Claim No. CFI-084-2018
THE DUBAI INTERNATIONAL FINANCIAL CENTRE
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum,
BEFORE H.E. JUSTICE SHAMLAN AL SAWALEHI
MOHAMMED ZAHID ASLAM
(1) SDI CAPITAL LIMITED
(2) SDI CAPITAL HOLDINGS LIMITED
Hearing: 9 July 2019
Counsel: Moaza Al Khadar Advocates & Legal Consultancy for the Claimant
Lead Counsel: Samer Abou Said
The First Defendant
Judgment: 29 July 2019
JUDGMENT OF H.E. JUSTICE SHAMLAN AL SAWALEHI
UPONreviewing the Claimant’s claim dated 19 September 2018
UPONhaving reviewed the Court
AND UPONhaving heard counsel for the Claimant at trial on 9 July 2019 (the “Trial”)
UPONthe non-attendance of the Defendants and of their legal representatives at the Trial
IT IS HEREBY ORDERED THAT:
- All claims against the Second Defendant are dismissed for lack of jurisdiction.
- The Defence and
- Judgment is hereby entered in favour of the Claimant as against the First Defendant in the sum of AED 1,982,159 (the “Judgment Sum”), comprising:
a. AED 1,086,984 as unpaid wages;
b. AED 96,355 as payment in lieu of untaken holiday time;
c. AED 121,582 as end of service gratuity; and
d. AED 704,768 as Article 18(2) penalties calculated up to and including the date of this Judgment.
- Pursuant to Article 18(2) of the
- The First Defendant shall pay to the Claimant the Judgment Sum within 28 days of the date of this Judgment.
- The First Defendant shall pay the Claimant’s costs of these proceedings on an indemnity basis and in such specific amount or amounts as the DIFC Courts’
Date of issue: 31 July 2019
- The Claimant, Mohammed Zahid Aslam, a UK national residing and working in Dubai, (hereafter the “Claimant”) filed this Claim on 19 December 2018 seeking payment of certain unpaid wages totaling AED 1,287,368, and for the transfer of his employment visa from the Defendants, SDI Capital Limited (hereafter the “First Defendant”) and SDI Capital Holdings Limited (hereafter the “Second Defendant”). The First Defendant is a DIFC company and the Claimant’s former employer. The Second Defendant is a Cayman Island registered entity which owns the First Defendant as its sole shareholder.
- The Claimant had initially filed his Claim in the DIFC Courts’ Small Claims
- The Claimant’s Application to transfer his employment visa was granted via the Order of Judicial Officer Maha Al Mehairi dated 31 December 2018. The Defendants then filed their Acknowledgment of
- The Parties met for a Case Management Conference (hereafter the “CMC”) before Judicial Officer Maha Al Mehairi on 28 February 2019 at which time a schedule for the Claim moving forward was discussed. At the CMC, it was agreed that the Defendants could file an amended Defence and Counterclaim within 10 days of the CMC. The Defendants filed the Amended Defence and Counterclaim on 11 March 2019. The Claimant provided an updated Reply to Defence on 21 March 2019. The Parties then exchanged Requests to Produce on 8 April 2019.
- On 10 April 2019, the Defendants’ Legal Representatives applied to the Court to be removed as designated legal representatives for the Defendants, stating that “the Defendants have consistently failed to provide instructions on time to enable us to comply with our duties to the Court in a timely manner and the Defendants have failed to settle our outstanding professional charges despite repeated reminders.” The Defendants’ Legal Representatives’ Application was granted via the Amended Order of Judicial Officer Maha Al Mehairi dated 21 April 2019.
- Based upon both Parties’ Requests to Produce and the Claimant’s Objections to the Defendants’ Requests filed on 15 April 2019, the Court issued the Disclosure Order of Judicial Officer Maha Al Mehairi dated 22 April 2019. The Defendants failed to file any objections to the Claimant’s Request to Produce.
- The Case Management Order of Judicial Officer Maha Al Mehairi was issued on 24 April 2019, and was later amended in early May. The Claimant provided document production and further witness statements in May 2019 and attended the Pre-Trial Review before H.E. Justice Shamlan Al Sawalehi on 16 June 2019. The Defendants failed to file further documents and also failed to attend the Pre-Trial Review. While the Claimant filed its Skeleton Arguments on 3 July 2019 in advance of Trial, the Defendants failed to make any further filing.
