April 25, 2024 SCT - JUDGMENTS AND ORDERS
Claim No. SCT 058/2024
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
NIYA
Claimant
and
NELL
Defendant
| Hearing : | 16 April 2024 |
|---|---|
| Judgment : | 25 April 2024 |
JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI
UPON this Claim being filed on 2 February 2024
AND UPON a hearing having been listed before H.E. Justice Maha Al Mheiri on 16 April 2024, with the Claimant and the Defendant’s representative attending
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY DECLARED AND ORDERED THAT:
1. The Defendant’s request for payment of an early termination fee in the amount of AED 5,000 pursuant to Clause 18.4 of the Employment Contract is declared void.
2. The Defendant shall pay the Claimant the Court fee in the sum of AED 367.25.
Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of issue: 25 April 2024
At: 9am
THE REASONS
The Parties
1. The Claimant is Niya(the “Claimant”), an individual filing a claim regarding her employment at the Defendant company.
2. The Defendant is Nell (the “Defendant”), a company registered in the DIFC , Dubai, UAE.
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 1 November 2023 (the “Employment Contract”).
4. The Claimant started working with the Defendant on 6 November 2023, and continued working for 1 month and during such time she faced health issues due to the nature of her job. Whilst seeking to terminate her employment, the Defendant offered her a job within the administration department as an alternative to continue working with the Defendant but it was later decided that she did not meet the expectations required for the specific role and was not the best candidate for the position.
5. On 18 December 2023, whilst on her probation period, the Claimant served her 1 week notice and once the Defendant finalised her final settlement, a request was made that she pay the amount of AED 5,000 as a refund of her joining fee with the company.
6. The Defendant states that the Claimant signed a contract that allows the Defendant to claim back the amounts paid for her hiring and joining the company.
7. On 2 February 2024, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking an order from the court to declare the Defendant’s request for the amount of AED 5,000 for the joining fee be dismissed.
8. On 9 February 2024, the Defendant filed an Acknowledgment of Service intending to defend all of the claim.
9. The parties met for a Consultation with SCT Judge Hayley Norton on 6 March 2024 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 16 April 2024.
The Claim
10. The Claimant, following her resignation, had sought to reach an agreement with the Defendant to waive its request for payment of the joining fee but the Defendant rejected this request and therefore the Claimant proceeded to file her Claim with the SCT.
11. In reply, the Defendant submits that the Claimant was fully briefed about the employment terms and conditions, and she willingly signed the Employment Contract, which clearly outlined the amount owed for the early termination fee and the repayment obligations within the 6-month period and pro rata thereafter. This agreement is detailed in Clause 18.4 of the employment contract.
“18. TERMINATION OF THE CONTRACT
18.1 Upon completion of the probationary period, either Party may terminate this Contract unilaterality by providing in writing a thirty 30) days prior notice of termination of employment and in compliance with the legal proceedings as stipulated in the DIFC Employment Law.
18.2 The Company reserves the right to pay in lieu of notice salary and other applicable benefits pertaining to this Contract till the end of the notice period. The Company shall not be liable for any additional compensation to the Employee other than the applicable statutory payments under the DIFC Employment Law of outstanding salary and annual leave.
18.3 Upon termination of this Contract, the Company reserves the right to deduct any outstanding dues and/or advanced payment/s made to the Employee from his/her final settlement.
18.4 Furthermore, should the Employee terminate this contract prior to the completion of 18 months of service, Company reserves the right to impose an early termination penalty on the Employee in the amount of 5,000 AED (Five Thousand Dirhams). In the first six (6) months, full amount of the early termination penalty and any applicable relocation expenses for self and family incurred by the Company on behalf of the Employee pertaining to the employment would be deducted from the final settlement. Thereafter, such expenses will be calculated on a pro-rata basis over eighteen (18) months based on the completed months of service.”
12. The Defendant argues that pursuant to Article 21(3) of the DIFC Employment Law, if an employee terminates their employment contract for any reason other than termination for cause under Article 63, and their termination date falls within a period of six (6) months from the employee's date of commencement of employment, the employer may recoup from the employee such reasonable costs or expenses specified in the employment contract as payable by the employee to the employer in such circumstances.
13. The value for early termination encompasses costs incurred during engagement, including management engagement and onboarding in whole, additional costs incurred by the Company by offering training to the employee and the expenses incurred by the employer in the course of recruiting the employee.
Discussion
14. This dispute is governed by DIFC Employment Law No. 4 of 2021 (the “DIFC Employment Law”) in conjunction with the relevant Employment Contract.
15. To determine whether the Defendant would be entitled to reclaim the amount of AED 5,000 for the early termination penalty. The Court must determine whether the Employment Contract defined the payments that fall under early termination. Having reviewed Clause 18.4, I find that it is vague and does not define what the amount of AED 5,000 has been used for specifically. At the Hearing, the Defendant explained that this fee is used for obtaining the visa and training that the Claimant received to be ready for the position.
16. Clauses 21 and 57 of the DIFC Employment Law reads as follows:
“21. Recruitment costs
(1) …
(2) D
(3) Subject to Article 21(3), an Employer is not permitted to recoup from an Employee any costs or expenses incurred by the Employer in the course of recruiting the Employee.
(4) If an Employee terminates their Employment Contract for any reason other than termination for cause under Article 63, and their Termination Date falls within a period of six (6) months from the Employee's date of commencement of employment, the Employer may, subject to Article 57(2), recoup from the Employee such reasonable costs or expenses which:
(a) were directly incurred by the Employer in the course of recruiting the Employee;
(b) are supported by proof of expenditure provided by the Employer to the Employee; and
(c) are specified in the Employment Contract as being payable by the Employee to the Employer in such circumstances.
57. Visas and permits
(1) If an Employee is required to work in the DIFC, their Employer is required to obtain and maintain, at the Employer's own cost, the requisite sponsorship documentation (including UAE and DIFC identity documentation), visas, authorisations, licenses, permits and approvals as may be required from time to time by Federal Law, Dubai Law, a Competent Authority or a Personnel Sponsorship Agreement, to enable the Employee to work lawfully for the Employer in the DIFC and comply with any such requirements.
(2) An Employer is not permitted to:
(a) recoup any costs and expenses incurred pursuant to Article 57(1) from an Employee; or
(b) retain the passport or other original personal documents of an Employee.
(3) If an Employee is sponsored for UAE residence visa purposes by their Employer, the Employer and the Employee must cooperate to ensure the cancellation of the Employee’s UAE residency visa as soon as reasonably practicable following the Termination Date and by no later than thirty (30) days following the Termination Date.
(4) An Employer who contravenes Articles 57(1), (2) or (3) is liable to a fine as set out in Schedule 2.”
17. In review of Article 21 of the DIFC Employment Law, I note that the law specifies the circumstances where an employer can request the employee to refund the amounts paid during the employment process or, in the situation of an early termination fee, before the 6 months period. The law also gives an exception, being that the employer cannot recoup the visa costs paid for the employee’s visa.
18. The terms used within the DIFC Employment Law are clear and leads the Court to conclude that the any clause agreed between the parties within the Employment Contract that falls contrary to the Law must be considered void. In addition, the training provided by the Defendant was done so on an internal basis and external providers were not utilised, therefore, I find that the Defendant did not pay any costs for the training.
19. In light of my finds above, I shall dismiss the Defendant’s request for the Claimant to pay the AED 5,000 for early termination fee.
20. The Defendant shall pay the Claimant the Court fee in the amount of AED 367.25.
