October 03, 2022 SCT - Judgments and Orders
Claim No. SCT 273/2022
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 MAHA AL MHEIRI
BETWEEN
LUMSA
Claimant
and
LACTIN
Defendant
| Hearing : | 13 September 2022 |
|---|---|
| Further Submissions : | 22 September 2022 |
| Judgment : | 3 October 20222 |
JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI
UPON this Claim being filed on 6 July 2022
AND UPON a hearing having been listed before H.E. Justice Maha Al Mheiri on 13 September 2022 with the Claimant’s and the Defendant’s representatives attending
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Claimant’s claim is dismissed.
2. Each party shall bear their own costs.
Issued by:
Hayley Norton
SCT Judge
Date of issue: 3 October 2022
At: X
THE REASONS
The Parties
1. The Claimant is Lumsa (the “Claimant”), an individual filing a claim regarding her employment at the Defendant company.
2. The Defendant is Lactin (the “Defendant”), a beauty lounge located within the DIFC, Dubai (“DIFC”).
Background and the Preceding History
3. The underlying dispute arises over the employment of the Claimant by the Defendant pursuant to an employment contract dated 15 September 2020 (the “Employment Contract”).
4. The Claimant continued working with the Defendant until 15 March 2021, after which time she signed a second contract with the Defendant which provides for her compensation to be made on a commission basis (the “Second Contract”). The Claimant was to be paid a monthly commission of 50% from net turnover (net sales) from the services rendered.
5. The parties signed a letter dated 31 August 2021, confirming that the Claimant received all her employment entitlements in accordance with the Employment Contract.
6. On 15 March 2021, the Claimant sent an email (the “Email”) to the support team at Zurich Workplace Solutions (the DIFC Employee Workplace Savings Plan Administrator) (the “DEWS Plan Administrator”) to notify them that the Claimant’s Employment Contract had been revised from a salaried to a commission basis. Within the Email, the Defendant sought their advice as to whether the Claimant would still be eligible to receive monthly contributions into her qualifying scheme. The reply stated that the Claimant would be exempt, as shown below.
“Dear Marzi,
Thank you for your email.
If the employee is in receipt of a basic salary as per his/her employment contract, they need to be enrolled into DEWS and monthly contributions need to be made for them. lf they are on commission basis and not receiving basic salary, they are exempted from DEWS, but we advise you to inform DIFC about their status.
Please do not hesitate to contact us if you need any further assistance.”
7. During the time the Claimant was working with the Defendant on a commission basis she received warning letters in relation to her work. Furthermore, the Defendant terminated the Claimant on 23 June 2022 and the parties were in disagreement in relation to the Claimant’s entitlements.
8. On 6 July 2022, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) claiming an amount of AED 43,317.85 for the following claims:
(a) 6 months’ remuneration in the amount of AED 30,000;
(b) Payment in lieu of 44 days’ untaken annual leave in the amount of AED 10,153.85;
(c) End of service gratuity in the amount of AED 3,164;
(d) Compensation for causing reputational damage and victimisation; and
(e) Reimbursement of an employment visa payment made by the Claimant in the amount of AED 10,000.
9. On 24 August 2022, the Defendant filed a defence to this claim.
10. The parties met for a Consultation with SCT Judge Maitha AlShehhi on 31 August 2022 but were unable to reach a settlement. In line with the rules and procedures of the SCT, this matter was referred to me for determination, pursuant to a hearing held on 13 September 2022 (the “Hearing”).
11. After the Hearing, I directed that the Claimant provide a clear breakdown of her claims, as her particulars of claim appeared to reflect a monetary sum greater than that total amount stated on the Claim Form. On 22 September 2022, the Claimant confirmed to the Court that she is claiming monetary relief in the form of the claims set out at paragraph 8 (a) to (d) above, therefore I shall not address claim (e) above.
The Claim
12. The Claimant’s case is that she was employed by the Defendant from 15 September 2020 until 23 June 2022. As provided above, the Defendant terminated the Claimant’s Second Contract with immediate effect.
13. The Claimant, pursuant to her termination, had sought to obtain a sum equal to AED 43,317.85 for 6 months’ unpaid salary, 44 days of annual leave, and payment of her end of service gratuity.
14. The Claimant also seeks an unquantified sum as compensation for alleged reputational damage and victimisation by the Defendant.
The Defence
15. The Defendant confirms that it had undergone internal discussions with the Claimant from the onset confirming that the Claimant would be paid on a commission basis. The Defendant submits that it did not withhold any salaries from the Claimant and that it has made the relevant payments into the Claimant’s qualifying scheme in accordance with the law.
16. The Defendant’s defence to each of the Claimant’s claims are set out in the Discussion below.
Discussion
17. This dispute is governed by Employment Law Amendment Law DIFC Law No. 4 of 2021 (the “DIFC Employment Law”) in conjunction with the relevant Employment Contract.
18. First and foremost, I shall deal with the nature of the Claimant’s employment with the Defendant, then 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.
19. After the review of the Claimant’s Second Contract, the Court notes that the arrangement between the parties is not a typical employer/employee relationship. The Claimant was under the Defendant’s employee visa and was provided with medical insurance, but the Claimant was not required to attend work at the Defendant’s beauty lounge every day, in fact, she was only required to attend the beauty lounge when she had appointments scheduled. In addition, she was free to take appointments in other beauty salons as shown on the Claimant’s Instagram page where she advertised her work. The Claimant was also free to reject any appointments that the Defendant wanted to book if she already had a client outside of the Defendant’s beauty lounge booked at the same time. The Court is satisfied that the Claimant’s role performed under the Second Contract is similar to a freelancer which allowed the Claimant to perform ad-hoc work for the Defendant without having a long term commitment to the company.