- The Trial went forward as scheduled on 9 July 2019 with the Claimant’s
The Claimant’s Arguments
- The Claimant outlines the relevant facts as follows. The Claimant began working for the First Defendant on 9 November 2015 with a monthly salary of AED 59,638. The Claimant contends that the First Defendant unilaterally reduced his salary starting in May 2016. Furthermore, the First Defendant failed to pay the Claimant at all starting from March 2017 through to the Claimants resignation on 4 November 2018 (with the First Defendant paying the Claimant his reduced salary in April 2017, November 2017 and December 2017 and incomplete salary payments for the months of May 2017, June 2017 and March 2018). The Claimant also seeks sums for accrued but untaken holidays earned in 2017 and 2018.
- The Claimant states that the Defendants’ main claim against paying his salary in full is that he was pursuing private business during his employment and that he ceased to attend the office. The Defendants also argued in their Defence and Counterclaim that the Claimant was allegedly not performing his job properly, causing a withholding of salary payments. The First Defendant alleges that it informed the Claimant that his salary would be reduced, and that the Claimant then agreed to have his back wages paid by another entity.
- The Claimant’s argument is that both the Defendants are jointly liable to pay the outstanding sums based upon the definition of “Group Company” as defined in his Employment Contract. Furthermore, the Defendants are liable to pay a penalty as required by Article 18(2) of the DIFC Law No. 4 of 2005 (hereafter the “DIFC Employment Law”) for failure to settle the outstanding amounts within 14 days after the employment relationship was terminated.
- The Claimant stated that it rejected the Second Defendant’s contention that the DIFC Courts do not have jurisdiction over the Second Defendant, who is neither a party to the Employment Contract nor a DIFC entity. However, the Claimant argues that the Second Defendant failed to properly contest jurisdiction and in any event, it is covered under the jurisdiction of the DIFC Courts as it is the sole shareholder and holding company for the First Defendant.
- As to the merits of the dispute, the Claimant argues that he need only prove his case, based upon the DIFC Employment Law, by a preponderance of the evidence in order to succeed. The Claimant’s claim is for the following sums:
- outstanding wages, including deductions from his salary;
- accrued but untaken holidays for 2017 and 2018;
- end of service gratuity;
- penalty under Article 18(2) of the DIFC Employment Law;
- court fees and attorney’s fees related to the CFI matter; and
- any other relief as appropriate.
- The Claimant addresses each of these claims in turn. As to the missing salary and unauthorized salary deductions, the Claimant states that he was hired with a salary of USD 195,000 per year or AED 59,638 per month. However, the First Defendant informed the Claimant in April 2016 that it would reduce his monthly salary to AED 50,000 starting in May 2016. The Claimant contends that he did not accept such a reduction in any capacity and thus, the deduction qualifies as unauthorized pursuant to Article 19(b) of the DIFC Employment law, which requires prior written agreement of the employee. Article 19(b) cannot be waived.
- In addition to this unauthorized deduction, the Claimant also argues that the First Defendant failed to pay any form of salary starting from March 2017 onwards. The Claimant admits that he did receive his reduced salary for April 2017, November 2017 and December 2017. He also received incomplete salary payments for May 2017, June 2017 and March 2018. The Claimant argues that there is no justification for these outstanding wages and all should be granted to him.
- The Claimant contends that he is entitled to pay in lieu of 35 holiday days, 10 rolled over from 2017 and 25 from 2018. He did not take this vacation time and was not paid out for it pursuant to Article 28 of the DIFC Employment Law.
- The Claimant argues that he has a right to end of service gratuity as per Article 62 of the DIFC Employment Law in the amount of 21 days’ basic wage for the three consecutive years he worked for the First Defendant. The Claimant argues that based upon his salary, his daily basic wage is AED 1,961 per day. He should be granted 62 days’ wage as his rightful end of service benefits.
- The Claimant argues that it is clear that, pursuant to Article 18(1) of the DIFC Employment Law, the First Defendant should have paid him any amounts owing within 14 days of his termination. Failure to do this results in the imposition of a statutory penalty pursuant to Article 18(2) in the amount of the employee’s last daily wage awarded per each day the employer remains in arrears. The Claimant argues that short and long delays are to be treated equally under
- The Claimant also requests that the Court
- Should the Defense and Counterclaim be allowed, the Claimant also responds directly to the arguments contained therein. The Claimant contends that the reasoning given for reduction or withholding of salary had never been articulated to him before his resignation. The Claimant argues that he stopped attending the office when the air conditioning was turned off but continued to work remotely.
