Claim No. SCT 019/2015
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Ruler of Dubai
IN THE SMALL CLAIMS TRIBUNAL
BEFORE H.E. JUSTICE OMAR AL MUHAIRI
Claimant/Defendant in counterclaim
FARGO GROUP DIFC
Defendant/Claimant in counterclaim
Hearing:12 October 2015
Counterclaim:13 October 2015
Judgment:16 November 2015
JUDGMENT OF H.E. JUSTICE OMAR AL MUHAIRI
UPON hearing the Claimant and the Defendant;
AND UPON reading the submissions and evidence filed and recorded on the Court file;
IT IS ORDERED THAT:
1. The Defendant shall pay the Claimant the sum of AED 53,841.25.
2. The Defendant’s counterclaim is partially dismissed.
3. Each party shall bear their own costs.
1. The Claimant is Fatima (“the Claimant”), an employee of Fargo Group DIFC, a restaurant registered in the DIFC.
2. The Defendant is Fargo Group DIFC, (“the Defendant”), restaurant registered in the DIFC.
3. The Claimant entered into an Employment Contract (“the contract”) with the Defendant on 4 September 2013 but the effective date on the contract was on 22 September 2013. The Claimant worked in a General Manager position with a basic salary of AED 15,000, housing allowance of AED 3,500 and transport allowance of AED 1,500. The Claimant’s basic salary then was raised to AED 16,500 and the allowances were raised to AED 10,000 as per the salary certificate dated 8 January 2015.
4. On 23 June 2015, the Claimant resigned and the Defendant accepted his resignation by letter. As per the contract signed between the parties the Claimant served the 60 day notice period. Accordingly, the last day of employment was on 21 August 2015.
5. The Claimant alleged that the Defendant has failed and refused after 14 days as per Article 18.1 of the DIFC Employment Law to cancel his visa and settle his entitlements such as salary for the period of August, end of service benefits, accrued annual leave, service charge, tips and unpaid public holiday pursuant to the contract and the law despite the requests made.
6. The Defendant filed his defence admitting that the Claimant was not paid his August salary and his entitlements in regards to end of service, accrued annual leave, unpaid public holidays and that the Defendant did not yet cancel the Claimant’s visa. In support of this, the Defendant alleges that he was not in breach of the 14 day deadline as per Article 18.1 of the DIFC Employment Law.
7. The Defendant also alleges that the Claimant was in breach of his contractual obligations in respect of the non-compete provisions and in respect of his unlawful dissemination of confidential information owned by the Defendant, to a direct competitor.
8. The parties failed to settle at the consultation hearing before Judicial Officer Nassir Al Nasser. Therefore, on 12 October 2015, both the Claimant and the Defendant’s representative appeared before me for a hearing.
9. The Claimant resigned on 23 June 2015. His resignation was accepted by the Defendant with the condition of serving a 60 day notice as per the contract between the parties. As such, the Claimant served the notice period and the last day of his employment ended on 21 August 2015.
10. The Defendant argues that the Claimant was in breach of his contractual obligations in respect to the non-compete provisions. Furthermore, the Defendant also argues that the Claimant was also in breach of the UAE Federal Law No. 5 of 1985 (the “UAE Civil Code”) and of the UAE Federal Law No. 3 of 1987 (the “Penal Code”).
11. I will discuss the applicability of the UAE Federal Law in the DIFC. Pursuant to the case law from the DIFC Court of Appeal, and in relation to the applicability of Federal Laws in the DIFC namely CA 003/2015 Marwan Lutfi v The Dubai International Financial Centre Authority, page 16 of the Judgment provides that:
“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 right of the Appellant and his contractual relationship with the Respondent is regulated by the DIFC Employment Law.”
Since the Defendant is a company registered in the DIFC and the employment relationship under the ambit of the DIFC Employment Law, the UAE Federal Law is not applicable in the DIFC.
12. Moreover, whether the contract between the parties was terminated for cause as alleged by the Defendant or terminated by resignation from the Claimant, the allegation made by the Defendant that the Claimant was terminated for cause is insufficient as the Defendant only raised the allegation that the Claimant breached his contract after the case was filed. In reality, the Claimant submitted his letter of resignation on 23 June 2015 and the Defendant accepted the resignation by providing a settlement proposal to the Claimant at the end of the employment relationship. Therefore, I am satisfied that the Claimant terminated the contract by resignation on 23 June 2015.
