The Dubai International Financial Centre

Claim No. SCT 036/2020

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

DIFC Courts

BEFORE SCT JUDGE

Judge

NASSIR AL NASSER

BETWEEN

LOGAN

Claimant

and

LUCINA

Defendant

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JUDGMENT OF SCT JUDGE NASSIR AL NASSER

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UPONthe Claim Form being filed on 5 February 2020

AND UPONthe Defendant filing an Acknowledgment of Service

with an intention to defend all of the claim dated 11 February 2020

AND UPONthe Defendant filing an Application Notice on 13 February 2020 alleging that the Claimant initiated the proceedings against the wrong Defendant

AND UPONthe Claimant Amending its Claim Form on 16 February 2020

AND UPONthe Order of SCT Judge

Ayesha Bin Kalban granting the Defendant 14 days to file its defence to the Amended Claim

AND UPONthe Defendant filing its defence on 1 March 2020

AND UPONthe parties being called on 10 March 2020 for a Consultation with SCT Judge Ayesha Bin Kalban and the parties not having reached a settlement

AND UPONa Hearing having been held before SCT Judge Nassir Al Nasser on 9 April 2020, with the Claimant and the Defendant’s representative in attendance

AND UPONreading the submissions and evidence filed and recorded on the Court

file;

IT IS HEREBY ORDERED THAT:

1. The Claimant’s claim shall be dismissed.

2. There shall be no order as to costs.

Issued by:

Ayesha Bin Kalban

SCT Judge and Deputy Registrar

Date of issue: 19 April 2020

At: 3pm

THE REASONS

The Parties

1. The Claimant is Logan, an individual filing a claim against the Defendant regarding his employment at the Defendant company (the “Claimant”).

2. The Defendant is Lucina, a Foreign Recognized Company registered in the DIFC

located at DIFC, Dubai (the “Defendant”).

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 2018 (the “Employment Contract”).

4. On 6 November 2019, the Claimant was terminated from his employment by the Defendant, and his last working day was 5 January 2020.

5. On 5 February 2020, the Claimant filed a claim in the DIFC Courts

’ Small Claims Tribunal (the “SCT”) claiming alleged overdue commission, penalties under the DIFC Employment Law, and his flight allowance.

6. On 16 February 2020, the Claimant amended its Claim Form.

7. That same day, SCT Judge Ayesha Bin Kalban issued an Order granting the Defendant 14 days to file its defence to the Amended Claim Form.

8. On 1 March 2020, the Defendant filed its defence.

9. The parties met for a Consultation with SCT Judge Ayesha Bin Kalban on 10 March 2020 but were unable to reach a settlement.

10. Thereafter, the parties attended a hearing listed before me on 9 April 2020.

Claimant’s submission

11. The Claimant filed a claim with the SCT alleging that, during the course of his employment, he was entitled to commission and a flight allowance. Following the Defendant’s failure to pay his entitlements, the Claimant is also seeking penalties pursuant to Article 19 of the DIFC Employment Law.

12. The Claimant alleges that Clause 4 of the Employment Agreement sets out the base salary and other compensation entitlements for the employment, namely:

13. The Claimant alleges that the agreed targets and methodology used to calculate the commission due to him were agreed and set out in a document entitled “Variable Compensation Guidelines”, dated August 2018 (the “Variable Compensation Guidelines”) which was signed by the Defendant’s CEO, and sent to him by way of email on 21 August 2018, and following receipt of the document, he agreed to enter into Employment Contract with the Company.

14. The Claimant adds that the Variable Compensation Guidelines is the only document which contains the targets and the methodology by which the commission was to be calculated, and it is the only signed document relating to these factors.

15. The Claimant alleges that the commission payment depends on:

16. Furthermore, the Claimant adds that there are three types of client engagements; proof of concept (“POC”), pilot, and production, which is the most valuable.

