Claim No: SCT 183/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
|Hearing :||19 June 2023|
|Further Submissions :||26 June 2023|
|Judgment :||5 July 2023|
JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI
UPON this Claim being filed on 11 May 2023 (and amended on 26 June 2023).
AND UPON a Hearing having been held before H.E. Justice Maha Al Mheiri on 26 June 2023, with the Claimant and the Defendant’s representative in attendance
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Claimant’s Claims shall be dismissed.
2. Each party shall bear their own costs.
SCT Judge and Assistant Registrar
Date of issue: 5 July 2023
1. Mopun (hereafter the “Claimant”) is an individual formerly employed as the General Manager at Mikita.
2. Mikita (hereafter the “Defendant”) is a wholesale services company, which is located, operating, and registered within the DIFC.
3. On 11 May 2023, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment for certain sums allegedly entitled to her as a result of her employment with the Defendant. The original claim form was amended on 26 June 2023. The total claim value is for USD 251,434.89 inclusive of 6 months’ notice and correction in bonus calculation. The Claimant also claims a daily penalty accrued as per Article 19 (2) of the DIFC Employment Law, and legal fees.
4. The Defendant responded to the Claim on 18 May 2023 with an Acknowledgment of Service intending to defend all the Claim.
5. The matter was called for Consultation before SCT Judge Hayley Norton on 30 May 2023, with the Claimant and Defendant’s representatives attending the Consultation, however the parties failed to reach an agreement.
6. On 19 June 2023, I heard the parties’ arguments at a hearing. After the parties provided oral submissions, the Claimant wanted to uplift the value of her Claim and the Defendant provided its consent to this matter.
7. Having reviewed all documentation on the Court file to date, I shall consider the issues set before me in the original claim dated 11 May 2023 and amended on 26 June 2023.
8. The Claimant contends that she entered into an Employment Contract with the Defendant on 5 September 2022 (hereafter the “Employment Contract”) to fill the position of “General Manager for Strategy and Business Development” and to work at the Defendant’s Dubai offices, located in the DIFC. At the time of issuing the Employment Contract, the Claimant contends that there was a lot of back and forth in relation to finalising the terms of the Employment Contract, but she signed it in the form that was submitted by the Defendant.
9. The Claimant contends she commenced her employment with the Defendant on 5 September 2022 and continued to be employed by the Defendant until her termination on 21 February 2023 (the “Termination Date”). The Employment Contract included a monthly salary to the Claimant of USD 18,000.
10. On 21 February 2023, the Claimant attended a meeting with her direct manager, CEO of the Defendant, where she was informed of her termination with immediate effect and was instructed to leave the office without any notice, or prior indication of termination.
11. The Claimant alleges that her termination was wrongful and violated the terms of her Employment Contract. As a result, the Defendant breached its contractual obligations by failing to provide the Claimant with notice or a valid reason, which is a clear violation of its obligations under the DIFC Employment Law.
12. The Claimant asserts that the Defendant's actions were wrongful and violated her rights under the terms of her Employment Contract and DIFC Employment Law. She has suffered significant harm as a result of these actions, and she seeks fair compensation.
13. Based on these events, the Claimant contends that she is owed significant sums, in the amount of USD 251,434.89, for notice period and other remedies to include:
(a) 6 months’ notice period in the amount of USD 199,696.44;
(b) Corrected bonus calculation based on 112,5% Element 2 attainment in the amount of USD 24,266.37;
(c) All legal fees and costs; and
(d) Article 19(2) penalties, from 7 March to 12 April 2023 in the amount of USD 27,472.08.
14. The Defendant filed a statement of defence detailing its arguments against the entirety of the Claimant’s Claims. The Defendant’s main argument is that the Claimant’s dismissal was for reasons of poor performance only and that this was made abundantly clear to the Claimant in the dismissal meeting. The Claimant’s failings were flagged to the Claimant early-on in her employment and similar failings were persisted up to termination.
15. The Defendant contends that the Claimant’s dismissal was in accordance with the Employment Law and her Employment Contract.
16. Based on this version of events, the Defendant argues that the Claimant is not entitled to her claims under the Employment Law. The Defendant asserts that the Claimant received a final salary payment which included payment up to and including the last day of February, in addition, the Defendant kept the Claimant’s visa and medical insurance for her and her family as a gesture of good will towards the Claimant.
17. The Defendant’s defence to each of the Claimant’s claims are set out in the Discussion below.
18. The DIFC Courts and the SCT have jurisdiction over this case as it concerns employment within the DIFC and the amount in question is more than AED 500,000, with the consent of the parties. This dispute is governed by the DIFC Employment Law in conjunction with the relevant Employment Contract.
