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Claim No: CFI 076/2021

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

LYRICIA

Appellant

and

LEXI

Respondent

ORDER WITH REASONS OF JUSTICE WAYNE MARTIN

UPON the judgment of H.E. Justice Maha Al Mheiri dated 1 September 2021 (the “Judgment”)

AND UPON reviewing the Claimant’s Appeal Notice filed on 9 September 2021 seeking

permission to appeal against the Judgment (the “Permission Application”)

AND UPON the hearing of the appeal on 25 October 2021

IT IS HEREBY ORDERED THAT:

1. The appeal is granted.

2. The Respondent pay to the Appellant the following additional amounts:

The total additional amount to be paid by the Respondent to the Appellant is AED77,290.

3. The Respondent is to reimburse the Appellant for any Court fees the Appellant has had to pay in respect of this appeal.

Issued by:
Nour Hineidi
Registrar
Date of issue: 6 December 2021
At: 9am

SCHEDULE OF REASONS

Summary

1. This is an appeal from a decision of the Small Claims Tribunal in relation to an employment dispute. For the reasons which follow the appeal should be allowed and the amount of the judgment in favour of the Appellant increased by the amounts specified in these reasons, which total AED77,290.

Background

2. The background to the appeal can be taken from the reasons given by the Judge in the Small Claims Tribunal.

3. The Appellant was employed by the Respondent in the position of Events Director pursuant to an Employment Contract dated 7 November 2019. The Appellant commenced employment on 8 December 2019.

4. On 8 April 2020, the Respondent sent a circular email to all staff advising that their basic salary would be cut by 50% as a consequence of financial difficulties caused by the COVID-19 pandemic. On 17 May 2020, staff were advised by a letter from the Respondent that the deduction would continue until further notice, and it continued in fact until December 2020.

5. Early in 2021 the Respondent reduced the deduction from 50% of basic salary to 35%.

6. On 26 January 2021 the Appellant and the Respondent signed an amended employment contract which took effect on 1 February 2021, and which described the Appellant’s position as “Director of Member Success”.

7. On 25 May 2021, the Appellant gave three months written notice of resignation from her position, to take effect on 23 August 2021. However, the Respondent asserted that the relevant notice period was 30 days, rather than three months, and advised the Appellant that her employment would terminate on 23 June 2021. The Respondent directed the Appellant not to attend for duty (i.e. to go on gardening leave until then).

8. On 14 July 2021, the Appellant commenced the proceedings in the Small Claims Tribunal claiming various amounts due under her employment contract.

The reasons of the Tribunal

9. It is only necessary to refer to the reasons of the Tribunal insofar as they relate to issues relevant to the appeal.

Unlawful deduction of salary

10. The Appellant contended that the Respondent was only entitled to reduce her salary until 31 July 2020 by reason of the authority provided by the Presidential Directive No. 4 of 2020 relating to the pandemic. She contends that thereafter she was entitled to rely upon the provisions of the DIFC Employment Law¹ including Article 20 which provides that:

11. Article 20(2) of the Employment Law provides that a claim of failure to pay in contravention of the Article must be brought within six months of the last in the series of deductions from the employee’s remuneration, which in this case was 31 January 2021. As the proceedings were commenced on 14 July 2021, they were brought within the six-month period specified by Article 20(2).

12. The Appellant contends that a total of AED39,000 was unlawfully deducted from her remuneration during the six months between August 2020 and January 2021 inclusive, and the total amount of the deductions is not contentious.

13. The Judge rejected the Appellant’s claim because of her view “that the Claimant’s action of continuing to work for the Defendant is to be taken as an implied action that she accepted the new terms of her employment agreement”.²

Notice period

14. The Appellant claimed that she was entitled to remuneration for a period of 90 days in accordance with her amended employment contract. The Judge accepted that claim and calculated that the Appellant was entitled to AED27,450 for the additional 61 days for which she had not been paid.

