Claim No. SCT 138/2017
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 MARIAM DEEN
Hearing: 3 July 2017
Final Submissions: 4 July 2017
Judgment: 9 July 2017
JUDGMENT OF SCT JUDGE MARIAM DEEN
UPON the Claim Form being filed on 1 June 2017
UPON the parties being called on 18 June 2017 for a Consultation with SCT Judge Lema Hatim and the parties not having reached settlement
UPON a Hearing having been held before SCT Judge Mariam Deen on 3 July 2017, with the Claimant in attendance and the Defendant’s written submissions being considered in his absence
AND UPON reviewing the documents and evidence submitted in the Court file
IT IS HEREBY ORDERED THAT:
1.The Defendant shall pay the Claimant a final settlement of AED 8,141.34 with respect to the Claimant’s annual leave entitlement.
2. The Defendant shall pay the Claimant AED 7,301.33 in respect of end of service gratuity.
3. The Defendant shall pay the Claimant AED 12,723.70 as a penalty pursuant to Article 18(2) of DIFC Employment Law and an additional AED 147.95 per day from the date of this Judgment, until payment is made.
4. The Defendant shall cancel the Claimant’s visa without delay, such procedure to be completed no later than 23 July 2017.
5. The Defendant shall pay the Claimant AED 1,000 in respect of the cost of the Claimant’s air-ticket home.
6. The Defendant shall reimburse the Claimant’s Court fee in the amount of AED 502.84.
Date of issue: 9 July 2017
At: 1 pm
1.The Claimant is Halle (the “Claimant”), an individual filing a claim against the Defendant regarding her employment by a DIFC registered company.
2. The Defendant is Hahn (the “Defendant”), the owner and Managing Director of the DIFC branch of Harriet Lounge LLC, a DIFC registered company.
3. The underlying dispute arises over the employment of the Claimant by the Defendant and subsequent termination of the Claimant’s employment by the Claimant.
4. On 1 June 2017, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) for payment of certain employment entitlements. The Claimant claimed a total of USD 6,840.71 against the Defendant.
5. The Defendant responded to the claim on 11 June 2017, summarising the reasons he intended to defend all of the claim.
6. The parties met for a Consultation with SCT Judge Lema Hatim on 18 June 2017 but were unable to reach a settlement.
7. A Hearing before me was scheduled to take place on 22 June 2017 but this was vacated upon the Defendant’s request, due to his unavailability. The Hearing was rescheduled to 3 July 2017.
8. On 2 July 2017, the Defendant requested for a second postponement of the Hearing due to his unavailability. The Defendant was asked to provide evidence of a ‘good reason’ for his inability to attend the Hearing, pursuant to Rule 53.63 of the DIFC Courts (“RDC”), however, he failed to respond to this request and was informed that the Hearing would continue as scheduled.
9. On the morning of 3 July 2017, the Defendant emailed the Court claiming he was ‘still out of town’ and provided a summary of additional submissions. Due to the late nature of the Defendant’s request for an adjournment and in light of the Hearing having already been postponed, I proceeded to hear submissions from the Claimant; the Defendant failed to attend, send an authorized representative, or participate via Skype or telephone, despite being given the opportunity to do so. Due to his absence, the Defendant was given additional time following the Hearing to make any further submissions by 4pm on 4 July 2017. No further submissions were made and the case was reserved for judgment.
10. The Claimant’s case is that she was employed by the Defendant on 27 October 2014, according to the terms of an employment contract (the “Employment Contract”). At the Hearing, the Claimant clarified that she brought her claim against the Defendant personally, rather than the Harriet Lounge LLC as a company because the Defendant was the owner and Managing Director of the DIFC branch in which she worked, which was a franchise of Harriet Lounge LLC. She confirmed that she held the Defendant personally culpable in the circumstances.
11. It was submitted that although she was initially paid AED 4,000 monthly under the terms of the contract, her salary was increased to AED 4,500 following an email from the Defendant dated 18 November 2015, in which the Defendant wrote:
“Also we will increase Halle salary started from dec salary because of her honesty/ sympathy/ hard working/loyalty and proper communication with me.”