13. For the facts mentioned above, I will discuss each item sought by the Claimant below.
End of Service Gratuity
14. Pursuant to Article 62(1), and (2)(a) of the DIFC Employment Law, it provides the following:
(a) Subject to Article 62(5), and (6), an employee who completes continuous employment of one (1) year or more is entitled to a gratuity payment at the termination of the employee’s employment.
(b) The gratuity payment shall be calculated as follows:
(c) Twenty one (21) days’ basic wage for each year of the first five (5) years of service.
15. Article 59(A) of the DIFC Employment Law provides that:
“An employer or an employee may terminate an employee’s employment for cause in circumstances where the conduct of one party warrants termination and where a reasonable employer or employee would have terminated the employment.”
16. The Claimant’s employment started with the Defendant on 22 September 2015 and ended on 21 August 2015 when he completed his notice period. Therefore, he is eligible to end of service gratuity calculated as follows:
a. AED 16,500/30 days = AED 550 per day * 21 days for the first year = AED 11,550.
b. AED 550 per day * 19.25 days for the 11 months = AED 10,587.5
c. AED 11,550 + AED 10,587.5 = AED 22,137.5
The Defendant argues that the Claimant was terminated for cause and that he is not entitled to end of service gratuity pursuant to Article 59A of the DIFC Employment Law. But as mentioned in paragraph 12 of this Judgment, I am satisfied that the termination was by resignation of the Claimant and not by cause as alleged by the Defendant.
17. The Defendant admits that he failed to pay the Claimant his salary from 1 August 2015 to 21 August 2015. Therefore, the Claimant is eligible to be paid for the days he worked as requested in the sum of AED 18,550.
Accrued Annual Leave
18. The Claimant argues that he is entitled to 49 days accrued annual leave and the Defendant in his submissions admits that the Claimant has the above mentioned days. Therefore, the Claimant is entitled to the sum of AED 43,283.3 calculated on the daily wage of the employee which is AED 883.33* 49 days, pursuant to Article 28(1) and (2) of the DIFC Employment Law which provides that
(1) “where an employee’s employment is terminated, the employer shall pay the employee an amount in lieu of vacation leave accrued not taken”.
(2) “Compensation in lieu of vacation leave shall be calculated using the employee’s daily wage applicable on the employee’s last day of employment.”
Unpaid Public Holiday, Credit Card tips and Third Quarter Service Charge
19. The Defendant confirms that the Claimant has two unpaid public holidays, credit card tips and service charges, but argues that these amounts are not due and owed to the Claimant. For the reasons mentioned in paragraph 12 and pursuant to Article 32(1), (2) and (3) of the DIFC Employment Law, the Claimant is entitled to the sum of AED 1,766.66 for the 2 unpaid public holidays. The Claimant is also entitled to the credit card tips in the sum of AED 90.72 and the third quarter service charge in the amount of AED 1,692.18.
20. At the hearing held on 12 October 2015, I permitted the Defendant to file a counterclaim. The Defendant filed a new claim, SCT 199/2015 as a counterclaim to the original claim SCT 193/2015. Thereafter, Judicial Officer Nassir Al Nasser issued an Order dated 20 October 2015 consolidating the above mentioned cases under the claim SCT 193/2015.
21. The Defendant alleges that following the receipt of the Claimant’s resignation letter and service notice, the Defendant became aware that the Claimant had materially breached his contractual obligations in respect of unlawful dissemination of confidential information owned by the Defendant, to a direct competitor. Therefore, the Defendant alleges that the breach entitled him to a counterclaim for damages.
22. The Defendant also alleges that the counterclaim was filed on the basis that the Defendant is entitled to recover the following from the Claimant:
(1) Visa fees of AED 2,175 which the Claimant admits that it is due and owing;
(2) School fees of AED 1,250 which the Claimant admits that it is due and owing;
(3) Cash advance of AED 30,000 which the Claimant admits that it is due and owing;
(4) An amount of AED 61,940 being other associated costs and damages incurred by the Defendant in relation to the Claimant’s contractual breaches;
(5) If the Claimant’s claim is successful in respect of his entitlement to end of service gratuity, the Defendant seeks a counterclaim of an amount equivalent to the end of service gratuity which may be awarded to the Defendant;
(6) If the Claimant’s claim for penalty is successful then the Defendant seeks, by way of counterclaim, an amount equivalent thereto by virtue of the Claimant’s contributory negligence to the delays incurred;
(7) Such further and alternative relief as the tribunal deems just and appropriate in the circumstances.
