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Gerda v The Gerardo [2016] DIFC SCT 062

Gerda v The Gerardo [2016] DIFC SCT 062

June 30, 2016

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Claim No. XXXX 

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 SCT JUDGE NATASHA BAKIRCI

BETWEEN

GERDA 

   Claimant

and

THE GERARDO

                                     Defendant

 

Hearing:          27 June 2016

Judgment:       30 June 2016


JUDGMENT OF SCT JUDGE NATASHA BAKIRCI


UPON this claim having been called on 13 June 2016 and 20 June 2016 for Consultations before SCT Officer Mahika Hart;

UPON the parties not having reached settlement;

UPON a Hearing having been held before SCT Judge Natasha Bakirci on 27 June 2016, with the Claimant and the Defendant’s representatives, Mr Sam and Ms Pam attending;

AND UPON reading the documents submitted in the Court file;

IT IS HEREBY ORDERED THAT:

1.The Defendant shall pay the Claimant AED 13,840.16 as his end of service settlement. Such payment shall be made by 3 July 2016.

2. The Defendant shall cancel the Claimant’s visa immediately and without any further delay.

3. The Claimant shall not be required to pay any visa penalty fees accrued against his visa. All such penalties must be paid immediately by the Defendant.

4. The Defendant shall additionally reimburse the Claimant in the amount of AED 367.50 for his DIFC Courts fees.

THE REASONS

Parties

1.The Claimant, Gerda is a xxxx national who was employed as a “Steward” and subsequently a “Baker” by the Defendant.

2. The Defendant, The Gerardo, is a restaurant facility located in the DIFC.

Background

3. The Claimant began working for the Defendant on 25 December 2012 as per the employment contract signed by both parties on that same date. The Claimant began working as a “Steward” for AED 1,100 per month basic salary.

4. The Claimant continued to work for the Defendant and signed an employment contract renewal dated 1 January 2013 continuing on as a “Steward” at the basic monthly salary rate of AED 1,100.

5. The Court was not in receipt of a contract renewal for the period of January 2014 through early 2015.

6. The Claimant continued to work for the Defendant and signed an additional contract renewal on 1 March 2015 changing his position to “Baker” and increasing his basic monthly salary to AED 2200.

7. Relevant to the dispute at hand, the employment contract includes the following provisions:

a. Clause I provides for “Staff accommodation” for the Claimant.

b. Clause II provides for an AED 2,000 airline ticket upon completion of each 12 months of continuous service.

c. Clause X entitles the Claimant to End of Service Benefits of 21 days’ basic salary for each year of service for the first 5 years and 30 days’ basic salary for each year thereafter. The contract provides for some reductions in gratuity if resignation occurs before three years or before five years. The contract provides for forfeiture of the end of service benefits if dismissed or if the employee fails to report for duty for 7 days consecutively or abandons the place of work without notice.

d. Clause XI lists the DIFC Labor Law as governing the contract. Clause XI also includes provisions for deduction of certain fees and costs against the Claimant’s pay if he is to resign within one year of service. These fees are to include “visa, medical, flight & relocation related costs as well as other loans and liabilities held with the company.” Clause XI also provides for two months’ notice period from either party and provides that if the Claimant should resign prior to one year after issuance of a renewed permit, he will be liable for the visa renewal charges.

e. Clause XII further provides that the parties are required to give two months’ notice of termination of the employment relationship.

8. The Claimant’s visa was up for renewal in January 2016 but due to a series of events has not yet been renewed and is instead expired as of that date. The penalties on the expired visa, which had yet to be cancelled on the date of the hearing, are AED 3,695 as of 23 June 2016.

9. The Claimant was terminated from work on 24 March 2016 but the Defendant decided to rehire or allow the Claimant to continue working after this point, although a termination letter was signed.

10. On 10 May 2016, the Claimant resigned from his employment with the Defendant and did not serve his required two months’ notice period.

The Claim

11.On 17 May 2016 the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal seeking his (i) outstanding salary, (ii) outstanding housing and transport allowance, (iii) end of service gratuity, (iv) airline ticket, and (v) reimbursement for unused vacation days. The total amount of the claim was USD $3,400 (AED 12,495). The Claimant subsequently alleged that he was unable to cancel his visa due to the Defendant’s refusal to cooperate.

12. The Parties attended a Consultation on 13 June 2016 and an additional Consultation on 20 June 2016 but were unable to reach a settlement of the dispute.

13. On 27 June 2016 I heard the parties’ arguments at a Hearing. I directed the Defendant to provide further information concerning the Claimant’s employment and the Defendant provided their documents in defence on 30 June 2016.

The Claim

14. The Claimant did not submit any documentation with his original Claim Form. He provided a copy of his employment contract after the Consultations. He claims his final settlement in the amount appropriate based on his contract.