19. Both the Claimant and the Defendant have submitted numerous and detailed submissions. I limit my discussion in this judgment to those submissions which are necessary for my determination of the Claimant’s claim and in particular her entitlement or otherwise to the remedies she seeks. Needless to say, consideration has been given to each of the Claimant’s claims, factual or legal, as has consideration been given to the Defendant’s responses thereto.
20. During the course of the Hearing, the Claimant made submissions as to the fact that the Defendant discriminated against her in the workplace. This was not set out in the remedy sought in amended claim dated 26 June 2023 and therefore I shall not address it in my findings below.
21. I shall set out below each of the Claimant’s claims, the Defendant’s defence to each Claim, and accordingly, the Court’s reasoning and finding.
6 months’ notice period
22. The Claimant argues that the Defendant is in violation of its contractual obligations, by failing to provide the Claimant with six months’ notice period as stated in her Employment Contract, and refusing to pay her basic salary and allowances that she would have received during the notice period. The Defendant is falsely claiming that the Claimant was still on probation and, therefore, not entitled to notice or payment in lieu thereof.
23. However, the Claimant’s offer letter and Employment Contract with the Defendant specifically entitles her to a notice period of six months, including all salary and allowances. The company is thus obliged to comply with this contractual obligation. The Defendant’s contention that the Claimant was still on probation is a willful misrepresentation of facts, as the contract unambiguously states that the probation period lasts only three months, after which the employee is entitled to full benefits, including notice and payment in lieu thereof. Clause 2.8 of the Employment Contract explicitly states that
"The Employee agrees that the employment is subject to a probation period of three months, during which time your contract may be terminated by Mikita without notice or end of service gratuity."
24. The Claimant argues that her employment started on 5 September 2022, and her probation period ended on 3 December 2022. There are no provisions in the contract for extending the probation period beyond three months. Furthermore, clause 13.6 of the Employment Contract clearly stipulates that
"This contract constitutes the sole agreement between the parties. Any cancellation or amendment to any portion of this agreement must be made in writing and signed by both parties."
25. The Claimant has never signed any amendments to her employment contract, nor has she been informed of any. As such, it is irrefutable that the Defendant has deliberately breached the Claimant’s Employment Contract by denying her the notice period and payment in lieu thereof.
26. In reply, the Defendant submits that the Claimant’s probation period was extended at the end of the first three months due to performance gaps, and was extended until 5 March 2023. These performance gaps were defined to the Claimant during her probation assessment and addressed in other occasions related to her work.
27. The probation period assessment was done in line with the Defendant’s policy, and where incidents related to performance or behavioral issues were raised, with clear indications on areas of improvement. Several issues took place within the Claimant’s department, leading to the Defendant’s employees getting frustrated, some getting sick and some sending emails for HR support or grievances. There were also concerns raised that she is still not able to show the outcomes she was hired for or to add value to the organisation.
28. The Defendant and Claimant agreed to extend the probation period for a further three months to give the Claimant the opportunity to improve the standard required in her role. The Claimant was communicated the extension of her probation through email by the Defendant and she accepted the extension of her probation by email, as evidenced by the Defendant’s submission.
29. Over the next three months the Defendant continued to monitor the Claimant’s performance closely. However, the Claimant did not improve to the level required which resulted in termination without notice, in accordance with Article 62(2) of the DIFC Employment Law, which reads as follows:
“62. Minimum notice periods
(1) An Employer or an Employee may terminate an Employee’s employment without cause in accordance with this Article.
(2) Subject to Articles 62(3), 62(4), 62(6) and 63, the written notice required to be given by an Employer or Employee to terminate the Employee’s employment shall not be less than:
(a) seven (7) days, if the period of continuous employment of the Employee is less than three (3) months, including any period of Secondment;
(b) thirty (30) days, if the period of continuous employment of the Employee is in excess of three (3) months but less than five (5) years, including any period of Secondment; or
(c) ninety (90) days, if the period of continuous employment of the Employee is in excess of five (5) years, including any period of Secondment.”
(3) Article 62(2) shall not prevent an Employer and Employee from agreeing to a longer notice period in an Employment Contract.
(4) An Employer may only make a payment of Wages to an Employee in lieu of all or part of the Employee's notice period pursuant to Article 63(2) or if the Employee agrees to such a payment in an agreement entered into pursuant to Article 11(2)(b).
(5) An Employer may require an Employee not to attend work or undertake their duties during all or part of the Employee's notice period.
(6) Article 62(2) does not apply:
(a) during any probation period agreed in an Employment Contract; …”
30. As such, I cannot find that the Claimant had reasonable grounds to believe that she passed her probation period. Thus, the terms of the Clause 2.8 of the Employment Contract must govern and under the terms of her Employment Contract, the Claimant is not entitled to 6 months’ notice period. I dismiss the Claimant’s claim for 6 months’ remuneration in lieu of his notice period, in accordance with Article 62(6)(a) of the DIFC Employment Law and the Employment Contract.
