Claim No. SCT 072/2013
THE DUBAI INTERNATIONAL FINANCIAL CENTRE
COURTS
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Ruler
IN THE SMALL CLAIMS
TRIBUNAL
BEFORE H.E. JUSTICE SHAMLAN AL SAWALEHI
BETWEEN
EBONY
Claimant
and
EELIS
Defendant
Hearing: 23 June 2014
Parties: Edelmar (litigant in person) for the Claimant
Edie for the Defendant
Judgment: 9 July 2014
JUDGMENT OF H.E. JUSTICE SHAMLAN AL SAWALEHI
Parties
1. The Claimant is Ebony, a former employee of the Defendant.
2. The Defendant is Eelis, a company that provides investment banking services based in London and incorporated in the DIFC
Factual Background
3. In April 2011, the Claimant entered into an Employment Agreement with Eelis for the senior position of Head of Investment Banking. Eelis is the Dubai branch of the investment banking line of business known as xxxx, with offices in the United States and London.
4. Approximately 12 months, later in March 2012, the Claimant was promoted to Chief Operating Officer and Global Head of Investment Banking of Eelis. As such, he was given additional responsibilities related to Eelis’s offices in North America as well as global operations of Eelis. Furthermore, in June 2012, the Claimant was granted a performance bonus award of 11,969 shares of Edie with a dollar value at the time of US$ 200,000.
5. On 11 February 2013, the Claimant was aggressively terminated from Eelis by the Senior Executive Officer (“SEO”). Although the Claimant was given no written reasons for his termination, he received a Letter of Termination on 11 February 2014 that outlined the terms and conditions for Claimant’s end of service including notice period, salary and allowances, approved expenses, outstanding vacation entitlement and end of service gratuity. The Letter outlined an outstanding amount of AED 222,943.17 due to the Claimant to be paid by 19 February 2013.
6. On 19 February 2013, no payment had been made by the Defendant, and by 25 February 2013, the last day of the 14-day notice period after the date of termination, no payment was made by Eelis. 68 days after the date of termination on 20 April 2013, the Claimant received AED 222,943.17 noted as “End of Service
7. On 18 December 2013, the Claimant filed the original claim with the DIFC Courts
8. On 23 January 2014, a consultation was attended by both the Claimant and a representative of the Defendant before H.E. Justice Omar Al Muhairi, but no settlement was reached. A hearing was then scheduled for 2 March 2014 before H.E. Justice Shamlan Al Sawalehi. The Judge
The Hearing
9. On 23 June 2014, a second hearing was held before H.E. Justice Shamlan Al Sawalehi, attended by the Claimant’s wife as his representative and XXX as a representative of the Defendant. At the hearing, the Claimant elected to proceed with the Small Claims Tribunal and amend the amount of remedy sought to a maximum of AED 200,000.
The Claimant’s Position
Housing and Car Allowances
10. The Claimant argues that all amounts calculated by CIS in the Letter of Termination were based on his base monthly pay of USD 20,000 and did not include any allowances, despite Section 2.1 of the Letter of Termination which states,“You will be paid your full salary and allowances from the termination date until the gardening leave expires on March 14, 2013.”Additionally, Section 9.3 of his Employment Agreement states,“During any Suspension Period the Employee’s salary and other benefits to which he is entitled under this agreement shall continue to be paid and provided by the Company.”Despite these clauses, the Claimant posits no housing allowance or car allowance was paid for i) his base salary of 11 days in February 2013; ii) his leave salary of 10.33 days; or iii) the one-month gardening leave from 11 February to 14 March 2013. As per the Schedule attached to the Letter of Termination, the Claimant was paid a total of AED 125,212.76 for the three particulars laid out above which was calculated only according to his base salary, leaving an outstanding amount of AED 36,619 in arrears for housing and car allowances.
Business Expenses11. The Claimant then argues that he was not reimbursed for business expenses owed to him in the amount of US$ 4,100. Throughout the course of business, the Claimant was required to travel to the other offices of CCM located in London, Houston and New York to meet with clients and staff. Each time the Claimant travelled, he incurred business expenses that would be submitted in the normal course of business and reimbursed to him.
12. In January 2013, he flew to xxx and incurred business expenses in the amount of USD 4,100. The Claimant alleges the expenses were submitted in the normal course of business in February 2013, prior to his termination by CIS. Reimbursement of these expenses incurred were not included in the Schedule attached to the Letter of Termination, despite Section 2.2 of the Letter of Termination which states,“You are entitled to be reimbursed for any approved and pending expenses properly incurred by you until 11thFebruary, 2013 while performing your duties on behalf of the Company. Please advise of any such expenses by no later than 15thFebruary, 2013.”