Payment in lieu of accrued but untaken annual leave

15. The Appellant contended that she was entitled to continue to accrue annual leave during the additional two months for which she was entitled to be employed during the period of notice. The Judge accepted that contention and calculated the amount due as AED1,647.

Article 19 penalty

16. Article 19 of the DIFC Employment Law provides:

17. Having concluded that the Appellant was entitled to be employed until 23 August 2021, it followed that the Appellant had commenced proceedings before the expiry of the period of 14 days following her termination, which was the time by which the Respondent was obliged to make the payments due by reason of Article 19. The Judge dismissed the claim on that basis.

18. The Judge made no reference in her reasons to the Appellant’s claim for general damages for emotional and psychological distress or for her injured feelings as a consequence of the Respondent’s discriminatory treatment of her as compared to other employees – compensation for injured feelings as a result of discrimination being specifically available pursuant to Article 61 of the Employment Law.

The grounds of appeal

Unlawful deduction

19. The Appellant contends that the Judge was wrong to dismiss her claim for AED39,000 which was deducted from her remuneration during August 2020 to January 2021 inclusive on the basis of an implied agreement between her and the Respondent. She contends that Article 20 of the Employment Law specifically and expressly requires that a deduction from remuneration can only lawfully occur with the prior written agreement of the employee. Article 20 does not provide that an agreement to be implied from the conduct of the employee authorises a deduction otherwise prohibited by the Article.

20. The Appellant’s contentions are correct and should be upheld. This ground of appeal must be allowed and the amount of the judgment in her favour increased by AED39,000.

21. The Appellant also submits, correctly, that by reason of the unlawful deductions from her remuneration, the contribution which her employer was obliged to make to her qualifying scheme was also reduced over that period in an amount of AED2,274. That amount should be added to the AED39,000 in respect of this claim.

Notice period

22. The Appellant contends that the Judge incorrectly calculated the amount of her entitlement for the additional 61 days of the 90-day notice period for which she was not paid. The error came about because the Judge incorrectly used a monthly salary of AED9,750 for the purposes of her calculation, when he should have used the amount of AED21,750.

23. The evidence establishes that the Appellant was indeed receiving a monthly salary of AED21,750 at the time she resigned, and this amount should have been used by the Judge for the purposes of her calculation.

24. This ground of appeal must also be upheld. Applying the appropriate monthly salary to the calculation performed by the Judge produces a total due of AED61,234. As the Judge allowed an amount of AED27,450 in respect of this claim, the success of this ground of appeal results in an increased award to the Appellant in the amount of AED33,784.

Payment in lieu of unpaid annual leave

25. The Appellant contends that the Judge also miscalculated the amount to which she was entitled in respect of annual leave accruing over the additional period of 61 days for which she was entitled to be employed. In calculating this amount the Judge used a monthly salary of AED22,000, which is closer to the actual salary of AED21,750, but has inserted the wrong daily rate which one would get from using that monthly figure – namely, an amount of AED450/day. Using the correct monthly salary of AED21,750, the daily rate is AED1003.84, which when applied to the 3.66 days of accrued annual leave, gives an amount due of AED3,674. As the Judge allowed an amount of AED1,647 in respect of this claim, the success of this ground of appeal entitles the Appellant to a further AED2,027.

Penalty

26. Subject to the observations which follow, the Appellant does not challenge the Judge’s dismissal of her claim for a penalty payment under Article 19(2). The first observation is that the Appellant correctly observes that the Judge misstated the date from which her claim commenced – incorrectly asserting that the claim commenced with effect from 4 December 2019, being 14 days from 20 November 2019. It is not at all clear where the Judge may have got those dates, but it is clear that they are wrong.

27. Second, although the Appellant accepts that the Judge was correct to dismiss her claim for penalty on the ground that she commenced proceedings before the date upon which payment of termination benefits was due, she asserts that Article 19 can be applied to impose a penalty in respect of the unlawful deduction of amounts from her remuneration contrary to Article 18. She relies upon the decision of Justice Sir Peter Grosse in T Rahmantalla v Espresso Telecom Group Ltd³ in support of this submission.