17. As per the Variable Compensation Guidelines, the targets per category of engagement for a Tier 1 client for the Claimant, are as follows:

18. The scoring mechanism for Tier 2 clients is as above but with targets doubled in each category, e.g. 16 for POC.

19. The Claimant adds that the agreed commission on-target earnings are as follows:

20. The Claimant also adds that the following definitions are quoted from the Variable Compensation Guidelines:

21. The Claimant alleges that during quarter 2 of 2019 he closed 1 POC Contract with Lorna and during quarter 3 of 2019 he closed 2 productions which consisted of Tier 1 (Latal Bank) and Tier 2 (DIFC) clients. Therefore, the Claimant alleges that he is entitled to commission as per the below:

22. Hence, the Claimant alleges that he is entitled to penalties pursuant to Article 19 of the DIFC Employment Law. The Claimant alleges that he was an employee of the Defendant until the date of termination being 5 January 2020. Since the Defendant had refused, and continues to refuse, to pay the final settlement dues within 14 days after the termination date, the Claimant submits that the Article 19(2) penalty is automatically triggered.

23. The Claimant alleges that the penalty applies from 20 January 2020, in the total of 9 days calculated from 20 January 2020 to 29 January 2020, being the date of this claim.

24. The Claimant’s daily wage is AED 1,183.56 (AED 432,000 annual salary / 365 days). Therefore, 9 days x 1,183.56 basic wage = AED 10,652.04. Additionally, the Claimant alleges that the Defendant shall continue to pay penalties equivalent to a daily wage of AED 1,183.56 until the date of full payment of the final settlement.

25. In relation to the flight allowance entitlement, the Claimant alleges that as per the Employment Contract, Clause 4.8 states that “the Employee is entitled to one (1) round-trip airfare back to their home country (i.e. USA) in economy class per calendar year, which is eligible after the probationary period is completed.”

26. This entitlement is due each calendar year and was requested while the Claimant was in employment. There is no qualification on the dates of travel. In addition, the Claimant suggests that the travel can take place during the same calendar year as requested, which is both reasonable and in line with precedent sent in 2019.

27. The Claimant claims the sum of AED 6,825 for the flight allowance entitlement.

28. Therefore, the Claimant filed a claim with the SCT claiming the total sum of AED 273,318 which consists of the total overdue commission in the sum of AED 255,841 (including 8% interest), penalties pursuant to Article 19 of the DIFC Employment Law in the sum of AED 10,652, and a flight allowance in the sum of AED 6,825.

The Defendant’s submissions

29. The Defendant denies that the Claimant is entitled to commission and penalties. However, in relation to the flight allowance, the Defendant alleges that this was settled with the Claimant’s end of service entitlements.

30. The Defendant is of the view that the allegations made by the Claimant are incorrect. The Defendant raised questions in its defence which it believes are key in determining whether the Claimant is entitled to his claims.

31. The questions raised by the Defendant were as follows:

32. The Defendant alleges that the answers to those questions do not support payment of commission to the Claimant.

33. The Defendant alleges that the key elements around estimating the variable compensation are:

34. The Defendant also adds that the targets initially set in Lucina can be considered as a matrix with two axes; one axis for the type of engagement and another for the type of client. Specifically:

35. The Defendant alleges that the Claimant failed to reach the targets set on 21 August 2018. Furthermore, the Defendant alleges that, during the course of the Claimant’s employment, no Tier 1 or Tier 2 clients were captured. The only production contracts are with Latal Bank and DIFC that fall below the Tier 2 threshold.

36. The Defendant adds that not only did the Claimant not meet any of his goals, but additionally, he was considerably incapable in forecasting his performance and setting his own sales targets.

37. The Defendant alleges that during the Claimant’s tenure, the only commercial contracts signed were the following:

38. The Defendant adds that the tripartite agreement covers two clients under two separate schedules. It will yield revenues of USD 35,000 per annum for DIFC and USD 81,000 per annum for Latal Bank. Therefore, both clients are below the USD 200,000 threshold for a Tier 2 client and are therefore excluded from any variable compensation calculations.

39. In relation to the POC at Lorna, the Defendant alleges that they started negotiation with Lorna in Q2 of 2018, therefore, before the Claimant joined the Defendant. However, the actual contract was signed in Q2 2019 as all major items, including financials, had been concluded already by July 2018. The Defendant alleges that the Claimant had no input into sourcing and finalisation of the contract and hence cannot claim for that contract to be included in calculations of his variable compensation.