- As to the reduction in salary, the Claimant reiterates that he did not agree to such a reduction, either verbally or in writing. The Defendant has failed to prove any such reduction was agreed. The Defendants have failed to comply with the Production Order to provide more clarity on this issue.
- The Claimant contends that he was never notified of any concern that his work performance was poor and was not informed that his salary reduction was connected with poor performance. As to the allegation of his side dealings and private business pursuits, the Claimant argues that these allegations are false. Instead, the cited emails with “external parties” are evidence of the Claimant seeking to engage new clients and look for business opportunities. The Defendants full knowledge of these dealings would have been more apparent if the Defendants complied with the Production Order.
- The Claimant argues that the First and Second Defendants are jointly and severally liable for his claims. The Claimant cites Article 13 of the Law of Obligations, DIFC Law No. 5 of 2005 in conjunction with Clause 20 of the Employment Contract. While the Second Defendant may not be a party to the Employment Contract, it is included in the language of Clause 20, which states “the Company, any holding company of the Company and any subsidiary of the Company or of any such holding company, including SDI Capital Limited.”
- Finally, the Claimant argues that he should receive reimbursement for his attorney’s fees on an indemnity basis due to the Defendants’ failure to further the Overriding Objectives of the DIFC Courts. The Claimant had hoped to litigate in the Small Claims Tribunal to keep costs low, however the Defendants did not allow for this. The Defendants have failed to comply with Court directions and have otherwise impeded the proceedings.
- The Claimant provided Post-Hearing Submissions on 15 July 2019, as directed during the Trial. The Claimant provided updates to his arguments regarding his entitlements, including figures and calculations. Furthermore, the Claimant conceded that the DIFC Courts do not have jurisdiction over the Second Defendant.
- The Defendants argued in the Defence that certain withholdings from the Claimant were justified for numerous reasons and that the Claimant was in serious breach of his contractual obligations and duties to the First Defendant. Based on these allegations, the Defendants seek to counterclaim against the Claimant for damages. Furthermore, the Defendants argue that the Second Defendant is both an unnecessary and impermissible party to the Claim. The Defendants also argue that the DIFC Courts do not have jurisdiction over the Second Defendant as a non-DIFC entity that is not party to the Employment Contract.
- However, I must take note of RDC 35.14 at this time. RDC 35.14 states:
“The Court may proceed with a trial in the absence of a party but:
- if no party attends the trial, it may strike out the whole of the proceedings;
- if the claimant does not attend, it may strike out his claim and any defence to counterclaim. The defendant may prove any counterclaim at trial and obtain judgment on his counterclaim and for costs; and
- if a defendant does not attend, it may strike out his defence or counterclaim (or both). The claimant may prove his claim at trial and obtain judgment on his claim and for costs.”
- With reference to RDC 35.14(3), I find it appropriate in this circumstance to strike out the Defendants’ Defence and Counterclaim, and to proceed on the basis of the Claimant’s oral and written submissions only. This is appropriate in the circumstances considering that the Defendants were fully aware of the Trial schedule and still failed to attend or to appoint and send their legal representatives.
- Given that the Defence has been struck out in full, the relevant assessment required in this matter is limited to a determination of whether the Claimant has proven his case by a preponderance of the evidence. While the Defence has been struck out, it is not assumed that the Claimant will be successful on his case. Instead, the Claimant must still prove his claims in oral and written submissions.
- As a preliminary issue, I must address jurisdiction. Although the Defendants’ arguments as to jurisdiction have been duly struck from the record, any judge must address his or her ability to make a judgment, including jurisdictional issues, as they become apparent. It is also incumbent on the Claimant to prove that the DIFC Courts has jurisdiction over any claim or defendant included in the matter. Upon initial review of the Claimant’s pleadings, I had some question as to the DIFC Courts’ jurisdiction over the Second Defendant.
- Thus, at the conclusion of Trial I instructed the Claimant to provide more comprehensive pleadings as to his argument for DIFC Courts’ jurisdiction over the Second Defendant. Upon receipt of the Claimant’s Post-Hearing Submissions, it is clear that the Claimant now concedes that the DIFC Courts bears no jurisdiction over the Second Defendant in this case. I will accept this concession. All claims against the Second Defendant are therefore dismissed due to the Claimant’s concession that the DIFC Courts bears no jurisdiction over the Second Defendant.