12. The Claimant submits that she was subsequently paid AED 4,500 every month from December 2015 for the duration of her employment, with the exception of July and August 2016, being the two months in which she took her total annual leave entitlement of 24 days. It is claimed that she was not paid for the leave she took for the following periods: 4-16 July 2016 (13 days) and 9-19 August 2016 (11 days). The Claimant stated that she queried the deduction from her pay for July and August 2016 and was reassured by the Defendant that her vacation leave would be paid for, but payment was never received. Consequently, the Claimant claims she is entitled to payment of her salary for the 24 days annual leave she took upon completion of her first year of employment, pursuant to Clause 5 of the Contract.
13. Clause 5 of the Contract also entitles the Claimant to 31 days annual leave upon completion of her second year of employment. The Claimant submits that on 4 September 2016, she made a request to use her annual leave entitlement but this was denied. Therefore, the Claimant seeks compensation in lieu of vacation leave accrued but not taken.
14. On 20 February 2017, the Claimant offered her resignation and completed a 40-day notice period which ended on 31 March 2017.
15. Following her resignation, the Claimant submits that she made several requests for her employment visa to be cancelled but the Defendant refused to do this until she supplied him with proof of her new employment by way of an offer letter. On 16 May 2017, the Claimant states that the parties met at the Defendant’s office, where the Defendant agreed to pay for the Claimant’s annual leave entitlement and flight home but refused to provide any end of service gratuity payment or cancel her employment visa.
16. The Claimant states that she has been unable to secure new employment and intends to return to the Philippines. She claims that despite the Defendant’s reassurances, she has still not received payment relating to her annual leave entitlement or flight allowance and therefore seeks payment of these, in addition to end of service gratuity, visa cancellation and reimbursement of the Court fee in order to resolve the matter.
17. Finally, in her Claim Form and at the Hearing, the Claimant confirmed that she sought the penalty under Article 18 of DIFC Employment Law to be activated so that she may be entitled to the equivalent of her daily wage for every day that the Defendant has been in arrears.
18. In the Defendant’s written submissions, he denies that the Claimant’s salary was raised to AED 4,500; it is submitted that the additional AED 500 payment made to the Claimant every month from December 2015 was a type of appreciation / bonus / gratuity and was certainly not a salary increment as there was no amendment to the Contract and no official letter to document it.
19. The Defendant accepts that a one-way ticket to the Claimant’s home country will be provided and that some annual leave payments are owed. However, he relies on the Non-Competition Clause 8 of the Contract to withhold cancellation of the Claimant’s employment visa until she provides evidence of a new offer of employment letter; this is to ensure she does not work for any of the Defendant’s competitors within 24 months of her employment with him.
20. It is alleged that the Claimant’s behaviour during her employment negatively impacted upon the Defendant’s business, however, no further information about this allegation has been provided and no counterclaim is being pursued.
21. The Defendant states that there has been no delay in paying the Claimant her salary and asserts that the delay in cancelling her visa and paying the annual leave entitlement has been a direct result of the Claimant’s failure to produce an offer of employment letter.
22. This dispute is governed by DIFC Law No. 4 of 2005, as amended by DIFC Law No. 3 of 2012 (the “DIFC Employment Law”) in conjunction with the Employment Contract.
23. The first issue to be determined is whether the additional AED 500 that was paid to the Claimant every month of her employment from December 2015 onwards, amounted to an increase in her salary from AED 4,000 to AED 4,500.
24. The Defendant submits that the additional payment was a form of bonus intended to show appreciation for the Claimant’s work. However, the Claimant points to an email from the Defendant dated 18 November 2015, in which the Defendant wrote:
“Also we will increase Halle salary started from dec salary because of her honesty/ sympathy/ hard working/loyalty and proper communication with me.”
25. Although the salary statement provided by the Defendant includes the additional AED 500 paid to the Claimant in the Gratuity / Extras column, it is clear from the same statement that the payment was made to the Claimant for every month of her employment from December 2015 until her resignation.
