Cases

Arbitrary Dismissal Case

• We managed to reach a significant decision by the Court of Cassation in one of the employment cases examined. The case was brought to court by an employee who was fired arbitrarily after receiving a termination letter of his unlimited contract. The employee's services were terminated due to his or her inappropriate behavior. However, the employee's employment was terminated without any administrative investigation into the employee's violations, which is illegal under the law. Where the employer simply sent a warning letter to the employee. The employer also broke the law by serving the notice period while the employee was on leave, which is illegal under Labor Law Article No. (90). Furthermore, the employer refused to compensate the employee or pay his final wages. 
• The court made its decision, taking into account all of the violations, and ordered the employer to pay compensation in the amount of three month' wages. In this case, the court ordered the employer to pay all of the employee's benefits.

(Cassation no. 610/2018 Civil Division, Federal Supreme Court)

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Moratory Interest Vs Compensation

In one of the cases, considered by the Court of Cassation, the applicant submitted a challenge to the appeal judgment, inter alia, stating that at the same time the court awarded the defendant Moratory interest and compensation, which is considered to be a misapplication of the law. In the opinion of the claimant, the moratorium interest is also considered to be compensation awarded to the respondent.

However, the Court of Cassation held that each of the moratorium interest and the compensation had a different concept, since the creditor was entitled to a moratorium interest in the event of failure of the debtor to pay the amount of the debt and to a default payment of the debt. Moreover, even if the value of the moratorium interest is greater than the debt amount, the court is not subject to any restrictions when awarding the moratorium interest. Plus, the reason for avoiding any stalling attempt from the debtor side is beyond imposing such interest. It is therefore entirely different from the basis and concept of compensation that is awarded for any sustained harm as a means of remedy and rectification.

Brief Concept Established by the Court:

Awarding compensation does not preclude the court from imposing a moratory interest on the judgment debtor.

(Cassation no. 11 of 2018, real estate)

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Good Faith in Employment Contractual Obligations

Background

The case is about an employment contract, between an employer (hereinafter referred to as the “Claimant”) and an individual employee (hereinafter referred to as the “Defendant”). The contract was from September 2016 until the termination by mutual consent on February 2017. Moreover, the parties entered into a settlement agreement for an amount over AED 300,000. In March 2017 the Claimant has paid over AED 200,000  from the whole payment, however subsequently the Claimant discovered a certain unlawful relation of the Defendant with a third party.

Legal Issues

• Disclosing confidential information about the Claimant’s business with a third party (obligation of secrecy).
• Termination of a cooperation agreement with Defendant which the Defendant had signed in his capacity as an authorized signatory for the Claimant.

Legal Arguments

1. The trust and confidence in the contractual relationship: according to Article 58(1) of DIFC Law No.5/2005 “a person is the fiduciary of another if they have undertaken to act for/on behalf of another in a matter in circumstances which give rise to a relationship of trust and confidence.”

2. The fiduciary of the employer is his employee according to Article 158(2) of DIFC Law No.5/2005.

3. The good faith and loyalty according to Schedule 3 of DIFC Law No.5/2005. That confirms the good faith, no conflict of interest, no secret profits and confidentiality. Under the good faith obligation, the fiduciary must act in good faith and in a principal’s best interests without regard to their own interests, which means provide the full disclosure of any information.

4. The misrepresentation arises where a statement is made in order to induce a person to enter into a contract according to Article 29(c) of DIFC Law No.5/2005.

5. The person is liable for misrepresentation if they are the misrepresentation in relation to a misrepresentation according to Article 30 of DIFC Law No.5/2005.

6. The non-disclosure cannot amount to representation unless the non-disclosure is a breach of a specific duty to disclose according to Article 29(5) of DIFC Law No.5/2005.

Court Decision: The Court found a relationship exists between the Defendant and the third party. The Defendant was in breach of his duties according to the employment contract with the Claimant. In addition, the Defendant made correspondence with the third party without the Claimant’s consent as a senior employee. Therefore, the court decided in favor of the Claimant.

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