November 24, 2022 SCT - Judgments and Orders
Claim No. SCT 373/2022
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 OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER
BETWEEN
LACWIT
Claimant
and
LIFURT
Defendant
| Hearing : | 15 November 2022 |
|---|---|
| Judgment : | 24 November 2022 |
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPON this Claim being filed on 20 October 2022
AND UPON a hearing having been held before H.E. Justice Nassir Al Nasser on 15 November 2022 with the Claimant and the Defendant’s representative in attendance
AND UPON reviewing the documents and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Defendant shall pay the Claimant the total sum of AED 4,615.38.
2. The Defendant shall provide the Claimant with a certificate of the Claimant’s ownership of 17 Class B Shares in the Defendant’s company.
3. The Defendant shall pay the Claimant the DIFC Courts’ filing fee in the sum of AED 367.50.
Issued by:
Delvin Sumo
SCT Judge
Date of issue: 24 November 2022
At: 4pm
THE REASONS
The Parties
1. The Claimant is Lacwit (the “Claimant”), an individual filing a claim against the Defendant regarding his employment at the Defendant company.
2. The Defendant is Lifurt (the “Defendant”), a company registered and located within the DIFC.
Background and the Preceding History
3. The underlying dispute arises out of the employment of the Claimant by the Defendant pursuant to an employment agreement dated 8 July 2021 (the “Agreement”).
4. On 20 October 2022, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking the value of 17 class B Shares of USD 106,250, penalties pursuant to Article 19 of the DIFC Employment Law in the sum of AED 106,849 and costs.
5. On 27 October 2022, the Defendant filed its Acknowledgment of Service with the intention of defending the whole claim.
6. On 2 November 2022, a Consultation was held before SCT Judge Maitha Al Shehhi, however the parties were unable to reach a settlement.
7. In line with the rules and procedures of the SCT, this matter was referred to me for determination, at a hearing held on 15 November 2022 (the “Hearing”).
The Claim
8. The Claimant submits that he was terminated by way of a termination letter on 21 June 2022. In addition, the Claimant submits that the Defendant should have provided the Claimant with 60 days written notice and that the termination date should have been 21 August 2022.
9. The Claimant submits that upon termination the Defendant should have settled his end of service entitlements within 14 days pursuant to Article 19 of the DIFC Employment Law. However, the Defendant only paid the Claimant his dues on 6 September 2022. The Claimant claims the penalty sum accrued for 65 days, is in the total sum of AED 106,849.
10. The Claimant additionally claims 17 Class B shares pursuant to Clause 7 of the Employment Agreement which states the following:
“Employee Share Scheme: The Employee shall receive 0.5% of Class B Shares in the Company, equivalent to 50 Class B Shares, (“ESOP Shares”) under the employee share scheme as a non-cash consideration for the services rendered by the employee, which shall be worth approximately USD 125,000 based on the current evaluation of the Company. The ESOP Shares shall be vested and issued to the Employee in the following manner:
| Sl. No. | Period of vesting and issuance | Number of ESOP Shares Issued |
| 1 | Completion of 1 (one) year from the date of joining of the Employee as the head of Business Development of the Company. | 17 Class B Shares |
| 2 | Completion of 2 (two) years from the date of joining of the Employee as the head of Business Development of the Company. | 17 Class B Shares |
| 3 | Completion of 3 (three) years from the date of joining of the Employee as the head of Business Development of the Company. | 16 Class B Shares |
The Defence
11. The Defendant agreed to provide the Claimant with a Certificate of his ownership of 17 Class B Shares, submitting that the Claimant completed 1 year of Employment from 8 July 2021 to 21 August 2022. The Claimant’s last day of Employment with the Defendant being 21 August 2022.
12. In relation to the penalties claimed by the Claimant, the Defendant submits that the Claimant’s employment was terminated on 21 June 2022, and that he was provided with a two month notice period. As a result, the Claimant’s last day of employment was on 21 August 2022.