Relocation13. Pursuant to Section 4 of the Letter of Termination, Eelis stated they would provide one economy air ticket to relocate the Claimant to his home in xxx. The Claimant argues that he was always booked by Eelis on business class, unless that class was unavailable at the time of booking, and believes he is entitled to a business class ticket in line with Eelis policy where senior executives travel business class or higher provided that the flight is longer than four hours.
Penalty14. The Claimant argues that he is entitled to a penalty equivalent to the last daily wage for each day he is in arrears, pursuant to Section 18 of the DIFC Employment Law. The Claimant asserts that Eelis is liable to pay a penalty for a total of 55 days which amounts to US$ 36,190.00.
15. Section 18 of the DIFC Employment Law states:
(1) An employer shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.
(2) If an employer fails to pay wages or any other amount owing to an employee in accordance with Article 18(1), the employer shall pay the employee a penalty equivalent to the last daily wage for each day the employer is in arrears.
16. Pursuant to the Schedule attached to the Letter of Termination, the amount due to the Claimant was payable by the stated payment date of 19 February 2013. No amount was transferred to the Claimant until 20 April 2013, being 68 days after the date of termination and 55 days after the notice period ended on 25 February 2013. Therefore, the Claimant alleges that the penalty clock commenced on 25 February 2013 through to 20 April 2013 when the alleged insufficient amount was deposited, for a total of 55 days.
17. Pursuant to Section 3 of the Employment Agreement, daily wage can be calculated from the Remuneration and Benefits section as US$ 658 or AED 2,420 daily. Thus, the total penalty amount pursuant to Section 18 of the DIFC Employment Law which states the employer shall pay the employee a penalty equivalent to the last daily wage for each day the employer is in arrears amounts to US$ 36,190.00. The reduced penalty amount included in Claimant’s claim total is US$ 34,819.00.
The Defendant’s Response and Position
Housing and Car Allowances
18. In response to Claimant’s final amended claim, the Defendant claims that it is their custom and practice not to pay an employee’s remuneration during the notice period including housing and car allowances.
Business Expenses
19. With regard to business expenses, the Defendant asserts that the Claimant did not provide copies of expense receipts and that the expense claims submitted with the original claim were incomplete. Additionally, the Defendant argues that the Claimant failed to provide evidence of him submitting the business expense claim form to the Defendant at the time they were incurred, and failed to provide evidence that the expenses were approved by the Claimant’s line manager at the time they were incurred.
Relocation
20. The Defendant asserts that they are under no obligation to provide a business class ticket to the Claimant and that if the Claimant does not obtain alternative employment in the UAE
Penalty
21. With regards to the penalty sought by the Claimant in the amount of US$ 34,819 pursuant to Section 18 of the DIFC Employment Law, the Defendant asserts that the Letter of Termination clearly set out the payments which were due to be made to the Claimant by 19 February 2013. Such payments were conditional on the Claimant confirming his agreement to and acceptance of the terms as set out in the Letter of Termination which the Defendant claims the Claimant has failed to do to date. Notwithstanding the fact that the Claimant did not sign the terms of the Letter of Termination, the Defendant proceeded to make payment to the Claimant in the amount set out in the Letter of Termination on 20 April 2013.
22. The Defendant maintains that there existed no intention to withhold payments from the Claimant and was awaiting receipt of the signed and returned Letter of Termination before it made payment to the Claimant.
The
Court
Car and Housing Allowance
23. According to Section 18(1) of the DIFC Employment Law, it is clear that an employer is required to pay an employee base pay as well as any other amount owing to an employee within the terms of their employment contract up until the date of termination and, in some cases, during the notice period or garden leave. Section 18(1) of the above-mentioned law states:
“18. Payment where the employment is terminated
(1) An employer shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.”
24. Additionally, the Letter of Termination given to the Claimant drafted by the Defendant clearly states that full salary and allowances from the date of termination to the end of the notice period will be paid to Claimant. Section 2.1 of the Letter of Termination states:
“2.1 Salary and Allowances
You will be paid your full salary and allowances from the termination date until your gardening leave ends on 14thMarch, 2013.”
25. Finally, the Claimant’s Employment Agreement clearly states that an employee’s salary and other benefits to which they are entitled shall continue to be paid during garden leave or a suspension period. Section 9.3 of the Employment Agreement under Section 9, “Garden Leave and Suspension,” states:
“9.3 During any Suspension Period, the Employee’s Salary and other benefits to which he is entitled under this Agreement shall continue to be paid and provided by the Company and, subject to the terms of the suspension, this Agreement and any implied obligations of the Employee shall continue to have full force and effect.”