28. There are a number of reasons why this submission must be rejected. First, as Justice Sir Peter Grosse expressly observed in the case to which the Appellant refers, Article 18 does not impose any statutory penalty for late payment. As His Honour observed:

Art. 18(1) cannot, by itself, support this claim. It does not impose any statutory penalty for late payment of salary.⁴

29. Although His Honour did go on to consider whether Article 19 might provide an alternative source for the claim, he did so by reference to the criterion specified in that Article – namely, by reference to the question of whether payment was made within 14 days of the Termination Date.

30. It follows that the Appellant faces precisely the same difficulty in relation to a claim for penalty based upon wrongful deduction from her remuneration as she faces in relation to her claims based upon other entitlements – namely, penalty could not commence until 14 days after the termination of her employment, which was more than a month after she commenced her claim.

31. Lest it be thought that this conclusion is harsh, it should be noted that Article 19(4) expressly provides that a penalty under Article 19(2) will be waived by a Court in respect of any period during which a dispute is pending in the Court regarding any amount due to the employee. As there has been such a dispute pending in the Court since a time before the time at which the penalty might otherwise accrue, it follows that Article 19(4) provides an alternative reason to why the Appellant’s claim based on penalty must fail.

32. This ground of appeal must be dismissed.

Gratuity payment

33. The Appellant also correctly points out that the Judge considered that the Respondent had correctly calculated the gratuity payment, although in fact the Respondent had used the wrong salary for the purposes of calculation. The difference between the amount calculated and the amount properly due is modest – namely AED205, but it should nevertheless be awarded to the Appellant.

The claim for emotional distress

34. The Appellant claims general damages for what she asserts is the emotional distress which she suffered by reason of the Respondent’s conduct in:

35. The Appellant asserts that the Respondent’s conduct amounts to discrimination contrary to Article 59 of the Employment Law, and that she is therefore entitled to damages in respect of her injured feelings pursuant to Article 61 of the Employment Law. Under that Article, a Court ordering compensation for discrimination may order an amount of up to one year’s salary as compensation for injured feelings. The Appellant asserts that she should receive the maximum amount available in this regard.

36. As I have noted, the SCT Judge made no reference to this aspect of the Appellant’s claim in her reasons. This places an appeal court in a rather difficult position in attempting to evaluate this ground of appeal.

37. The general difficulty which this ground of appeal faces, is the very limited nature of the evidence which might sustain its success. In relation to discrimination, there is some evidence that other employees were not required to go on gardening leave. However, before it could be concluded that the Appellant was discriminated against in this regard, it would be necessary to know the circumstances pertaining to each other relevant employee, the nature of their duties and the reasons why the Appellant was required to go on gardening leave as opposed to the other employees. That material is simply not available to the Court.

38. Further, although the Appellant asserts, understandably, that she has been distressed by the burden of having to pursue the Respondent through the Courts, there is no independent evidence of the degree of her distress, or of any medical condition or symptom which she has suffered, or of any impediment to her other employment. Accordingly, there is no evidence upon which this Court could make any estimate of the nature of any financial loss which might have been sustained by the Appellant and which could possibly provide a yardstick for the measure of compensation, even if satisfied that a claim of discrimination had been made out. Accordingly, this ground of appeal must be dismissed for want of evidence.

Summary and conclusion

39. The Appellant has succeeded in making out a number of her grounds of appeal. The amounts due in respect of the grounds on which she has been successful are set out in the reasons above; they total AED77,290. Accordingly, the appeal will be granted, and the Respondent ordered to pay a further AED77,290 to the Appellant.

40. Further, although the Appellant has not been wholly successful, she has been substantially successful on the appeal. Accordingly, the Respondent should be ordered to reimburse the Appellant for any Court fees she has had to pay in respect of the appeal.