23. In response, the Claimant admits that the Defendant is entitled to the following sums as part of the Defendant’s counterclaim:
(1) Visa fees of AED 2,175;
(2) School fees of AED 1,250;
(3) Cash advance of AED 30,000
The Claimant denies the remainder of the relief claimed by the Defendant in paragraph 22 above.
24. In his counterclaim, the Defendant repeated the arguments made in its statement of Defence in the original claim without providing any further arguments and further evidence. However, the only difference between the defence in the original claim and the counterclaim is that the Defendant has now added the argument of negligence or contributory negligence and asserted that it has incurred costs and damages of AED 61,940.
25. Moreover, the Claimant admits that the Defendant is entitled to the sum of AED 33,425 for cash advance, visa fees and school expenses. Therefore, I am satisfied that the Defendant is entitled to the sum AED 33,425.
26. I will only deal with new allegations made in the counterclaim; the allegations that are repeated have already been dealt with above in the original claim.
27. The Defendant argues that the Claimant was in breach of clause 13 of the Contract signed between the parties, which provides that:
“All information or date which may be disclosed to him in connection with the duties entrusted on him. He will neither discuss nor disclose any of the information or material relating to the company, and/or any of its affiliates or any of its customers with a third party without prior written permission.”
“That prior to the termination of his employment … he will return all manuals, materials and other documents supplied to the employee in connection with the duties entrusted on him.”
“That the obligation set out in this Article survive the expiry or termination of this contract. Any breach of this provision by the employee will constitute a material breach of this contract and constitute grounds for immediate termination and for further legal action…”
Although the Defendant submitted the email communications made by the Claimant to a direct competitor dated 1 July 2015 and 8 July 2015, he failed to provide the contents sent and it is unknown whether the attached documents in the email were in fact the Defendant’s information. Therefore, the evidence provided was not sufficient to prove that the Claimant breached the Contract.
28. Additionally, the Defendant only found out about such a breach or raised a claim of such a breach after the contract between the parties was terminated. Prior to the Claim the Defendant did not raise any of the allegations made, in fact the Defendant provided the Claimant with a settlement agreement. Therefore, I am satisfied that the claim in relation to breach of contract shall be dismissed.
29. The Defendant also referred to the UAE Federal Law which, as discussed in paragraph 11, is not applicable in the DIFC.
Costs and Damages
30. The Defendant claimed the amount of AED 61,940 for costs and damages incurred as a result of the Claimant’s alleged breaches of the terms of the employment contract. However, the Claimant argued that the Defendant failed to provide any particulars to explain how the amount of AED 61,940 has been calculated and the Defendant has failed to provide any particulars to explain, or evidence to establish, how the alleged breaches of the contract by the Claimant caused any such costs and damages. As such, I am not satisfied that the Defendant is entitled to the claimed amount of AED 61,940 as the Defendant failed to provide any sufficient evidence of the costs and damages incurred.
31. For the reasons stated above, I dismiss the counterclaim filed by the Defendant partially. The Defendant is only entitled to the sum of AED 33,425 admitted by the Claimant.
32. The Claimant argued that he is entitled to a penalty fee pursuant to Article 18.1 of the DIFC Employment Law which provides that:
“An employer shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.”
However, the Defendant argues that there was an on-going dispute between the parties when the contract was terminated, and for such reason the parties did not settle the matter. In fact, the Defendant provided the Claimant with a settlement agreement which was rejected by him. Therefore, I am satisfied that there was a dispute between the parties in regards to the end of service sums when the employment was terminated, and as such the Claimant is not entitled to the penalty fee pursuant to Article 18.1 of the DIFC Employment Law.
33. For the reasons mentioned above, the Claimant is entitled to the sum of AED 87,266.25 and the Defendant is entitled to the sum of AED 33,425 admitted by the Claimant in the counterclaim. After calculating the difference, the Defendant shall pay the Claimant the sum of AED 53,841.25.
Nassir Al Nasser
Date of issue: 16 November 2015
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