Abu Dhabi Court of Cassation, Labour Appeal No. 98 of 2023, judgment of 6 May 2024
A release or acknowledgement by a worker giving up rights under the employment contract or the Labour Relations Law while the employment relationship continues is void, even with his consent, because those rights are matters of public order. A waiver or settlement made after the relationship has ended is valid. A promised profit share that remained subject to conditions the parties never agreed cannot be claimed (Articles 420 to 423 of the Civil Transactions Law). Contracts are interpreted by the parties' common intention, reading the terms as a whole.
A manager joined the employer in December 2021 on AED 50,000 a month and claimed that he had also been promised 20% of the profit of any project he managed. After the employer sent him an email in February 2023 defining the 'performance award' as a share of net profit after operating costs, financing and taxes, he rejected the method and resigned by email on 12 March 2023. The employer accepted the resignation on terms negotiated in seven points: six more months of salary, housing and health insurance, use of a company car for a year and other benefits, in exchange for releasing the company from all past and future obligations. He accepted by email and was paid his gratuity and March salary. He then sued for AED 4.17 million in profit share and other items. The lower courts awarded wages, leave pay, housing and gratuity but rejected the profit claim.
The Court of Cassation dismissed his appeal. It restated that an instrument by which a worker gives up contractual or statutory rights while employed is void, even if he agreed, because labour rights are of public order; the exception is a waiver made after the employment relationship ends. Here the settlement was concluded after the resignation and was binding. In addition, under Articles 420 to 423 of the Civil Transactions Law, an obligation subject to a condition is not enforceable until the condition is met; the profit share was subject to conditions the worker never accepted, so no agreement on it existed. The trial court's reading of the contracts and its partial reliance on the expert were within its discretion.
Settlements with departing employees are enforceable if they are concluded after the employment has ended, as here, where the terms were agreed after the resignation. A release signed while the employee is still employed remains exposed to challenge. Bonus or profit-share promises whose calculation basis was never agreed are hard for an employee to enforce.
| Articles 420, 421, 422 and 423 of Federal Law No. 5 of 1985 (Civil Transactions Law) — text of articles 420, 421, 422, 423 Decided under this law; it has been replaced by Civil Transactions Law 2025. |
| Labour Relations Law, rights of workers as matters of public order (the judgment cites no article number) |
“ويُستثنى من ذلك صدور هذا التنازل بعد انتهاء علاقة العمل بين الطرفين”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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