is to take place, Disciplinary hearing will be held within 10 working days of having notified the employee of the pending disciplinary procedure.”

13.7 “The employee has the right to call on his/her witnesses and to examine adverse witnesses at the hearing.”

13.8 “The Disciplinary enquiry will be conducted and chaired by the Chief of Human Capital and the Head of the Department of the employee.”

13.9 “An employee can appeal the decision from the Disciplinary Enquiry to the Grievance Committee within three working days.”

104. In fact, his Honour said at [110] –

“In view of my conclusion that the Defendant was entitled to terminate the contract of employment by giving notice to that effect on 31 January 2012, it is unnecessary to consider whether the Defendant failed to comply with the requirements of the Employee Policies and Procedures.  The Defendant did not purport to dismiss the Claimant for cause whereby it could be argued that the dismissal was initiated by an omission to comply with disciplinary procedures.  On the contrary, the Defendant simply availed itself of the entitlement to terminate the contract under clause 8.  It is therefore unnecessary to investigate the Defendant’s compliance with the Employee Policies and Procedures.  There is no concept of constructive dismissal under DIFC Law”.

105. The case was dealt with: for reasons he gave, his Honour considered that the disciplinary procedure did not apply.

106. Prior to the Appellant’s termination there was a process of investigation, as recounted in the reasons of Justice Omar Al Muhairi.  If it applied, however, the disciplinary procedure may not have been fully followed.

107. Nonetheless, notwithstanding apparent partial following of the procedure, the disciplinary procedure did not apply.  Any wrong belief of some within the Respondent at the time cannot govern the correct position.  In my opinion, the trial judge was correct.

108. The Respondent was not “administering…discipline for unsatisfactory conduct and performance in the workplace” (cl 1.0 of the progressive discipline section of the Policies, stating its purpose).  It was deciding whether or not to exercise a contractual right to terminate the Appellant’s employment.  This was a right which, subject to the Appellant’s contentions concerning implied terms (which as later appears I do not accept), it could exercise without any investigation or for a reason or reasons unconnected with satisfaction with the Appellant’s performance.  The investigation culminating in the EY report came to no specific conclusions, and the decision as expressed in the termination letter was not that the termination was because of unsatisfactory conduct but that the Respondent “does not wish to continue this employment relationship”.  Clause 8 entitled the Respondent to give effect to this wish.

109. It may be added that, had there been breach, a further question would be whether loss leading to damages other than nominal damages would have been suffered.  That does not arise.

Invalid termination because of implied terms

110. The employment agreement provided in cl 8 –

Term and Termination

The Employee’s employment shall be for an unlimited period and will remain in force until one Party delivers to the other Party one (1) month’s written notice of termination.”

111. The Respondent gave written notice of termination, in fact paying the Appellant for a three month notice period which she was not required to serve.

112. The Appellant cast a wide net, contending that terms fettering the right to terminate were to be implied in the employment agreement to the effect –

(a)   that the parties would not conduct themselves in a manner likely to destroy or seriously damage the relationship of trust and confidence between employer and employee;

(b)   that the parties would act in good faith and deal fairly in their interactions under the employment agreement;

(c)   that the parties would act reasonably in their interactions under the employment agreement; and

(d)   that the parties would co-operate in the performance of their obligations under the employment agreement.

113. The last of these implied terms does not seem to have been raised at trial.

114. The trial judge adverted to the difficulties of definition and uncertain application of implied terms of this nature.  One aspect of this is that the present question is one of termination of employment, not performance of employment obligations.  Thus, while an implied term of mutual trust and confidence has been recognised in England as an incident of the employment relationship, in Johnson v Unisys Ltd [2001] UKHL 13; (2001) 2 All ER 801 the House of Lords held that it does not apply to the manner in which an employer exercises a contractual right of termination; see also Eastwood v Magnox Electric PLC [2004] UKHL 35; (2004) 3 All ER 991 referring to “the Johnson exclusion area” and Edwards v Chesterfield Royal Hospital NHS Foundation Trust [2011] UKSC 58; (2012) 2 AC 22.

115. Even as an incident of the employment relationship, an implied term must be consistent with, and yields to, the express terms of the employment contract.  This was one reason for holding back from judicial implication of a term constraining the exercise of a power of dismissal without cause: see Johnson v Unisys Ltd at [47] per Lord Hoffmann, with whom Lords Bingham and Millett agreed.  An unfair dismissal scheme may be superimposed by legislation, as is the case in England.  The Employment Law comprehensively regulated contracts of employment in the DIFC, but it had not been thought appropriate to regulate a contractual power of termination by notions of mutual trust and confidence, good faith or reasonableness.  There is no legislative basis in the DIFC for fettering such a power; rather, the indication is that it should not be fettered.