- There is no issue as to the DIFC Courts’ jurisdiction over the First Defendant as it is a DIFC entity and this is a Claim regarding employment in the DIFC. The Claim is governed by the DIFC Employment Law, Law No. 4 of 2005, as amended in 2012. While a new version of the DIFC Employment Law was enacted on 30 May 2019, that version of the (new) law does not come into effect until 30 August 2019 and thus the new version is not applicable in this matter.
- In moving on, I will assess the Claimant’s claims as against the First Defendant only, looking to see if the Claimant has proven his claims by a preponderance of the evidence. Although the Claimant is required to prove his claim by a preponderance of the evidence, employment claims provide for special circumstances as regard the burden of proof. As per the DIFC Employment Law, Articles 13-16, the employer in the DIFC is required to keep numerous records regarding employment and thus there are numerous matters for which the employer retains a burden of proof, provided the Claimant has at least proven that he worked at the employer company.
- In this case, it is undisputed that the Claimant worked for the First Defendant company. It is then up to the First Defendant to provide the employment records, payroll records, and other evidence to show that the Claimant received all entitlements as required by law. In this case, the First Defendant has failed to provide this evidence in full and has failed to properly participate in the proceedings such that its Defence and Counterclaim has been appropriately struck from the record. In these circumstances, it is required of the Claimant to prove his claims by a preponderance of the evidence available to him. The First Defendant’s failure to participate completely in the proceedings may be taken as evidence that the First Defendant cannot prove that the Claimant has received all of his entitlements.
- Therefore, based on the extensive financial and employment records that have been provided by the Claimant, I find that the Claimant has proven by a preponderance of the evidence that he was not provided with his full entitlements with regard to salary, holiday pay and end of service benefits. The First Defendant has not provided any acceptable evidence to the contrary and therefore, I find that the Claimant is entitled to succeed on his claims for outstanding wages, accrued but untaken holiday time and end of service gratuity.
- As to his outstanding wages, the Claimant has carefully culled through his financial records to determine the amounts still owing to him from the First Defendant. The Claimant’s salary began as AED 59,638 per month. While this amount was reduced to AED 50,000 per month in May 2016, the Claimant contends that he never agreed to such a reduction. According to Article 19 of the DIFC Employment Law, employers may not make deductions from an employee’s salary or wages without proper authorization. In this case, proper authorization would require agreement in writing from the employee as per Article 19(b) of the DIFC Employment Law. Such written authorization should have been collected in advance of any reduction in salary and would be easily provided as evidence in the proceedings to prove such reduction was authorized. In this case, the Defendant has not provided any such authorization leading to the appropriate conclusion that such authorization does not exist. Therefore, I have determined that the Claimant’s monthly salary remained at AED 59,638 at all times during his employment with the First Defendant.
- As a result, the Claimant is hereby owed AED 1,086,984 in reimbursement of outstanding salary payments based upon the First Defendant’s nonpayment of salary for a number of months and the First Defendant’s payment of reduced salary for additional months. In keeping with the Claimant’s claim, I find it appropriate to award the Claimant AED 1,961 per day for the four days worked in the month of November 2018, considering the Claimant’s yearly salary divided by 365 days in the year. The below chart represents the amounts owing as per the financial evidence provided by the Claimant.
|Months||Amount Received||Amount Owing|
|May 2016 – Feb 2017||AED 50,000 per month||AED 9,638 x 10 = AED 96,380|
|Mar 2017||None||AED 59,638|
|Apr 2017||AED 50,000||AED 9,638|
|May 2017 – June 2017||AED 25,000 per month||AED 34,638 x 2 = AED 69,276|
|July 2017 – Oct 2017||None||AED 59,638 x 4 = AED 238,552|
|Nov 2017 – Dec 2017||AED 50,000 per month||AED 9,638 x 2 = AED 19,276|
|Jan 2018 – Feb 2018||None||AED 59,638 x 2 = AED 119,276|
|Mar 2018||AED 10,000||AED 49,638|
|Apr 2018 – Oct 2018||None||AED 59,638 x 7 = AED 417,466|
|Nov 2018||None (worked for 4 days)||Basic Wage AED 1,961 x 4 = AED 7,844|
|Total Owing:||AED 1,086,984|
- As for accrued but untaken holidays, I find nothing to refute the Claimant’s claim that he left the First Defendant’s employment with 35 accrued but untaken holiday days. The DIFC Employment Law supports rollover of certain days of holiday time and also supports payout of untaken holiday time upon termination (see Articles 27-28 of the DIFC Employment Law). The First Defendant is required to keep careful records of holiday time taken and accrued but I have not seen any evidence disproving the Claimant’s claims. I find that with the evidence provided, the Claimant has proven this claim by a preponderance of the evidence.
