Favorable Court Judgement in a Dispute against a Senior Executive
Riad & Riad scored a favorable court judgments for a leading UK textile and fabrics company in a dispute against a senior executive director.
The Court of First Instance and the Court of Appeal decided that a board member and managing director of a company is not entitled to employees’ benefits despite having a continuing employment contract and being enrolled at the Social Insurance as “employee” during his tenure as a director.
The court rejected the director’s claims for compensation for unfair dismissal, profit share and EOS.
In the reasoning of the judgments, both, Court of First Instance and the Court of Appeal agreed with our legal arguments that:
- The employment contract between the company and the director was impliedly terminated upon the director’s acceptance to act as a board member and managing director in the company.
- The fact that the director became in charge of managing the company’s business and making strategic and operational decisions extinguish the subordination element on which employment relationships are built.
- Terminating a board member or managing director does not create a right for compensations for unfair dismissal.
- The relationship between the employer and the director will be subject the Companies Law rather than the Labor Law.
- New Circular Confirms the Obligation to Pay Contribution of 1% of Net Profit to the Vocational Training Fund