26. The Claimant’s salary and other benefits to which he is entitled is laid out in Section 3 of his Employment Agreement under “Remuneration and Benefits.” Under this section, the Claimant is entitled US$ 20,000 per month as base salary; US$ 1,000 per month and US$ 5,833.33 for car and housing allowances respectively; as well as USD 5,000 per child per year for school fees and additional allowance for medical insurance.
27. Taking into consideration the DIFC Employment Law, in addition to the individual clauses of Claimant’s Letter of Termination and Employment Agreement, it is clear that the Defendant is in arrears as no housing or car allowance was paid for i) the Claimant’s base salary of 11 days in February 2013; ii) his leave salary of 10.33 days; and ii) the one-month gardening leave period from 11 February to 14 March 2013. As such, this Court orders the Defendant to pay the ClaimantAED 36,619in arrears for housing and car allowances for the periods set out above.
Business Expenses
28. The Claimant’s request for the reimbursement of business expenses in the amount of US$ 4,100 isdenied. The Claimant has put forth no evidence to prove the business expenses claimed were in fact submitted and approved by the Defendant.
Relocation
29. The Claimant’s request for a business class ticket in lieu of an economy class ticket provided by the Defendant isdenied. There is no Clause in the Employment Agreement, Letter of Termination or Employment Law that entitles the Claimant to a business class airline ticket for the purposes of relocation. Past practices alone do not warrant the relief sought by the Claimant with regard to recovering personal airline ticket expenses.
Penalty
30. Section 18 of the DIFC Employment Law states,
“18. Payment where the employment is terminated
(1) An employer shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.
(2) If an employer fails to pay wages or any other amount owing to an employee in accordance with Article 18(1), the employer shall pay the employee a penalty equivalent to the last daily wage for each day the employer is in arrears.”
31. The purpose of Section 18(2) of the DIFC Employment Law is to deter employers from causing undue delay in the dues owed to its employees. It also promotes fair treatment of employees and fosters a practice that will contribute to the prosperity of the DIFC, as an overall general purpose of the DIFC Employment Law (See Section 3).
32. In order to avoid this penalty, employers must make the amount owed to employees available including wages, end of service dues and any and all monies owed to the employee whether contractually or statutorily, before the 14 days’ notice period expires. To avoid any doubt or confusion, an employer may post-date a check to a date within the fourteen day notice period in order to show no undue delay or bad faith.
33. The employee should not contribute to the delay in receiving the last payment owed to him or her by refusing to sign a visa cancellation document or any other document that is a pre-requisite for cancellation before funds owed are dispatched by the employer. The DIFC enables employees to cancel their visas without foregoing a right to pursue a DIFC Courts claim against their former employees. This is in place in order to prevent undue delay in payments owed, as well as preventing employees from taking advantage of their employers and bleeding the company by way of penalties for each day the amount owed is overdue.
34. This remedy afforded to employees by way of a penalty inflicted on employers should not be taken advantage of. Both parties need to show good faith and, in terms of the employer, make funds owed to employees available before the 14 day notice period is up or, in terms of the employee, do what is necessary in order to receive the funds.
35. The penalty calculation period used by Claimant is from 25 February, 2013 (being the last day of the 14 day notice period) through to 20 April 2013 (the day the Defendant deposited AED 222,943.13 in the Claimant’s account) for a total of 55 days. This calculation is incorrect. Section 18(2) of the DIFC Employment Law indicates the employer shall pay the employee a penalty equivalent to the last daily wage foreach day the employer is in arrears(emphasis added).The Court recognizes that the calculation used by the Claimant was an attempt to meet the Small Claims Tribunal maximum claim threshold of AED 200,000.
36. Due to the fact that the Defendant failed to correctly calculate the housing and car allowances in the Schedule of the Letter of Termination, the penalty clock started on the last day of the 14 day notice, being 25 February 2013, until the day on which the arrears were paid. This puts the penalty at well over 450 days. For the purposes of the Small Claims Tribunal, and the maximum relief to be sought at AED 200,000, this Court rules that the Defendant must pay a penalty of 67 days to to Claimant at a rate of AED 2,420 per day , amounting to a total ofAED 162,140.
37. For the reasons mentioned above, it is hereby ordered that the Defendant shall pay the Claimant AED 36,619 in housing and car allowance arrears and AED 162,140 in penalties, pursuant to the DIFC Employment Law, amounting to a total ofAED 198,759, in addition to the Courts fees.
Issued by:
Nassir Al Nasser
Judicial Officer
Date of issue: 16 July 2014
At: 12pm