- Calculation of the holiday time is based upon the “Daily Wage” as defined in the DIFC Employment Law. “Daily Wage” is defined in the DIFC Employment Law as “compensation received by an employee as wages for services performed during the working day. The daily wage shall be calculated taking into consideration the total amount of working days in a year.” The Claimant has incorrectly calculated this amount based upon a “Basic Wage,” which takes into account the Claimant’s yearly salary divided by 365 days in a year (AED 1,961). However, the Daily Wage should properly be calculated by dividing the Claimant’s yearly salary (AED 715,656) by the average number of working days in a year (260 days), which results in a Daily Wage of AED 2,753. Thus, I find it appropriate to award the Claimant his accrued but untaken holiday days in the amount of AED 96,355 for 35 untaken holiday days.
- As for End of Service Gratuity, it is undisputed that the Claimant worked for the First Defendant for just shy of three full years. The First Defendant has not provided any accepted evidence of a reason for the Claimant to be deprived of his statutory right to end of service payments and thus, I find that the Claimant shall be granted his end of service benefits. The Claimant has shown through his financial records that no such payments have been received.
- As per Article 62 of the DIFC Employment Law, the Claimant is entitled to receive end of service gratuity in the amount of 21 days’ basic wage per year. Basic wage is calculated based upon the number of days in the year and amounts to AED 1,961 per day for the Claimant. Thus, I find it appropriate to award the Claimant AED 121,582 for 62 days’ worth of basic wage in satisfaction of his end of service gratuity entitlement.
- The Claimant also claims that the First Defendant should pay him a penalty pursuant to Article 18(2) of the DIFC Employment Law. Article 18 of the DIFC Employment Law states:
“Payment where the employment is terminated
- An employee shall pay all wages and any other amount owing to an employee within fourteen (14) days after the employer or employee terminates the employment.
- 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.”
- In this case, I have already found that the First Defendant owes the Claimant significant sums as unpaid salary, accrued but untaken vacation time and end of service gratuity. Therefore, the First Defendant is found to be in “arrears” as to “wages or any other amount owing” to the Claimant. It is therefore appropriate to require the First Defendant to pay to the Claimant the penalty articulated in Article 18(2) of the DIFC Employment Law.
- As the Claimant’s last working day was 4 November 2018, the Article 18 penalty will begin to accrue from 18 November 2018 onwards until full payment is made to the Claimant. Article 18 penalties are calculated by taking the last daily wage payable to the Claimant. As noted above as regards untaken holiday time, the Claimant’s daily wage is AED 2,753 per day. 256 days have passed from 18 November 2018 until this Judgment and thus the First Defendant shall pay the Claimant AED 704,768 as Article 18(2) penalties. The First Defendant shall continue to pay the Claimant AED 2,753 per day starting from 1 August 2019 onwards, until the Judgment amount has been paid.
- In sum, I find it appropriate to grant the Claimant’s claims in full as against the First Defendant. Thus, the First Defendant shall pay the Claimant:
- AED 1,086,984 as unpaid wages;
- AED 96,355 as payment in lieu of untaken holiday time;
- AED 121,582 as end of service gratuity;
- AED 704,768 as Article 18(2) penalties calculated through the date of this Judgment; and
- AED 2,753 per day starting on 1 August 2019 onwards, until the First Defendant has made full payment of the amounts owning in paragraphs a-c above.
- It is appropriate to require the First Defendant to repay the Claimant for his DIFC Courts’ Fees and his attorney fees and other appropriate costs of these proceedings. The First Defendant shall pay the Claimant’s costs of these proceedings on an indemnity basis and in such specific amount or amounts as the DIFC Courts’ Registrar shall determine following consideration of the Claimant’s costs submissions to be filed within 30 days of the issuance of this Judgment.
Date of issue: 31 July 2019