The DIFC Courts in Dubai recently announced that the number of cases handled by the Small Claims Tribunal (SCT) had almost doubled, from 79 in the first six months of 2016 to 150 for the same period this year – a good proportion of which are understood to be employment-related. So what’s behind the rise, and how might proposed changes to employment law impact this trend?
Set up in 2007, the SCT was designed to enable access to justice in a swift and efficient manner, and is open to anyone across the Emirate. In fact, according to the courts, 88 per cent of claims are resolved in less than four weeks – something it prides itself on. The DIFC Courts have also been active in educating employers and employees about the SCT process, meaning knowledge of it as an option is likely to be high.
“Greater awareness, the innovative use of technology, and new partnerships opening access to companies in free zones”, has been driving the SCT’s caseload, according to DIFC Courts. Last year, for example, it introduced Smart SCT, which means parties can now resolve disputes using their smartphone. Only the judge needs to be present in the courtroom – the rest can be done virtually.
But while awareness of the court, and its many advantages compared to the Court of First Instance (CFI), is undoubtedly a major contributor to the increase in cases, it is also apparent that economic conditions have worsened, which has led to a rise in terminations, and consequently employment disputes, Jamie Liddington, partner, head of employment at law firm Hadef & Partners, told People Management.
“Coupled with the increase in terminations is the increased awareness of the potential to claim a penalty payment (Article 18 of DIFC Employment Law), where the employer fails to pay all wages or other amounts owing within 14 days of the termination date,” said Liddington. “At the moment, almost every case in the DIFC Courts which relates to employment includes a claim for a penalty payment.”
The penalty is calculated as one day’s wages for each day that the employer remains in arrears, which can reach a sizeable amount. “In one case (Adil v Frontline) this led to a penalty payment of US$1.6m (AED 5.8m),” he added.
Rebecca Ford, partner at Clyde & Co, said there were other reasons why the SCT is becoming a popular forum. One is that it is private, unlike the CIF, “which is attractive to employers”. Another is the relatively swift dispute resolution the SCT offers, she said.
“This is particularly pertinent to employment disputes, due to the ‘Article 18’ penalty,” said Ford. The quick resolution may also mean any penalty payment is limited.
“The SCT has automatic jurisdiction for any claim which has a value of up to AED500,000, and may also accept jurisdiction of an employment claim with a value greater than this, where the parties to the dispute consent,” said Ford. “As the court fees are lower in the SCT than the CFI, an individual looking to bring an employment claim in the SCT may seek to persuade an employer to accept SCT jurisdiction, on the basis that any Article 18 penalty will be determined at a faster rate than if the case proceeded in the CFI.”
Luke Tapp, senior associate, Pinsent Masons, put the increase in SCT claims, from an employment perspective, down to the general growth in business activity and the increased awareness of individual employment rights.
“As workforces within Dubai become more sophisticated and knowledgeable of their employment rights, the number of claims will inevitably grow,” he said. “Although it may be bad news for employers in the short term, if this trend creates an improvement in local workplace policies and procedures, it will have a positive impact on the stability and quality of the Dubai workforce.”
The vast majority of employment claims that currently fall within the jurisdiction of the DIFC Courts fall within the sub-jurisdiction of the SCT, however Liddington said there could be “some re-distribution” over the next 12 months as it is anticipated that the DIFC Authority is soon to publish a draft of a new DIFC Employment Law. “We anticipate this will, for the first time, provide a means for employees to seek compensation where they have been subjected to discriminatory treatment,” said Liddington. The new law could come into force as early as January 2018, though it is considered more likely to arrive in February.
“Unless the DIFC Courts increase the upper limit on the value of employment claims (perhaps to AED 1m) this may result in more claims falling outside of the Small Claims Tribunal's automatic jurisdiction,” said Liddington.
Tapp said he also believed the new DIFC Employment Law could have an impact on employment relations and the level of claims. “It will be extremely important for companies to ensure they are aware of the changes to the DIFC employment legislation when it is implemented, and that DIFC companies update their policies and employment contracts to reflect any such amendments,” he said.
While there are a number of considerations to bear in mind, in most cases it will be to the employee’s advantage to issue a claim in the SCT – not least because the court's rules provide that regardless of the outcome (and in the absence of unreasonable conduct on the side of either party), the parties each bear their own costs, said Liddington. “This is in stark contrast to the Court of First Instance, where the loser pays the winners reasonable costs of the litigation,” he added.
Mark Beer, co-chief executive and registrar general of the DIFC Courts, has said the rapid growth of the SCT “underscores our ability to support SMEs and individuals”, but one legal expert who spoke to People Management, and wishes to remain anonymous, raised concerns that employees are not allowed legal representation unless the court accepts an application by one of the parties to allow this.
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