The Small Claims Tribunal clarifies the evidentiary threshold for implied acceptance of contractual variations regarding salary, ruling that continued performance at a reduced rate constitutes binding agreement.
What were the specific employment claims brought by Femi against Finola in SCT 058/2015?
The dispute centered on the termination of an employment relationship that spanned from 15 January 2014 to 2 April 2015. The Claimant, Femi, initiated proceedings in the Small Claims Tribunal seeking a comprehensive settlement of end-of-service entitlements, alleging that the employer had failed to remit necessary payments upon the expiration of his contract.
The core of the disagreement involved allegations of unauthorized salary deductions. Femi contended that his employer had unilaterally reduced his salary between March 2014 and March 2015 without his formal approval. As noted in the court record:
The Claimant alleged that he had been employed by the Defendant from 15 January 2014 until 2 April 2015 when his employment contract expired.
Femi sought compensation for unpaid salary, gratuity, vacation leave, and notice pay, asserting that his final dues were not settled within the statutory 14-day period following the conclusion of his employment. The employer’s failure to resolve these outstanding amounts prompted the litigation.
Which judge presided over the Femi v Finola SCT hearing and when was the judgment issued?
The matter was adjudicated by H.E. Justice Shamlan Al Sawalehi within the DIFC Small Claims Tribunal. Following a hearing held on 9 June 2015, the Tribunal issued its formal judgment on 22 June 2015.
How did Femi and Finola characterize the salary reduction dispute during the SCT proceedings?
Femi argued that the reduction in his salary, implemented by the Defendant from March 2014 onwards, was unauthorized and therefore void, entitling him to the difference in his remuneration as part of his end-of-service settlement. He maintained that he had not consented to the lower pay rate, which he viewed as a breach of his original employment terms.
Conversely, the Defendant admitted that Femi was entitled to end-of-service benefits but argued that the salary reduction was a mutually agreed-upon alternative to terminating the Claimant’s employment due to poor performance. The Defendant asserted that by continuing to work under the new salary structure for over a year, the Claimant had effectively accepted the variation. As the court noted:
In his defence, the Defendant had admitted that the Claimant was entitled to end of service benefits as calculated on the final settlement dated 10 June 2015 , but argued that the Claimant agreed to a new amount for his salary from March 2014 onwards as an alternative option to terminating his contract due to employee poor performance.
Did the Claimant’s continued performance at a reduced salary constitute an implied acceptance of new contractual terms under DIFC law?
The primary legal question before the Tribunal was whether an employee’s conduct—specifically the act of continuing to perform contractual duties while accepting a reduced salary—serves as sufficient evidence of agreement to a variation of the employment contract. The court had to determine if the Claimant’s silence or continued service over a period of 12 months precluded him from later claiming that the salary reduction was an unauthorized deduction.
How did Justice Al Sawalehi apply the doctrine of implied acceptance to the salary reduction?
Justice Al Sawalehi focused on the objective conduct of the employee. The court reasoned that the Claimant had a clear opportunity to object or initiate a claim for unauthorized deductions at the moment the salary reduction was first implemented. By choosing to remain in the position and accept the lower payments for the duration of the contract, the Claimant’s actions were interpreted as an acceptance of the new terms.
The court emphasized that the employment relationship is a two-way street where the employee retains the agency to reject unilateral changes. The reasoning was articulated as follows:
I hold that, the conduct of the employee by accepting to continue to work for his employer with the new amount of salary since March 2014 until his contract expired was an agreement to the new salary terms of the employment contract.
The judge further elaborated that the Claimant’s failure to act promptly undermined his later claim of non-approval:
In my view the employee could have refused to receive or accept a different amount of salary, and he could have filed an unauthorized deduction Claim against his employer from the first time he noticed that his salary was reduced without his approval.
Which specific articles of the DIFC Employment Law were applied to calculate the Claimant’s entitlements?
The Tribunal relied on several provisions of the DIFC Employment Law to calculate the final award. Specifically, Article 62(2)(a) and (3) were utilized to determine the end-of-service gratuity, which was calculated on a proportionate basis for the 14 months and 18 days of service.
For the notice period, the court applied Article 59(2)(b), which mandates compensation in lieu of termination notice for continuous employment exceeding three months. Additionally, the court referenced Article 27(1) of the DIFC Employment Law to calculate the compensation due in lieu of accrued but untaken vacation leave.
How did the court utilize the final settlement document dated 10 June 2015 in its calculation of damages?
The court treated the Defendant’s "final settlement" document, dated 10 June 2015, as a primary evidentiary baseline for the undisputed portions of the claim. While the Claimant contested the underlying salary rate used in that calculation, the court used the document to verify the specific days of unpaid salary and the pro-rata vacation leave entitlements. By aligning the final award with the figures presented in the settlement—while correcting for the two days of unpaid salary—the court ensured that the judgment remained consistent with the employer's own admissions regarding the duration and nature of the employment.
What was the final disposition of the claim and the total monetary relief awarded to Femi?
The Tribunal allowed the claim in part, dismissing the Claimant’s arguments regarding the unauthorized nature of the salary reduction. The court ordered the Defendant to pay a total sum of AED 5,860. This amount comprised:
* AED 1,834 for end-of-service gratuity;
* AED 3,255 for compensation in lieu of termination notice;
* AED 2,386 for vacation leave; and
* AED 217 for two days of unpaid salary.
The Defendant was also ordered to pay the Court fees associated with the filing of the claim.
What are the practical implications for DIFC employers and employees regarding salary variations?
This judgment serves as a warning to employees that silence or continued performance following a unilateral change in salary may be construed as legal acceptance of that change. Practitioners should advise clients that if an employer attempts to reduce salary without consent, the employee must formally object or initiate a claim for unauthorized deductions immediately. Waiting until the end of the contract to challenge the reduction is unlikely to succeed if the employee has accepted the lower payments in the interim. For employers, this case highlights the importance of documenting any agreement to salary variations to avoid ambiguity, although the court’s reliance on conduct provides a strong defense where such documentation might be lacking.
Where can I read the full judgment in Femi v Finola [2015] DIFC SCT 058?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/femi-v-finola-2015-difc-sct-058
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in the text of the judgment. |
Legislation referenced:
- DIFC Employment Law, Article 27 (1)
- DIFC Employment Law, Article 59 (2) (b)
- DIFC Employment Law, Article 62 (2) (a) and (3)