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Claim No: SCT 510/2023

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BETWEEN

NYLA

Claimant/Respondent

and

NAOMI LIMITED

Defendant/Applicant

ORDER WITH REASONS OF JUSTICE ANDREW MORAN

UPON reviewing the Judgment of H.E. Justice Maha Al Mheiri (the “Judge”) dated 13 March 2024 (the “Judgment”)

AND UPON reviewing the Defendant’s Appeal Notice dated 1 April 2024 (and amended on 2 April 2024) seeking permission to appeal the Judgment (the “Application”)

AND UPON considering the documents and submissions filed by both parties and recorded on the case file

AND UPON hearing and considering the oral submissions of the Defendant/Applicant and the Claimant/Respondent made at a hearing held on 18 April 2024 (the “Hearing”)

IT IS HEREBY ORDERED THAT:

1. Permission to make the Application for permission to appeal, which was made out of time, is granted.

2. The Application is refused.

3. Each party shall bear their own costs of the Application.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 3 May 2024
At: 8am

SCHEDULE OF REASONS

1. By an Appeal Notice, including the required Application for Permission to Appeal, issued on 1 April 2024 (and amended on 2 April 2024) (the “Application”), the Defendant/Applicant and intending Appellant, Naomi Limited , seeks permission to appeal the Judgment of H.E. Justice Maha Al Mheiri (the “Judgment”) sitting in the Small Claims Tribunal (the “SCT” or the “lower court”), of 13 March 2024.

2. The Judgment was made upholding certain claims of Nyla (the “Claimant” in the lower court and the “Respondent” to the Application) made against the Applicant, for payment of outstanding and unpaid salary, untaken annual leave, and pending DEWS which the Judge held were due to him under a contract of employment dated 27 January 2023.

3. A preliminary objection is made to the Application by the Respondent on the basis that it was served beyond the time limit allowed under RDC 53.107. The Judgment it sought to appeal was issued on 13 March 2024, but the Application was not issued until 1 April 2024. Consequently, it was issued beyond the time limit allowed.

4. The Applicant explains this as being due to leaving it until the last day for filing, 27 March, being guided to the online portal and being unable to file it on the day the attempt was later made, because it was Good Friday.

5. The Court has power under RDC 4.2 (1) to extend time which is requested in manuscript addition to the Appeal Notice. Whilst the Court was unimpressed by the excuse proffered, which does not explain why the Appeal Notice was not filed on 27 March, the delay was very short, and no prejudice was suffered by the Respondent in consequence of it. In the particular circumstances of this case, and especially having regard to the lack of merit in the Application, the extension of time for serving the Appeal Notice is hereby retrospectively granted to the date and time of its filing.

6. By her Judgment, the learned Judge ordered as follows:

7. Under Rule 53.87 of the Rules of the Dubai International Financial Centre Courts 2014 (the “RDC”), the “Court”, meaning the Court to which an appeal is made, will allow an appeal where the decision of the lower court was:

8. By RDC 53.89, an application for permission to appeal a decision of the SCT, must be made to the Court of First Instance in a particular form, and under RDC 53.91, permission to appeal may only be granted by me as a judge of the Court of First Instance:

9. Application of that test, or satisfaction that its requirements have been met, obviously requires a prospective inquiry and assessment. In short, an applicant/intending appellant must show that there is a real (i.e. a realistic as opposed to a fanciful) prospect of persuading an Appeal Court, that the judge of first instance, in the Small Claims Tribunal was wrong in what she decided. This requirement must be satisfied by the grounds of appeal advanced, and submissions made at an oral hearing showing that the judge erred in her findings and decision.

10. In this case, an Application for Permission to Appeal (and the Appeal if permission is granted) is brought on the basis that the Judge erred in calculating the Claimant’s entitlement to payment in lieu of leave not taken. It is contended that whereas the Judge used the Claimant’s monthly salary and allowances of AED 25,000 as the basis of the calculation of the Daily Wage, she should have used only his basic salary amount of AED 12,500. Thus, he was only entitled to half of the calculated sum AED 3,761.54/2 = AED 1,880.77.

11. The finding that he was entitled to 18.26 days of paid leave up to the date of the termination (based on Section 27 of the Employment Law, which stipulates an accrued entitlement of 20 days per annum in the circumstances of this Claimant’s employment period) and that he utilised only 15 of them, is not challenged; nor is the finding that he is therefore entitled to payment in lieu of the 3.26 days of leave not taken. My calculation pro-rating 11 months entitlement using the following formula: 20/12 x 11= 18.33 days, thus produces a result slightly more favourable to the Respondent but the minimal discrepancy is not the subject of any complaint or appeal.

12. By Clause 7.1 of his contract, “subject to the Employment Law” the Claimant is entitled to unlimited vacation for “full pay” – which must mean he is entitled to full pay for an unlimited part of the vacation period to which he is entitled under Article 28 of the Employment Law (vide infra) – in this case 20 days per annum or pro-rata for any lesser period employed. Any other construction of that clause offends against a sensible commercial interpretation of it; and a literal interpretation disregarding “subject to the Employment Law”, would mean he was always entitled to be on vacation during his employment and receive full pay – a ludicrous notion of the contractual intention of parties to a contract of employment for work. The key stipulation is the entitlement to “full pay” if he takes leave or vacation within his entitlement. If he decides (and the employer agrees) to work on a day on which he is entitled to take leave, then Article 28 (3) (infra) applies to define his entitlement to payment in lieu of taking leave.