26. The Defendant uses clear wording in his email of 18 November 2015 and refers to his intention to ‘increase ms. Halle salary from dec salary’. Therefore, I am not persuaded that the additional AED 500 payments from the Defendant were bonuses paid to the Claimant every month as they appear to have been awarded to the Claimant consistently from December 2015 onwards, irrespective of her performance. Although the original Employment Contract was not amended I am satisfied from the wording of the Defendant’s email that the additional payment amounted to an increase in the Claimant’s salary.
27. At Clause 5 of the Employment Contract, it states:
“The Employee shall be entitled to vacations in the amount of 24 days per annum upon completion of the First Year. From the Second Year, Employee is entitled to 31 days annually”
28. The Contract was signed on 27 October 2014, therefore, in the absence of evidence to the contrary it can be assumed that the Claimant’s first year of employment ended on 26 October 2015; from which time, the Claimant became entitled to 24 days annual leave to be taken between 27 October 2015 and 26 October 2016. The parties appear to agree that the Claimant took 24 days annual leave in her second year of employment for the following periods: 4-16 July 2016 (13 days) and 9-19 August 2016 (11 days).
29. As I have determined the Claimant’s monthly salary to have been AED 4,500 I calculate that her annual wage to be AED 54,000 (4,500 x 12) and her daily wage to be AED 147.95 (54,000 / 365). Therefore, the Claimant is owed AED 3,550.80 (147.95 x 24) for the 24 days annual leave she took in her second year of employment.
30. The Claimant’s third year of employment commenced on 27 October 2016 and by the terms of the Employment Contract she would have been entitled to 31 days annual leave in her third year. As she only continued to be employment by the Defendant until 31 March 2017, her annual leave entitlement shall be calculated on a pro rata basis in accordance with Article 28 of the DIFC Employment Law:
“Compensation in lieu of vacation leave
(1) Where an employee’s employment is terminated, the employer shall pay the employee an amount in lieu of vacation leave accrued but not taken. In the event that the employee has taken more vacation leave than has accrued at the termination date, the employee shall repay the employer the corresponding sum.
(2) Compensation in lieu of vacation leave shall be calculated using he employees daily wage applicable on the employees last day of employment.”
31. During her third year of employment the Claimant worked from 27 October 2016 to 31 March 2017, a total of 156 days. Therefore, she accrued an entitlement to 13.25 days annual leave (156 / 365 x 31). The Claimant’s compensation is calculated using the daily wage applicable on her last day of employment, being AED 147.95. Accordingly, she is owed AED 1,960.34 (13.25 x 147.95) for her third year of employment.
32. Although the Employment Contract does not entitle the Claimant to annual leave in her first year of employment, the DIFC Employment Law states at Article 27:
(1) Subject to Article 30, an employer shall give an employee a minimum paid vacation leave of twenty (20) working days per annum to be accrued pro rata for employees who have been employed for at least ninety (90) days…”
33. According to Article 30 of the DIFC Employment Law, leave during the first year of employment is accrued at the rate of one-twelfth of 20 on the first day of each month of that year. Therefore, as the Claimant completed the first year of her employment she would have been entitled to 20 days of annual leave. Having had sight of the salary statement provided by the Defendant, I am satisfied that the Claimant did not take 20 days of paid leave during her first year of employment and is due compensation in lieu of vacation leave, in accordance with Article 28 of the DIFC Employment Law, mentioned above. As the Claimant’s monthly salary was AED 4,000 for the duration of her first year of employment, her daily wage during that period was AED 131.51 [(4000 x 12) / 365]. Therefore, the Claimant is entitled to AED 2,630.20 (20 x 131.51).
34. The total value of the Claimants award in relation to her annual leave entitlement is AED 8,141.34.
End of Service Gratuity
35. The Claimant seeks payment of end of service gratuity. Article 62 of the DIFC Employment Law provides:
“End of service gratuity
(1) 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.
(2) The gratuity payment shall be calculated as follows:
(a) twenty one (21) days’ basic wage for each year of the first five (5) years of service.
(b) thirty (30) days’ basic wage for each additional year of service, provided that the total of the gratuity shall not exceed the wages of two (2) years of service.
