In ruling upon an action initially filed before the Dubai Court, the Court of Cassation held that an employer and an employee could not agree to increase the compensation to be paid by the employee to the employer upon an early termination of a contract which had been fixed for a definite period. The Court of Cassation further held that any agreement contradicting such provision should be considered null and void.

Claim
A labour action was filed by a FZE company (the "Claimant") against an ex-employee (the "First Defendant") and another FZE Company (the "Second Defendant"). The Claimant requested the Court order the Defendants to pay him jointly and severally the amount of AED 20 M as a compensation for the moral and material damages suffered by him in addition to interest and legal costs.

Facts of the claim
The Claimant submitted that it operated in the field of visual media and TV and Press Broadcasting, as did the Second Defendant. The Claimant also argued that the First Defendant worked for the Claimant as a TV presenter from 11th August 2003 against a monthly salary amounting to AED 5000 (five thousand Dirhams). On 1st January 2006 the First Defendant's contract was renewed for three years against a monthly salary amounting to AED 18,250 to be paid in Dubai, along with the same salary to be paid concurrently in her home country, Pakistan, in Pakistani Rupee (Total AED 36,500). On 16th September 2006 the First Defendant resigned from her job without any valid reason. The Claimant argued that the Second Defendant was behind the First Defendant's decision, and that the former joined the latter company on 13th November 2006 to work in a TV program similar to the one presented by the Claimant's company. In light of the above, the Claimant submitted that it had suffered moral and material damages, which the Claimant claimed could be summarised as follows:

  • Expenses incurred to train the First Defendant to be a qualified TV presenter; expenses incurred to promote the program that was presented by the Claimant; expenses incurred to prepare the studio in addition to AED 5 M worth of expenses covering travel and accommodation between Dubai and Pakistan.
  • Loss of commercial profit amounting to AED 500,000 per month that the Claimant used to make from the TV program of the First Defendant. The Claimant also argued that it should be compensated for the remaining period of the contract, being from 16th September 2006 to 1st January 2009 (about 30 months.

However, the Claimant encouraged the Court to exercise full discretion to assess the quantum of the moral damages that it suffered.

Court of First Instance
The Court of First Instance rejected the Claimant's case. Consequently, the Claimant appealed the decision.

Court of Appeal
In its turn, the Court of Appeal transferred the case to an expert for investigation. The Court appointed expert submitted his original and supplementary report. The Court of Appeal decided as follows:

With respect to the First defendant: the decision of the Court of First Instance was cancelled. The Court of Appeal ordered the First defendant to pay the amount of AED 6,150,920 (Six Million one hundred fifty and nine hundred twenty Dirhams) along with 9% legal interest effective from the day the judgment would be final until full payment. Consequently, the First Defendant appealed to the Court of Cassation.

With respect to the Second Defendant: the decision of the Court of First Instance was upheld. Consequently the Claimant appealed to the Court of Cassation through cassation no. 67/09 and requested the court to overturn the decision.

Court of Cassation
Arguments presented by the First Defendant and the Court's Decision

The First Defendant argued that the Court of Appeal erred in its decision:

  • To consider its signature only on the last page of the contract as an acceptance for the contract. It argued further that the Court of Appeal had misunderstood and misinterpreted the defense presented in its memo in that the First Defendant had denied, and insisted on denying, the employment contract dated 1st January 2006, and had further argued that it signed only the last page of the three pages contract but not the first two pages.
  • To interpret Article 116 of the Law No. 8 of 1980 ("the Labour Law") in favour of the employer and to order her to compensate the Claimant for early termination of her employment contract. In this respect it was submitted that when the law stipulates that something can be agreed to the contrary, such an agreement should be interpreted in the worker's favour, The First Defendant argued that although Article 116 states "unless the contract provides otherwise," it also specifies the amount of indemnity in such events and was intended to be interpreted in favour of the employee.

For the first argument the Court of Cassation interpreted Article 11 of the Civil Procedure Law, in relation to the proof of evidence in civil and commercial transactions, to mean that unless the First Defendant denied her signature on the contract, such contract shall had due evidential weight and becomes non contestable even if the First Defendant's denial is partially. Article 11 of the said law stipulates that: An informal document is deemed to emanate from the person who signed it, unless he formally contests the writing, the signature, the seal or the finger print alleged to be his.

The result of this finding was that the content of such document shall not be capable of contest by the person whose signature is attributed, unless such person denies the signature or stamp. However, according to the Court, if such a denial is limited to the content of the document in whole or in part, it shall not constitute a denial of the signature of the document within the meaning of the law of evidence. To the contrary, the document shall remain valid in full against the person who signed it unless such person claims forgery of the signature.

For the second argument the Court of Cassation interpreted Article 7 of the said law to mean that workers rights are related to the public order and that parties cannot agree to the contrary. Consequently, any agreement contrary to these rights must be considered null and void. The court held that Article 116 of the Law meant that the employer and the employee may not agree to increase the compensation to be paid by the employee to the employer upon an early termination of a contract and that any agreement contradicting such provision would be considered null and void. Article 116 of the said law stipulates that: Should the contract be terminated by the worker for causes not set forth in Article 121, the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the termination of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.

The Court of Cassation interpreted the last sentence of Article 116, "unless otherwise stipulated in the contract" in favour of the employee such that that parties may agree to reduce the compensation or part of it.

With respect to the Second Defendant's appeal, this was rejected and the decision of the Court of Appeal upheld.

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