The Defence

15. The Defendant provided their version of a final settlement breakdown on 30 June 2016, alleging that they owe the Claimant AED 5060.15 for final settlement, including certain deductions. The Defendant further claimed that the Claimant should be required to cover the visa penalties associated with his visa, which amount to AED 3695 as of 23 June 2016.

16. Specifically, the Defendant claims that they are entitled to deduct from the Claimant’s final settlement AED 1600 for housing allowance paid in advance, AED 1000 for salary advance, and AED 2200 for the Claimant’s failure to serve his notice period.

Discussion

17. The DIFC Courts and the Small Claims Tribunal have jurisdiction over this case as it regards employment within the DIFC and the amount in question is less than AED 500,000.

18. The Claimant is clearly entitled to his final settlement for his over three years of work performed for the Defendant, as the Defendant has failed to prove otherwise. While the Defendant does claim that the Claimant failed to serve his notice period, they acknowledge that he did resign on 10 May 2016.

19. The final settlement is prescribed by the DIFC Law No. 4 of 2005, as amended by DIFC Law No. 3 of 2012 (the DIFC Employment Law) in conjunction with the relevant employment contract. This settlement will typically consist of any remaining pay including allowances, end of service gratuity, unpaid notice period, unused vacation days, unpaid travel benefits and any other amounts owed under the employment contract. The final settlement can sometimes include deductions for certain expenses required to be covered by the employee by law or by contract. I will take each of these items in turn to determine the final amount owed to the Claimant.

A. Outstanding Pay and Allowances

20. The Defendant concedes in their Final Settlement Calculation that the Claimant is owed salary for days worked between 21 April 2016 and 10 May 2016 in the amount of AED 1,466.67. They further concede that the Claimant is also owed housing and transportation allowance for this same time period in the amount of AED 1,066.67. Thus, the Defendant owes the Claimant AED 2,533.34 in outstanding pay and allowances for the period of 21 April 2016 until 10 May 2016. This is not in dispute based upon the Defendant’s submission and the Claimant’s statements during the Hearing.

B. End of Service Gratuity

21. According to Article 62 of the DIFC Employment Law, employees are entitled to receive gratuity payments upon completion of one year or more of continuous employment. Article 62 provides that the gratuity will be calculated based on 21 days’ basic wage for each of the first five years of service.

22. Clause X of the Claimant’s employment contract provides for the same gratuity payments as listed in the DIFC Employment Law, but also provides for some deductions based on time served. Clause X reduces the gratuity entitlement to 7 days per year of service if the Claimant resigns before completing three years of service. It further reduces the entitlement to 14 days per year of service in the event of resignation after three years but before completing five years of service.

23. It is important to note that Article 10 of the DIFC Employment Law provides that the requirements therein are minimums and cannot be waived or reduced unless the DIFC Employment Law explicitly permits such reduction. As Article 62 does not contain permission to reduce the gratuity benefits, the employment contract provisions attempting to reduce the gratuity based on time served are invalid.

24. The Defendant does not seem to argue with this point, as they have conceded that they owe the Claimant AED 5,126.82 in end of service gratuity for 21 days per year. This calculation is correct upon further review of the Court and thus is owed to the Claimant.

C. Notice Period

25. It is confirmed by both parties that the Claimant did not serve out his notice period. He resigned from his post on 10 May 2016 and that was also his last day of service. The Defendant argues that because he failed to serve his notice period, one month’s salary should be deducted from his end of service settlement. The Claimant does not claim any entitlement for pay during the notice period but does not concede that the pay should be deducted from his salary.

26. Article 59 of the DIFC Employment Law covers notice requirements for both employers and employees. Article 59(3) allows parties to agree on their required notice period and allows that either party can waive the notice or accept payment in lieu of notice.

27. The employment contract under Clause XI requires a two months’ notice period from either party upon termination of the employment relationship. It is clear that the Claimant did not serve this notice period but as allowed under the DIFC Employment Law, either party is entitled to waive the notice period. The Defendant would argue that they did not wish to waive the notice period and therefore the Claimant was not entitled to do so.

28. The Claimant was required under the employment contract to serve two months’ notice, but his failure to serve this notice period does not entitle the Defendant to deduct pay for this time from his final settlement. Instead, it entitles the Defendant to refrain from paying him for the notice period. Therefore, the Defendant’s attempt to deduct AED 2,200 for notice period from the final settlement is rejected as invalid.

D. Vacation Time and Travel Benefits

29. Article 28 of the DIFC Employment Law covers payment for vacation time. It states that when employment is terminated, the employer shall pay an amount in lieu of untaken vacation days using the daily wage to calculate the amount.

