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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Samir Kantaria - Partner, Head of Employment & Incentives - Employment and Incentives
By way of background, Ms Al Herz and Mr Lutfi were both employed and subsequently dismissed by the DIFC Authority (“DIFCA”). A key factor which impacted on the employees’ relationships with the DIFCA and appeared to influence its decision to dismiss the individuals was that Ms Al Herz and Mr Lutfi married on 27 July 2011.
In particular, given their respective senior positions in the DIFCA, it was determined that a potential conflict of interest had arisen in the workplace pursuant to the marriage and that certain internal policies had been breached. Both individuals pursued claims again the DIFCA arising out of the termination of their employment and although the claims were heard at separate hearings, both cases were heard before Deputy Chief Justice Sir Anthony Colman.
Hana Al Herz and DIFCA
Ms Al Herz was dismissed on 31 January 2012 because the DIFC Authority had determined that her conduct “had not been in line with the DIFCA Code of Values and Ethics and the DIFCA Employee Policies and Procedures”. Consequently, Ms Al Herz was dismissed in accordance with the notice provisions contained in her contract of employment with the DIFCA.
As there is no statutory protection against unfair dismissal in the DIFC Employment Law No.4 of 2005 (as amended) (the “Law”), Ms Al Herz’s primary claim was that notwithstanding the absence of a concept of unfair dismissal within the Law, her dismissal should be deemed unfair on the basis that DIFCA had acted in breach of the following implied terms:
In rejecting her claim, Justice Colman set out the following key points:
In dismissing the notion that the concept of unfair dismissal should effectively be introduced via terms being implied into the employment contract, Justice Colman stated that “if any such principle of unfair dismissal is to be introduced, it should be by legislation and not by judicial innovation”.
As a side note, Ms Al Herz had also brought a claim for discrimination on the grounds of marital status and a claim for end of service gratuity. The Court also dismissed Ms Al Herz’s claim for discrimination on the basis that the decision to dismiss her was not because of or on the grounds of her marriage. The end of service gratuity claim was dismissed on the grounds that she was not entitled to such a payment on the basis that she was a UAE national who had been enrolled by the DIFCA into the statutory UAE pension scheme.
Marwan Ahmad Lutfi and DIFCA
Mr Lutfi was dismissed on 4 December 2011 because the DIFCA had determined that there had been a failure to comply with the DIFCA’s policies and procedures. In particular, following his marriage to Ms Al Herz, the DIFCA determined that Mr Lutfi’s continuing employment was in breach of its policy which provided that “employment of relatives is generally not allowed” and specifically, that relatives should not work within the same department and/or have direct or indirect supervision for each other. Mr Lutfi was paid in lieu of his three month notice period and received all other contractual entitlements on termination.
Mr Lutfi presented similar claims to those set out by Ms Al Herz above, which were considered by Justice Colman. In dismissing Mr Lutfi’s claim that the dismissal was unfair, Justice Colman referred to passages from the Hana Al Herz judgment and confirmed that the DIFCA’s “express power to terminate was not fettered by any implied terms”.
In addition, Justice Colman dismissed Mr Lutfi’s claim for end of service gratuity for reasons similar to those set out in the Hana Al Herz judgment. Justice Colman also dismissed Mr Lutfi’s claim for defamation as being untenable insofar as there was no evidence of any damage to his reputation arising from the manner in which he was dismissed.
The two judgments are unambiguous and absolute insofar as they confirm that employers may dismiss employees in accordance with the express contractual notice provisions and no additional obligations should be implied on employers in this respect. They are certainly positive judgments for DIFC employers and further reduce the ability of employees to pursue claims arising from the termination of their employment.
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