13. By Clause 9.2, on termination of the contract, the Claimant was entitled to receive “such rights as may have accrued thereto at the date of termination”.

14. The Employment Law Consolidated Version No. 4 (March 2024) as amended by DIFC Laws Amendment Law DIFC Law No. 1 of 2024, DIFC Laws Amendment Law DIFC Law No. 2 of 2022, Employment Law Amendment Law DIFC Law No. 4 of 2021, and Employment Law Amendment Law DIFC Law No. 4 of 2020, the “Employment Law” is the applicable law relating to employment contracts in the DIFC, not the law referred to and dealt with hereafter, that was produced by the Applicant immediately after the hearing. It provides as follows in its relevant provisions numbered and recited in their material parts as follows:

15. The Applicant’s basis for contending the Judge should have used only the Basic Salary was articulated thus: the Respondent has in fact been paid in full for the allowances he was entitled to, in addition to his basic salary in his monthly salary payments during the months when the accrued entitlement of days of leave (or right to payment of wages in lieu of taking them) had arisen. Thus, it was contended that for him to recover the same allowances again, would amount to double recovery and thus all he was entitled to, was the basic salary component of his Daily Wage.

16. This submission unfortunately depends on a misconception of the applicable provisions of the contract of employment, the Employment Law and of the conceptual basis of entitlement to payment of wages in lieu of accrued entitlement to leave. As to the applicable legal provisions, these operate by virtue of the combined effect of the Respondent’s entitlements under his employment contract and what he is entitled to under the Employment Law, by way of payment of wages in lieu of accrued entitlement to leave, where that leave is not taken, because the employee works instead of taking that accrued leave. As I explained to the Applicant at the hearing, the conceptual basis for payment of salary in lieu of taking leave is that the employee is working for the benefit of his employer instead of taking the leave he has already earned and accrued, during each day already worked. If an employee took none of his accrued leave (say 20 days in a 260 day year of working) he is entitled to what his contract and/or the Employment Law stipulates as his entitlement for the accrued leave days worked – on top of his Annual Wage already paid. There is no double recovery it is a separate and distinct right and entitlement to additional payment, acquired by the employee.

17. This is where Clause 9.2 of the contract of employment and Article 28(3) of the Employment Law come into play and have effect together. By the former, the employee is entitled to receive from the Company “such rights as may have accrued”. By the latter, he is entitled to “Compensation in lieu of Vacation Leave, [which] …. shall be calculated using the Employee's Daily Wage at the Termination Date.” The Judge below therefore had to determine first, what was the Respondent’s “Daily Wage”?

18. The first point to note is that it was expressly not his “Basic Wage”, which is separately, distinctly, and differently defined as excluding “any Allowance or Additional Payment”. “Daily Wage” is defined differently and calculated by reference to the employee’s Annual Wage. Clause 6 of the contract defines the Annual Wage as the salary and allowances there stipulated amounting to AED 25,000 per month or AED 300,000 per annum. There is no exclusion of allowances in the definition, and this enables calculation of the Daily Wage in accordance with the Employment Law as the quotient produced when “an Employee’s Annual Wage [is] divided by two hundred and sixty (260) for an Employee that works five (5) days per Work Week.”

19. Addressing the question to be addressed on an application for permission to appeal, it is clear to me that the Judge approached the calculation of payment in lieu of leave entitlement untaken entirely correctly under the contract and the Employment Law. In my clear view, there is no prospect of an appeal court holding that she was wrong in her approach to the calculation of the Claimant’s (as he was before her) entitlement under this head of claim. For that reason, this Application for Permission to Appeal is refused.

20. By way of postscript both to the hearing of the Application and my ruling and determination above, it should be recorded that the Applicant sent an email to the court immediately after the conclusion of the hearing relying on Article 19 of the following resolution of the UAE Cabinet, regarding the application of the Federal Law cited in its capitalised title below:

21. This citation of law sheds light on why the Applicant has misguidedly pursued this appeal. Unfortunately, it has been wrongly advised concerning the application of the Resolution and Law it has sought to rely on. Those legal instruments do not apply to regulate labour relations or employment contracts in the DIFC for reasons now explained.

22. The Federal Decree Law No 33 of 2021 is a Federal Law enactment of the United Arab Emirates which, together with the Cabinet Resolution directing its implementation, though they apply in other parts of Dubai, do not apply in the DIFC to contracts of employment governed by the laws and regulations of the DIFC, where the Courts of the DIFC shall have sole jurisdiction in all matters relating to such contracts. Clause 15.1 of the employment contract in this case expressly so provides.

23. This legal fact stems from another piece of Federal Law of the UAE namely, Federal Law No. 8 of 2004 on Financial Free Zones, which by Article 3 provides:

24. The Federal Law lately produced by the Applicant and the Cabinet Resolution concerning it, are Federal civil and commercial laws, which, exceptionally, do not apply in the DIFC. In consequence, the Applicant can place no reliance upon them. The DIFC has its own different Employment Law and it is that law which the Judge below was bound to and did apply correctly.