The daily rate for the employee’s basic wage shall be calculated based on the number of days in the year. The employer may deduct from the gratuity any amounts owed to the employer by the employee.
(3) Where the termination occurs prior to the end of any full year of employment, the gratuity payment shall be calculated on a proportionate basis…”
36. In the absence of evidence to the contrary, the Claimant’s employment began on 27 October 2014 and ended on 31 March 2017, therefore, she worked a total of 2 years and 126 days, which is equivalent to 2.35 years (2 + 126 / 365). Subsequently, she is entitled to 49.35 (2.35 x 21) days’ basic wage as end of service gratuity. This amounts to AED 7,301.33 (49.35 x 147.95). It is important to note that the Employment Contract does not differentiate between wages and allowances and therefore the Claimant’s daily wage is equivalent to her basic wage.
Article 18 of the DIFC Employment Law
37. In her Claim Form and at the Hearing, the Claimant confirmed that she sought the penalty under Article 18 of DIFC Employment Law to be activated. It provides:
“(1) 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.
(2) If an employer fails to pay wages or any other amount owing to an employee in accordance with Article 18(1), the employer shall pay the employee a penalty equivalent to the last daily wage for each day the employer is in arrears.”
38. The Defendant has not shown any attempts to pay the Claimant what she was owed within 14 days of her termination. Therefore, in accordance with the DIFC Courts precedent set by the judgment of Justice Roger Giles in Asif Hakim Adil v Frontline Development Partners Limited (CFI-015-2014, 3 April 2016; affirmed in CA-006-2016, 20 March 2017) and the judgment of H.E. Justice Ali Al Madhani in Pierre-Eric Daniel Bernard Lys v Elesco Limited (CFI-012-2014, 14 July 2016; appeal pending), the Claimant is entitled to Article 18 penalties running from 14 days after her official date of termination until the date payment is made. For the purposes of Article 18, the Claimant’s date of termination is 31 March 2017.
39. Therefore, the Defendant has been in arrears since 14 April 2017 (14 days following termination) and the penalty began to accrue at the daily rate of AED 147.95 from this date. Accordingly, as of the date of this Judgment, the penalty is owed for 86 days from 14 April 2017 until 9 July 2017, totaling AED 12,723.70 (86 x 147.95). With the daily penalty of AED 147.95 continuing to accrue until the date of payment.
40. The Defendant accepts that he refused to cancel the Claimant’s employment visa until she had provided proof of an offer of new employment and he explained his reasoning behind this was to ensure she did not seek employment with a competitor. The Claimant seeks for her visa to be cancelled and states that she intends to return to the Philippines and I order that the Claimant’s employment visa be cancelled within 14 days, by no later than 23 July 2017.
41. Although the Contract does not provide entitlement to the Claimant for an air ticket home, the Defendant accepted that he would provide the cost of the Claimant’s one-way ticket to her home country. The cost of the ticket is put at AED 1,000 in the salary statement produced by the Defendant but the Claimant stated in the Hearing that she sought AED 2,000 as the cost of flights to the Philippines are usually in excess of AED 1,000. In the absence of supporting evidence from the Claimant I am inclined to adopt the figure agreed to by the Defendant in the salary statement and award the Claimant AED 1,000 in respect of her air ticket home.
42. In summary, I find that the Defendant is liable to pay for the Claimant’s annual leave taken during her second year of employment, in addition to compensation in lieu of leave taken during her first and third years of employment, which amounts to AED 8,141.34. The Claimant is also entitled to end of service gratuity payment in the sum of AED 7,301.33 and the Defendant is liable to pay AED 12,723.70 as the accrued penalty for every day that it has been in arrears, pursuant to Article 18 of DIFC Employment Law. This penalty will continue to accrue at the daily rate of AED 147.95 for as long as the Defendant continues to be in arrears The Defendant shall pay the Claimant an additional AED 1,000 in respect of her air-ticket home. Furthermore, the Claimant’s employment visa must be cancelled within 14 days.
43. The Defendant shall also reimburse the Claimant in the amount of AED 502.74 for the Court fee she has paid.
Date of issue: 9 July 2017