40. The Defendant alleges that Clause 4.2 of the Claimant’s Employment Contract contains the fundamental and express terms for receipt of variable compensation; namely that the entitlement will arise “if the Employee’s individual goals within a fiscal year, as agreed to by the Company and the Employee from time to time, are fully met”.

41. The Defendant alleges that, based on the individual goals on a quarterly basis which are expressly marked as ‘goals’ by the Claimant himself, there appears to be no basis for the Claimant’s assertion that he has fully met such goals, therefore he fails to qualify for any variable compensation.

42. The Defendant also adds that, the Claimant, at no time during his employment, asserted that he was entitled to any variable compensation payments. Clause 4.2 of the Employment Contract provides that “if the Employee is eligible, any such variable salary payable under this section 4.2 shall be paid within 30 days after the end of the fiscal quarter to which such variable salary related.” Therefore, the Defendant suggests that the Claimant was well aware of his performance and that he did not qualify under the Employment Contract and Variable Compensation Guidelines.

43. The Defendant also alleges that it has fulfilled all of its contractual obligations and has paid the Claimant his end of service entitlements including his flight ticket.

Discussion

44. This dispute is governed by DIFC Law No. 2 of 2019 (the “DIFC Employment Law”) in conjunction with the relevant Employment Contract.

45. The question to be asked is whether these contracts (Lorna, Latal Bank and DIFC) show that the Claimant missed, met or exceeded his periodically agreed upon sale goals in order to be eligible for variable compensation (commission)?

46. Clause 4.2 of the Employment Contract provides that:

47. As per the Variable Compensation Guidelines, the targets per category of engagement for a Tier 1 client for the Claimant, are as follows:

48. The scoring mechanism for Tier 2 clients is the same as above but with targets doubled in each category, e.g. 16 for POC.

49. The Claimant argues that during quarter 2 of 2019 he closed 1 POC contract with Lorna and during quarter 3 of 2019 he closed 2 productions which consisted of Tier 1 (latal Bank) and Tier 2 (DIFC) clients, which entitles him to a commission in the sum of AED 250,180.

50. On the other hand, the Defendant argues that the Claimant failed to reach the targets set on 21 August 2018. Furthermore, the Defendant alleges that, during the course of the Claimant’s employment, no Tier 1 or Tier 2 clients were captured. The only production contracts are with Latal Bank and DIFC, that fall below the Tier 2 threshold.

51. The Defendant adds that not only did the Claimant fail to meet any of his goals, but additionally, he was considerably incapable in forecasting his performance and setting his own sales targets.

52. Upon reviewing the evidence in the case file, I am of the view that the Claimant closed a POC with Lorna, 2 Productions with Latal Bank and DIFC. However, the question arises as to whether the Claimant met his full yearly and/or quarterly targets.

53. Going back to paragraph 48 of this Judgment, it appears that the Claimant failed to meet his targets for Tier 1 and Tier 2. He only signed 1 POC and 2 productions which consisted of Tier 1 and Tier 2 clients during the whole course of his employment with the Defendant.

54. In reference to the above, namely, paragraph 46 of this Judgment, it appears that Clause 4.2 of the Employment Contract provides that “the Employee will be eligible to receive an annual variable pay of AED 288,000 (‘Variable Salary’) if the Employee’s individual goals within a fiscal year, as agreed by The Company and the Employee from time to time, are fully met”.

55. In light of the above clause, I find that the Claimant failed to meet his targets during the course of his Employment and therefore, he is not entitled to variable compensation.

56. As I have found that the Claimant is not entitled to variable compensation, I also find that that the Claimant is not entitled to penalties pursuant to Article 19 of the DIFC Employment Law.

57. There is no evidence that the Defendant did not settle the Claimant’s end of service entitlements within 14 days from his last day of employment with the Defendant.

58. In relation to the Claimant’s claim for flight ticket to his home country, the Defendant provided confirmation that this has been settled, and that the Claimant has received his ticket.

Conclusion

59. In light of the aforementioned, the Claimant’s claim shall be dismissed.

60. There shall be no order as to costs.

Issued by:

Ayesha Bin Kalban

SCT Judge and Deputy Registrar

Date of issue: 19 April 2020

At: 3pm