13. The Defendant further submits that from 22 August 2022, it had 14 days to settle the end of service entitlements which it did, on 6 September 2022. Therefore, the Defendant submits that the Claimant is not entitled to penalties pursuant to Article 19 of the DIFC Employment Law.
Discussion
14. This dispute is governed by DIFC Law No. 4 of 2021 (Employment Law Amendment Law) (hereafter the “DIFC Employment Law”) and is to be considered in accordance with the relevant Agreement.
15. Pursuant to the Agreement, the Claimant was employed by the Defendant as of 8 July 2021 and his employment was terminated on 21 June 2022 with immediate effect. The Claimant was paid two months’ notice.
16. The Claimant claimed 17 Class B shares and penalties pursuant to Article 19 of the DIFC Employment Law. The Claimant’s position is that he was terminated with immediate effect and pursuant to Article 19, the Defendant should have settled his end of service entitlements within 14 days of his termination, namely, 14 days after 21 June 2022. However, the Defendant failed to do so and therefore, the Claimant, is entitled to penalties for 65 days.
17. The Defendant’s position is that the Claimant’s employment was terminated on 21 June 2022 with immediate effect and, that he was paid a two months’ notice period. The Defendant submits that the Claimant’s last day of employment was 21 August 2022 and not 21 June 2022. The Defendant submits that the Claimant’s end of service entitlements were paid on 6 September 2022, which is not to be considered as late payment.
18. The Defendant further submits that if the Claimant’s last working day was on 21 June 2022, he would not be entitled to 17 Class B Shares, as the Agreement provides that period of vesting and issuance is upon the completion of one year from the date of joining as Head of Business Development of the company. The Claimant joined the Defendant on 8 July 2021 and the completion of one year’s of employment was on 8 July 2022. Therefore, the Claimant is not entitled to the 17 Class B shares. However, the Defendant submits that the Claimant has completed one year of employment, as his last working day was on 21 August 2022.Therefore, the Claimant is entitled to 17 class B shares, for which the Defendant has agreed to provide a certificate to the Claimant of his entitlement of the said shares.
19. I shall firstly deal with which date is considered to be the last date of employment, in order to be able to calculate whether the Claimant is entitled to penalties pursuant to Article 19 or not. The Claimant commenced his employment on 8 July 2021 and his employment was terminated on 21 June 2022. The Claimant was paid two months’ notice, although his employment was terminated with immediate effect. I find that the term ‘immediate effect’ and the fact that notice was paid, is similar to garden leave but that the effective date of the termination is 21 August 2022, which is the end of the notice period and not the date on which the Claimant was given the termination letter.
20. Therefore, penalties under Article 19 of the DIFC Employment Law, shall only commence 14 days after 21 August 2022 and not 21 June 2022, which would be 4 September 2022.
21. The parties confirmed that the Defendant has paid the Claimant his end of service entitlements on 6 September 2022, two days after the deadline of the 14 days. Article 19(2) of the DIFC Employment Law provides “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) which provides that An Employer shall pay to an Employee, within fourteen (14) days after the Termination Date.
22. I find that the Defendant is in arrears of two days and which the Claimant is entitled to. As per the Employment Agreement, the Claimant’s monthly remuneration is AED 50,000. Pursuant to the DIFC Employment Law, the daily wage is calculated as the following: “an Employee’s Annual wage divided by two hundred and sixty (260) for an Employee that works 5 days per work week (AED 600,000/260 days= AED 2,307.69 daily wage).
23. Therefore, the Claimant is entitled to AED 4,615.38 as penalties under Article 19 of the DIFC Employment Law for the two days the Defendant was late in paying the end of service entitlements.
Conclusion
24. In light of the aforementioned, it is hereby ordered that the Defendant shall pay the Claimant the total sum of AED 4,615.38.
25. The Defendant shall provide the Claimant with a certificate of the Claimant’s ownership of 17 Class B Shares in the Defendant’s company.
26. The Defendant shall pay the Claimant the DIFC Courts’ filing fee in the sum of AED 367.50.