116. The Appellant submitted that we should take up the views of Lord Steyn in Johnson v Unisys Ltd and Lady Hale in Edwards v Chesterfield Royal Hospital NHS Foundation Trust, the former of whom at least was prepared to reconcile the implied term as to mutual trust and confidence with a contractual right of termination.  That has not gained acceptance, and Lord Hoffmann noted that in Wallace v United Grain Growers Ltd (1997) 152 DLR (4th) 1 at [75] – [76] the majority declined to imply a requirement of good faith reasons for dismissal.  In the Supreme Court of Canada this was seen as contravening the long recognised mutual right of both employers and employees to terminate an employment contract at any time provided that there were no express provisions to the contrary.

117. Clause 8 of the employment agreement has been set out above.  It was not a right of termination during a fixed period of employment.  It expressed the defining act of the extent of the employment, and was mutual.  It enables the employee to bring the employment to an end just as much as the employer.  That is the mutual right to which the Supreme Court of Canada referred, and is something both parties to the employment agreement would wish to be free to do as the agreed means of putting a limit on the open-ended period of employment.

118. There is no warrant for the courts to create the fetter of an implied term to the effect that in the exercise of the right mutual trust and confidence will not be damaged, and there is no room for such a term – termination will necessarily bring the relationship of mutual trust and confidence to an end.  As was said by Lord Hoffmann in Johnson v Unisys Ltd at [46], the implied term of mutual trust and confidence –

“…is concerned with preserving the continuing relationship which should subsist between employer and employee.  So it does not seem altogether appropriate for use in connection with the way a relationship is terminated”.

119. Nor, consistently with the express right to terminate, is there room for implied terms as to good faith or reasonableness (let alone for the operation of the term as to co-operation implied by Article 58 of the Contract Law 2004, DIFC Law No 6 of 2004 (“the Contract Law”) – termination is neither co-operative nor in the performance of a party’s obligations under the contract).  To repeat, the purpose of cl 8 was to enable either party to put a limit on the open-ended period of employment.  Either could do so for reasons unconnected with satisfaction with the other’s performance, or for selfish reasons.  The Appellant could terminate the employment simply because she no longer wanted to work for the Respondent, or at all; the Respondent could terminate the employment simply because it no longer wanted the Appellant to work for it.  If either the Appellant or the Respondent had particular reasons for terminating the employment, they could keep those reasons to themselves; they were no concern of the other party.

120. In my opinion, therefore, the trial judge was correct in declining to find the fetter of the implied terms on which the Appellant relied.

121. I do not overlook the Appellant’s reliance on Articles 56 and 57 of the Contract Law referring to implied contractual obligations, and Article 38 of the Implied Terms in Contracts and Unfair Terms Law, DIFC Law No 6 of 2005.  The reliance is misplaced.  Articles 56 and 57 envisage that implied obligations can arise, but say nothing about the implication and application of terms in particular contracts and particular situations.  Article 38 imposes a test of reasonableness on a contractual term in standard terms of business regulating the rendering of contractual performance, but cl 8 is not such a clause and in any event it is not unreasonable.

Discrimination

122. It was not clear to me whether the Appellant contended that discrimination would invalidate the termination.  In the associated appeal Marwan Lutfi v Dubai International Financial Centre Authority that was not said; Mr Wynne of Counsel, who appeared for the appellant in both appeals, acknowledged that a discriminatory termination would be effective and confined his case to one of damages for breach of statutory duty.  I express no view on whether, if there were discrimination, it would invalidate the termination of the Appellant’s employment, or on whether it would otherwise entitle the Appellant to damages.  For the reasons which follow, the trial judge’s finding that there was no discrimination should stand.

123. Article 56 of the Employment Law provided –

“56. Discrimination

(1)  Discrimination for the purposes of this Article means a distinction based on personal characteristics relating to sex, marital status, race, nationality or religion, mental or physical disability that has the effect of imposing burdens, obligations or disadvantages on a person not imposed upon other persons or that withholds or limits access to opportunities, benefits and advantages available to other persons under this law.  In the case of mental or physical disability, such condition shall not constitute a basis for a discrimination claim unless it is of a long-term nature, generally no less than twelve (12) consecutive months in duration.

(2)  An employer shall not:

(a)  refuse to employ or refuse to continue to employ a person; or

(b)  discriminate against a person regarding employment or any term or condition of employment, because of that person’s sex, marital status, race, nationality, religion, mental or physical disability, unless there is a bona fide occupational requirement.”

