Dubai Court of Appeal decides the scope of summary dismissal in the DIFC

Judgment was given in a significant appellate case in the Dubai International Financial Centre Courts: McDuff v KBH Kaanuun Ltd CA-003-2014 on 14 October 2014. The appeal concerned the meaning of the reasonable employer test in Article 60 (4) of DIFC Employment Law 2005 (now Art 59A).

Judgment

The claimant solicitor had given notice of his resignation and had been dismissed summarily by Dubai law firm KBH, which cited 25 allegations of misconduct. The judge held that these were a pretext - the true reason for the dismissal was his decision to move to a rival firm.

Justice Roger Giles giving the leading judgment in the Court of Appeal held that the DIFC law’s test of whether a reasonable employer would have terminated the employment was is in “strong terms” - it was not enough that a reasonable employer ‘could’ have terminated. Therefore it did not involve an importation of the UK unfair dismissal test (whether the employer acted reasonably or unreasonably in treating the reason for dismissal as a sufficient reason). He held that the DIFC Law did “not call for an investigation of the employer's beliefs and how they were arrived at…. The hypothetical employer is not allowed a range of reasonable responses; it must be found that it would have terminated the employee.” The judge did not err in holding that the 25 breaches were not ‘fundamental’ to KBH.

The common law concept of fundamental breach was one interpretation of the first requirement in Art 60(4), namely conduct which ‘warrants termination’. However what the judge was actually saying was that these breaches were not significant to the dismissal.

Significance

This judgment is of wide significance as it decides the scope of summary dismissal in the DIFC. Article 59 of the DIFC Employment Law 2005 (as amended) requires minimum notice of dismissal unless there is termination for cause – which is defined in Art 59A in substantially the same terms as were addressed in this appeal. Therefore a DIFC employer may only dismiss without notice where it is able to demonstrate that a reasonable employer in its shoes would also have terminated the contract.

The Court of Appeal also ruled that KBH’s deduction of a recruitment fee from the claimant’s final pay was a breach of contract because the clause in his contract only applied where employment was terminated by resignation. In any event it was held to be contrary to Art 18 (1) (now Art 20) of DIFC Employment Law 2005 which provided that "a person shall not request, charge or receive directly or indirectly, from a person seeking employment a payment for — (a) employing or obtaining employment for the person seeking employment..." That was not limited to prospective employees as an employee retained the protection after commencing employment.

Chief Justice Michael Hwang and H.E. Justice Omar Al Muhairi agreed with Justice Roger Giles’ judgment which can be downloaded here.

Andrew Burns successfully appeared for the claimant in the Dubai International Financial Centre Courts.

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Dubai Court of Appeal decides the scope of summary dismissal in the DIFC

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