6 months unpaid salary
20. The Claimant submits that her employment is not based on commission and states that pursuant to the fact that she was terminated, she ought to be entitled for the amounts of her salary that she should would have received during the 6 months preceding her termination.
21. The Claimant submits that she was not aware of the contents of the Second Contract or that she would be working on a commission basis.
22. In response to this claim, the Defendant argues that the agreement between the parties confirmed that the Claimant would be paid on a commission basis and that she has been paid all the amounts that are due as per the Second Contract.
23. To determine whether the Claimant would be entitled to this sum, the Court must determine the nature of the renumeration as set out within the Second Contract. Clause 6 of the Second Contract states as follows:
“6 Remuneration:
You shall be paid an all-inclusive compensation package started 1st July 2021 on commission base as follow; As agreed, you will receive only a monthly commission of 50% from net turnover (net sales) from the Services.”
24. Clause 6 is clear and straight forward, it is unfortunate that the Claimant claims that she signed the Second Contract without understanding the clause as stated, but the Court is satisfied that she is aware of it due to the fact that there were negotiations in relation to the percentage claimed from the Defendant. The percentage was originally 35% of net sales however, the Claimant later negotiated an increase to 50% of net sales, which was reflected in the Second Contract.
25. The Defendant confirmed as per the appointments booked with the Claimant, she has received 50% of net sales for all of her appointments, as such, I dismiss the Claimant’s claim for 6 months’ salary payment.
Payment in lieu of untaken annual leave
26. The Claimant claims an amount of AED 10,153.85 as payment for her accrued and untaken annual leave. The Claimant submits that she is entitled to 44 days. The Defendant denies that the Claimant is entitled to the aforementioned annual leave days as she is not an employee with the Defendant.
27. Article 27 and 28 of the DIFC Employment Law stipulates that:
“27. Vacation Leave
(1) Subject to Article 30, an Employee who has been employed for at least ninety (90) days is entitled to paid Vacation Leave of twenty (20) Workdays in each Vacation Leave Year.
(2) An Employee is entitled to be paid their Daily Wage during Vacation Leave.
(3) …
28. 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 up to and including the Termination Date calculated in accordance with Article 28(3).
(2) In the event that the Employee has taken more Vacation Leave than has accrued at the Termination Date, the Employer shall be entitled to deduct an amount calculated in accordance with Article 28(3) from any payments due to the Employee on the Termination Date.
(3) Compensation in lieu of Vacation Leave, or any amount owed by the Employee in respect of excess Vacation Leave taken, shall be calculated using the Employee's Daily Wage at the Termination Date.”
28. As the Claimant does not have fixed days to attend work and her attendance depends only on her appointments the 1.6 days generated per month does not apply in her situation, in addition she does not have a daily wage, which the annual leave compensation is calculated upon.
29. In light of the above, the Claimant’s claim for payment in lieu of untaken annual leave shall be dismissed.
End of service gratuity
30. The Claimant claims that her end of service gratuity has been withheld from her and she is requesting to be paid the amount of AED 3,164.
31. The Defendant submits that it has made all of the payments that have fallen due and owing in relation to the Employment Contract and there is no pending end of service payment to be made under the Second Contract. The Defendant further adds that it was in fact the Claimant that did not access her DEWS account in order to obtain the payments.
32. Article 66 of the DIFC Employment Law stipulates that:
“(1) An Employee who is not required to be registered with the GPSSA under Article 65(1), and who completes continuous employment of at least one (1) year or more with their Employer, before or after the Qualifying Scheme Commencement Date, is entitled to a Gratuity Payment for any period of service prior to the Qualifying Scheme Commencement Date on the termination of their employment. A period of service referred to in this Article 66(1) includes any period of Secondment.
(2) An Employee’s Gratuity Payment shall be calculated as follows:
a. an amount equal to twenty one (21) days of the Employee’s Basic Wage for each year of the first five (5) years of service prior to the Qualifying Scheme Commencement Date; and
b. (b) an amount equal to thirty (30) days of the Employee’s Basic Wage for each additional year of service prior to the Qualifying Scheme Commencement Date,” [sic].
33. In the absence of any basic wages, the Defendant was mindful that the Claimant would not be entitled to any end of service benefit nor contribution into a qualifying scheme. Further, the DEWS account that had been set up for her for monthly contributions closed following the commencement of the Second Contract. The Defendant seeks to rely upon the confirmation it received from the DEWS Plan Administrator which confirmed that the Claimant would not be eligible to receive monthly contributions into her qualifying scheme in light of her commission-based contract.
34. The Court agrees with the Defendant’s submissions, and in the absence of a basic wage, the Claimant is not entitled to be paid any end of service gratuity, as the mechanism for calculating the end of service depends entirely on the employee’s basic salary. Therefore, in accordance with the above, the Defendant’s claim in relation to end of service shall be dismissed.
Compensation for damaging reputation and victimisation
35. The Claimant seeks payment from the Defendant of an unquantified amount as compensation for the alleged stress and victimisation that had fallen upon the Claimant as a result of the Defendant’s actions. This includes not allowing the Claimant to undertake work.
36. The circumstances that have fallen upon the Claimant, while unfortunate, do not meet the burden that the Claimant would have to prove in order to demonstrate that she has suffered undue damage at the hands of the Defendant.
37. Accordingly, I dismiss the Claimant’s claim for compensation for undue stress and victimisation.
Conclusion
38. In light of the aforementioned, the Claimant’s claim is dismissed.
39. Each party shall bear their own costs.