124. The trial judge noted the submission that discrimination in substance meant that the employee was treated less favourably than others would be treated in the same circumstances on one of the prohibited grounds.  After detailed consideration of the course of events, his Honour expressed his conclusion –

“98.  The final decision to terminate her employment on 31 January 2012 was, in my judgement, the consequence of the Audit Committee’s belief that past conflicts of interest might have occurred and that it was undesirable that she should go on working for DIFCA in any capacity for that reason.  Putting it broadly, the Audit Committee did not feel comfortable with her continuing to work for DIFCA in any capacity.  Her marital status was not a material consideration.  The fact that she and ML had married merely flagged up to the Audit Committee what it suspected, that their pre-existing relationship might have been such as to give rise to conflicts of interest to the prejudice of the DIFCA.  The Defendant would, in my view, probably have acted in an exactly similar way if the Claimant and ML had never formally held a Melcha.

99.   Accordingly, I conclude that the Claimant has failed to establish that in terminating her employment the Defendant was discriminating against her because of or on the grounds of her marital status.  It was simply exercising its contractual right to terminate the contract by giving the requisite notice or to pay her salary in lieu of notice, even if its reason for doing so might have been misconceived.

100. The question of whether there was a bona fide occupational requirement for termination therefore does not arise.  That issue can be triggered only of it is first established that the employer’s conduct has been discriminatory.”

125. The Appellant’s submissions ranged widely.  They came down to three contentions.

126. First, it was contended that the trial judge erred in law in that, although citing the relevant passage, he failed to adhere to the observation in King v The Great Britain China Centre (1991) IRLR 513 at [38] that discrimination is usually a matter of inference and –

“(4)  Though there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination.  In such circumstances the Tribunal will look to the employer for an explanation.  If no explanation is then put forward or if the Tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the Tribunal to infer that the discrimination was on racial grounds.  This is not a matter of law but, as May LJ put it in Noone [1988] lRLR 195, ‘almost common sense’.

(5)  It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof.  At the conclusion of all the evidence the Tribunal should make findings as to the primary facts and draw such inferences as they consider proper from those facts.  They should then reach a conclusion on the balance of probabilities, bearing in mind both the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case.”

127. With particular reference to (4) in this passage, it was said that there were grounds for inferring discrimination because of marital status, that there was no evidence from the Audit Committee explaining the decision to terminate the Appellant’s employment, and that the trial judge should therefore have found that the termination had been discriminatory.

128. I do not accept the submission.  A finding as to the place of the Appellant’s marital status in the decision to terminate her employment did not require the process of an inference which had to be rebutted by evidence from the Respondent.  King v The Great Britain China Centre says as much at (5).  Inferences are drawn from the whole of the evidence, with a conclusion being reached on the balance of probabilities.  That there was no evidence from the Audit Committee was relevant, but in the end it was for the trial judge to come to a finding on the whole of the evidence having that in mind.  I am not persuaded that there was any error in this respect.

129. Secondly, it was contended that the trial judge had erred in law in failing to recognise that it was only necessary that marital status have “a significant influence on the outcome”: Nagarajan v London Regional Transport (1999) IRLR 572 at [19].  Although his Honour cited the relevant passage from this case, it was said, he departed from it in coming to his conclusion.  The first departure was when, in outlining the Appellant’s arguments, his Honour attributed to her that “the predominate cause of the termination of her employment or at least an equally potent cause was her marriage to ML” and that the marriage was “the overriding motive for the termination”.  The second departure was in expressing the conclusion that the Appellant “has failed to establish that in terminating her employment [the Respondent] was discriminating against her because of or on grounds of her marital status”, see [99] set out above.

130. The submissions at this point approached the surreal.  The outline of the Appellant’s arguments cannot demonstrate application of too strict a test of causation.  No doubt the Appellant’s case was put strongly, as one of a dominating influence of her marital status, but that did not mean that either the Appellant or the trial judge overlooked the correct test.  In any event, the trial judge clearly rejected even a significant influence of the Appellant’s marital status.  He found that the Audit Committee’s reason for the final decision to terminate her employment was that past conflicts of interest may have occurred and it was undesirable that she go on working for the DIFCA, and specifically that “Her marital status was not a material consideration”: at [98] set out above.  I do not accept the suggested misapplication of causation principles.

131. Thirdly, it was contended that the trial judge’s finding was perverse.  The principal ground for the submission appeared to be that AA had accepted in cross examination that if the Appellant and ML did not get married, they would both have remained in their positions.  The Appellant otherwise sought to rehearse the evidence in detail with a view to displacing the trial judge’s finding.  This included suggesting that AA’s initial view that either the Appellant or ML would need to leave the DIFCA if they were to marry was subconsciously motivated by animosity because of “an issue about” the marriage, and that that view began the process which ended in the termination and was a sufficient basis for finding discrimination.

132. The reasons of the trial judge contain an account in some respects more full than the outline in the reasons of H.E. Justice Omar Al Muhairi.  I have considered all the material to which we were referred.  I am quite unpersuaded that the trial judge was in error in the finding he made.  It should be recalled that the concern in the Audit Committee’s decision-making came from possible pre-marriage conflict of interest, and that the possible conflict of interest involved a personal relationship but not one of marital status.  The evidence of AA on which the Appellant relied was of little if any significance.  His evidence overall was that the marriage “triggered the situation”.  Events had moved on, and he was not one of the decision-makers; the suggestion of initiating subconscious motivation is rather extreme, and in my view not warranted on the evidence, but in any event any causative influence was long spent when the employment was terminated.