Corrected Bonus Calculation
31. Clause 4.2 of the Claimant’s Employment Contract states the following:
“4.2 the employee will only be eligible to receive a discretionary bonus if he/she is in the company’s employment at the date of payment and has not given or received notice to terminate his employment in accordance with clause 2.3 of this agreement.”
32. The DIFC Employment Law is silent on bonus entitlement and how they would be paid out in situations where the employment relationship has been terminated, and therefore the Court’s practice has been to proceed as agreed upon by the parties to an employment contract. In my view, Clause 4.2 clearly sets out that the bonus pay-out is made at the Company’s discretion and requires that the employee’s employment is not terminated and nor is the employee serving the notice period.
33. As established above, the Claimant is not entitled to the 6 months’ notice period and the employee and employer relationship was terminated. As such, I find the Claimant is not entitled to the bonus sought, pursuant to Clause 4.2 of the Employment Contract this bonus is discretionary, and the Defendant is therefore not obliged to pay any sum. The amount that was paid by the Defendant to the Claimant in her final settlement was a gesture of good will and the court does not consider it an obligation according to her Employment Contract and DIFC Employment law to pay any amount.
34. Therefore, I dismiss the Claimant’s claim for her corrected bonus calculation.
Legal Fees and Costs
35. The general rule in the SCT regarding legal costs states at Rule 53.70 of the Rules of the DIFC Courts (hereafter “RDC”) that the “SCT may not order a party to a small claim to pay a sum to another party in respect of that other party’s costs, fees and expenses, including those relating to an appeal, except: (1) such part of any Court or Tribunal fees paid by that other party as the SCT may consider appropriate; (2) such further costs as the SCT may assess by the summary procedure and order to be paid by a party who has behaved unreasonably.”
36. In this case, neither party has claimed, nor can either party be said to have behaved “unreasonably” as per the standard required by RDC 53.70(2). Therefore, I am limited in my assessment of costs to the SCT fees paid by both parties. I find that it is reasonable in this case, as the Claimant has not been successful in her claims, to require the Defendant to reimburse the Claimant for her SCT Court fees.
37. The parties shall bear their own costs.
Article 19 penalty in accordance with the DIFC Employment Law
38. Article 19 of the DIFC Employment Law stipulates as follows:
“19. Payments following termination
“(1) An Employer shall pay to an Employee, within fourteen (14) days after the Termination Date:
(a) all Remuneration, excluding, where applicable, any Additional Payments deferred in accordance with Article 18(2);
(b) where applicable, any Gratuity Payment that accrued prior to the Qualifying Scheme Commencement Date under Article 66(1) not transferred to a Qualifying Scheme under Article 66(6);
(c) a Daily Wage for each day of accrued Vacation Leave not taken; and
(d) all outstanding amounts due in respect of the Employee under Article 66(7) not yet paid to a Qualifying Scheme.
(2) Subject to the provisions of Article 19(3) and 19(4), an Employee shall be entitled to and the Employer shall pay a penalty equal to an Employee’s Daily Wage for each day the Employer is in arrears of its payment obligations under Article 19(1).
(3) A penalty pursuant to Article 19(2) may only be awarded to an Employee if the amount due and not paid to the Employee in accordance with Article 19(1) is held by a Court to be in excess of the Employee's Weekly Wage.
(4) A penalty pursuant to Article 19(2) will be waived by a Court in respect of any period during which:
(a) a dispute is pending in the Court regarding any amount due to the Employee under Article 19(1); or
(b) the Employee's unreasonable conduct is the material cause of the Employee failing to receive the amount due from the Employer.”
39. Pursuant to Article 19 (1) of the DIFC Employment Law, an Employer is required to pay an Employee all remuneration within fourteen (14) days after the termination, and in such instances where payment is not made within the time period, pursuant to Article 19(2) that Employer shall pay a penalty equal to an Employee’s daily wage for each day the Employer is in arrears of its payment obligation under Article 19(1).
40. In this case, I have already found that the Defendant does not owe the Claimant any amounts, the only amount that was delayed (due to bank transfer issues) is the travel expense that was delayed after the 14 days limit after termination. The amount for travel expenses does not meet the criteria that is set in the Article 19 of the Employment Law.
41. Therefore, I am of the view that the Claimant is not entitled to a penalty pursuant to Article 19 of the DIFC Employment law and dismiss this claim accordingly.
42. The Claimant’s claims are dismissed.
43. Each party shall bear their own costs.