This judgment clarifies the limits of employer discretion under COVID-19 emergency measures, specifically regarding the payment of contractual notice periods upon termination.
What was the specific monetary dispute between Layat and Lendi Holding regarding the termination of the Employment Contract?
The dispute originated from the termination of the Claimant’s employment on 12 May 2020. Initially, the Claimant filed a claim in the Small Claims Tribunal (SCT) for a total of AED 62,332.14, covering unpaid salary, expenses, annual leave, and a three-month notice period. Following a consultation before SCT Judge Maha Al Mehairi on 10 June 2020, the parties reached a partial settlement regarding salary, expenses, and annual leave, totaling AED 15,332.
The remaining contested issue concerned the Claimant’s entitlement to payment in lieu of a three-month notice period, valued at AED 45,000. The Defendant argued that it was entitled to withhold this payment by imposing "leave without pay" under COVID-19 emergency regulations. As noted in the court record:
The underlying dispute arises over the employment of the Claimant by the Defendant pursuant to an employment contract dated 5 January 2020 (the “Employment Contract”).
The court ultimately rejected the Defendant's attempt to avoid this payment, finding that the contractual obligation remained binding. As stated in the judgment:
Therefore, I find that the Claimant is entitled to payment in lieu of three-months’ notice period in the sum of AED 45,000.
Which judge presided over the hearing in Layat v Lendi Holding and in which DIFC division was the matter heard?
The matter was heard before SCT Judge and Registrar Nassir Al Nasser. The proceedings took place within the Small Claims Tribunal (SCT) of the DIFC Courts. The hearing was conducted on 7 July 2020, with the final judgment issued on 16 July 2020.
What arguments did Lendi Holding advance to justify withholding the notice period payment, and how did Layat respond?
The Claimant, Layat, asserted his right to the notice period payment based on the terms of his Employment Contract and the explicit language used by the Defendant in the termination notice. As the court noted:
The Claimant is Layat, an individual filing a claim against the Defendant regarding his employment at the Defendant company (the “Claimant”).
The Defendant, Lendi Holding, argued that it was permitted to impose "leave without pay" during the notice period by invoking Article 6(1)(c) of the Presidential Directive No. 4 of 2020, which was enacted to provide relief to employers during the COVID-19 pandemic. The Defendant contended that this directive allowed them to unilaterally modify the terms of the notice period. However, the Claimant highlighted that the Defendant had already committed to paying the notice period in the formal termination letter. The court observed:
On 7 June 2020, the Defendant responded to the claim by filing an Acknowledgment of Service with an intention to defend part of this claim.
What was the precise legal question the court had to answer regarding the interaction between Presidential Directive No. 4 of 2020 and contractual notice periods?
The court was tasked with determining whether the emergency measures introduced under Presidential Directive No. 4 of 2020, specifically the provision allowing employers to "impose leave without pay," could be applied to an employee who had already been terminated. The central issue was whether the Directive overrode the specific contractual obligation to provide payment in lieu of notice, particularly when the employer had already issued a termination notice confirming that the employee would be remunerated for that period.
How did Judge Nassir Al Nasser apply the test of contractual interpretation and the scope of the Presidential Directive to the facts of the case?
Judge Nassir Al Nasser examined the text of the Presidential Directive and found that it did not grant employers an unfettered right to retroactively apply "leave without pay" to a notice period following termination. The court reasoned that the Directive did not explicitly reference notice periods, and therefore, the contractual obligations remained enforceable. Furthermore, the judge placed significant weight on the specific language used by the Defendant in the termination notice provided to the Claimant.
The court found that the Defendant had explicitly waived the requirement for the Claimant to work the notice period while simultaneously promising to remunerate him for it. As the judgment states:
Moreover, the Defendant, in the Termination Notice, confirmed that the Claimant will be remunerated in relation to the notice period.
The judge concluded that the Defendant failed to provide any evidence that the Claimant had consented to a waiver of this payment. The court’s reasoning emphasized that the employer’s own written communication created a binding commitment that could not be unilaterally revoked by citing the emergency measures. As noted in the judgment:
The Defendant also failed to provide any written documents that the Claimant agreed to the waiver of the payment of the notice period.
Which specific DIFC laws and regulations were applied by the court in reaching its decision?
The court primarily applied the DIFC Law No. 2 of 2019 (the "DIFC Employment Law") as the governing statute for the employment relationship. Additionally, the court analyzed the scope of the Presidential Directive No. 4 of 2020, specifically Article 6(1)(c), which addresses COVID-19 Emergency Measures. The court also relied on the specific terms of the Employment Contract dated 5 January 2020 to establish the notice period entitlement.
How did the court interpret the scope of Article 6(1)(c) of the Presidential Directive No. 4 of 2020?
The court interpreted Article 6(1)(c) narrowly, noting that while it allows an employer to implement emergency measures such as leave without pay during the "Emergency Period," it does not explicitly extend to an employee’s contractual notice period after the employment relationship has been terminated. The court held that the Directive does not provide a mechanism for employers to unilaterally negate a previously agreed-upon payment in lieu of notice. By distinguishing between active employment and the post-termination notice period, the court ensured that the Directive was not used as a tool to avoid clear contractual obligations.
What was the final disposition of the claim, and what specific orders were made regarding the payment of AED 45,000?
The court allowed the claim in full regarding the notice period. The Defendant was ordered to pay the Claimant the sum of AED 45,000 for the notice period. Additionally, the court ordered the Defendant to cover the court fees incurred by the Claimant. As stated in the order:
In light of the aforementioned, it is hereby ordered that the Defendant shall pay the Claimant the sum of AED 45,000.
Regarding the court fees, the order was explicit:
The Defendant shall pay the Claimant the Court fees in the sum of AED 939.99.
What are the wider implications of this ruling for DIFC employers and employees regarding notice periods and emergency measures?
This case serves as a critical reminder that emergency legislation, such as the COVID-19 measures, does not grant employers a blanket exemption from their contractual obligations. Practitioners should note that the DIFC Courts will strictly interpret the scope of such directives. If an employer explicitly confirms in a termination notice that an employee will be remunerated for a notice period, they cannot later rely on emergency measures to unilaterally withdraw that promise. Future litigants must ensure that any waiver of contractual rights is documented in writing and agreed upon by the employee, as the court will not infer such a waiver in the absence of clear evidence.
Where can I read the full judgment in Layat v Lendi Holding [2020] DIFC SCT 176?
The full judgment can be accessed via the DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/layat-v-lendi-holding-limited-2020-difc-sct-176
The text is also available via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-176-2020_20200716.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the judgment. |
Legislation referenced:
- DIFC Law No. 2 of 2019 (DIFC Employment Law)
- Presidential Directive No. 4 of 2020 (COVID-19 Emergency Measures), Article 6(1)(c)