Gratuity

133. Article 60 of the Employment Law provided for a gratuity payment at the termination of an employee’s employment.  The trial judge’s disposal of the Appellant’s claim to the gratuity was –

“106.     The Claimant being a UAE national, the Defendant had enrolled her in the UAE pension scheme in accordance with Federal Law No. 7 of 1999 and Article 61 of the Employment Law.

Accordingly, by reason of Article 61 she was not eligible to receive an end of service gratuity.”

134. Article 61 to which his Honour referred, however, was in the Employment Law as amended sometime after the termination of the Appellant’s employment.  In the amended Law the provision for a gratuity was in Article 62, and Article 61 read –

“61 Pension for UAE and GCC Nationals.

Where an employee is a UAE or GCC national, the employer shall enrol him in the employee’s UAE pension scheme in accordance with applicable Federal legislation and he shall not be eligible to receive end of service gratuity as prescribed in Article 62 on termination of employment”.

135. There was a slip in the trial judge’s appreciation of the amendment, and the Appellant is correct in her submission that his Honour erred in his disposal of the claim.  To the extent to which the Respondent submitted that Article 61 had retrospective operation because Schedule 1 to each of the Employment Law and the amended Employment Law, “Rules of Interpretation”, states that a statutory provision includes a reference to the statutory provision as amended or re-enacted from time to time, the submission should not be accepted.

136. It is therefore necessary to consider the matter afresh.

137. Article 60 (1) of the Employment Law stated that the entitlement to a gratuity was subject to Article 60 (5) and (6), which provided –

“(5) Where an employer has established a pension scheme for his employees, he shall provide in writing to the employee, prior to the employee commencing work, the option to choose between participating in the pension scheme or receiving the end of service gratuity payment.

(6) Where an employee has received a document under Article 60 (5), he shall expressly state his choice in writing and submit it to the employer”.

138. A Federal pension scheme was established by Federal Law No 7 of 1999 (Pensions and Social Security).  All UAE nationals must be enrolled.  This is the UAE pension scheme to which Article 61 of the amended Employment Law refers.

139. These sub-Articles were retained, with minor amendment, in the subsequent Article 62.  The Respondent submitted that, quite apart from the later Article 61, Articles 60 (5) and (6) of the Employment Law had the effect that the Appellant was not entitled to a gratuity payment, and that the later Article 61 was no more than confirmatory of the pre-existing position.  It submitted that Article 60 (5) provided a mechanism for an employee to choose between his employer’s pension scheme and a gratuity under the Employment Law, it being irrational that an employee would be entitled to receive both, and that the mechanism extended to and operated in the case of enrolment in the Federal pension scheme.  The Appellant must have been enrolled upon commencing employment with the Respondent, and there was evidence that “pension” contributions were deducted from her salary.

140. Although Article 60 did not specifically so provide, choosing to participate in the employer’s pension scheme clearly disentitled the employee to a gratuity: there was no point in providing for a choice unless there could be an effective choice.  I do not think that the choice had to be in the precise manner stated in Article 60 (5) and (6) – why should an employee not make and convey an informed choice although the option is given or the choice is made orally, or make it the day after commencing employment?  Failure to follow the precise mechanism in my view would not vitiate a choice.

141. In my opinion the words “Where an employer has established a pension scheme for his employees…” are wide enough to encompass an employer who takes up the Federal pension scheme and enrols his employees in it.  It is not uncommon for an employer to make use of an already existing scheme.  The Respondent must have made a choice, although so far as the evidence went the precise mechanism was not followed, and it was a choice notwithstanding that as a UAE national her enrolment in the Federal pension scheme was a matter of course.

142. The drafting is not ideal, but the language can be given a sensible operation which avoids double entitlement.  In my opinion, the trial judge was correct in holding that the Appellant is not entitled to the gratuity.  It may be added that where Article 61 of the amended Employment Law reflects the compulsory enrolment in the Federal pension scheme, Article 62 retains equivalents to the former sub-Articles (5) and (6), and enrolment in the Federal pension scheme precludes a gratuity, the choice for which the later Article 62 (5) and (6) provides can only work if the Federal pension scheme is a pension scheme the subject of choice.

Conclusion

143. As earlier indicated, I agree that the appeal should be dismissed with costs.

CHIEF JUSTICE MICHAEL HWANG:

144. I agree with the conclusions of my brother judges on the outcome of this appeal.

Issued by:

Natasha Bakirci

Assistant Registrar

Date of Issue: 26 November 2014

At: 4pm