30. The daily wage, as defined in Schedule 1 of the DIFC Employment Law, includes all compensation for services performed, to be calculated considering the total working days in a year. This is in contrast to the basic wage as defined to include only the wages excluding additional allowances.

31. Therefore, the Claimant should receive compensation for untaken vacation time calculated using the daily wage. The Defendant has conceded that they owe the Claimant for 30 days of untaken vacation days but they have calculated the amount based on the basic salary of AED 2,200. This is an incorrect calculation.

32. Instead, the calculation should take into account salary and housing allowance for a total of AED 3,800 per month. This comes out to AED 190 per day for 22 working days’ vacation time as provided for in Clause II of the employment contract. This totals AED 4,180 which is owed by the Defendant to the Claimant.

33. Additionally, the Claimant seeks AED 2,000 for an airline ticket, as provided for in the employment contract. The Defendant has not added this to their final settlement submission, presumably because they argue it is not required under the employment contract.

34. Specifically, the employment contract states that following 12 months of continuous service and subject to your returning to resume employment with the Defendant, the Defendant will provide an airline ticket in an amount not to exceed AED 2,000. This Clause is limited if the employee has not completed one year of service. The Clause further provides for an additional outbound ticket upon termination of the employment relationship if the employee has not found another job in the UAE.

35. The Defendant has not submitted any documentation showing that the Claimant has availed of his airline ticket entitlement in the last 12 months or any documentation showing why the Claimant is not entitled to receive this ticket. Therefore, the Claimant is entitled to receive AED 2,000 as compensation for the airline ticket entitlement.

E. Deductions against Final Settlement

36. The Defendant has sought to make three deductions against the Claimant’s final settlement for housing allowance paid in advanced (AED 1,600), salary advance (AED 1,000) and notice period (AED 2,200).

37. As mentioned above, the notice period deduction is invalid and therefore rejected by the Court.

38. The DIFC Employment Law states at Article 19 that employers shall not deduct anything from employee’s wages unless such deduction is authorised by law, the employee agreed to the deduction in writing, the deduction is for overpayment or the deduction has been ordered by the Court.

39. The alleged deduction for housing allowance paid in advance for August 2015, as reflected in the Defendant’s Final Settlement Calculation, has not been substantiated with any further documentation proving that the Claimant has received this amount or that the Claimant agreed in writing to the deduction. Therefore, this deduction is rejected for failure to substantiate.

40. Similarly, for the AED 1,000 deduction for a salary advance taken in May 2015, there is no further documentation or receipt submitted as proof that the Claimant received this amount or agreed to the deduction in writing.

41. Therefore, the three deductions attempted to be applied by the Defendant against the Claimant’s final settlement are rejected as unsubstantiated.

F. Cancellation of Visa and Deduction of Visa Penalties

42. The Claimant sought cancellation of his visa as he no longer worked for the Defendant. The Defendant has lodged no objection to cancelling the visa but has claimed that visa penalties accrued against the Claimant’s visa for failure to renew on time should be covered by the Claimant and not the Defendant.

43. As mentioned above, the DIFC Employment Law only allows such deductions in certain instances.

44. The Defendant argued that the relevant employment contract did provide that the Claimant would cover visa fees in certain circumstances. More specifically, Clause XI states that if the employee resigns within one year of service, they will be liable for recruitment and residence fees on a pro-rata basis, to include visa fees. Furthermore, the Clause states that upon renewal of the employment permit, the employee will be liable for the renewal charges if they resign prior to one year after the renewed visa was issued.

45. It is relevant that the last contract renewal signed between the parties and submitted to the Court is dated 20 February 2015 and signed 1 March 2015. It purports to continue the contract for an additional year and states that all terms and conditions of the previous contract remain unchanged.

46. These provisions do not make the Claimant liable for his visa charges and penalties. First, the Claimant has served more than one year since he began working in 2012. Furthermore, even if the contract renewal of 1 March 2015 serves to renew Clause XI for another year, the Claimant left service on 10 May 2016, more than one year after the contract renewal.

47. Thus, the Defendant is not entitled to any reimbursement of visa fees or penalties from the Claimant and cannot deduct these amounts from the Claimant’s final settlement.

48. Instead, the Defendant is ordered to cancel the Claimant’s visa immediately and without further delay.

Findings

49. The Claimant is entitled to a final settlement of AED 13,840.16 owed by the Defendant and to be paid to the Claimant immediately and no later than 3 July 2016.

50. The Defendant is not entitled to make any deductions against this final settlement.

51. The Defendant is required to cancel the Claimant’s visa immediately with no further delay. The Claimant is not responsible to pay any visa penalties accrued against his visa.

52. Finally, the Defendant is required to pay the Claimant’s Court fees.

Issued by:

Natasha Bakirci

SCT Judge

Date of issue: 30 June 2016

At: 4 pm

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