Kuwait Court of Cassation principle number 403

Summary: - An employment contract permitting either party to terminate it unilaterally before the end of its term. A contract of indefinite duration. The other party must be notified at least three months before termination of the contract for workers paid monthly. Failure to observe this. The party terminating the contract is obliged to pay compensation equivalent to the wage for the same prescribed notice period. Article 44 of Law 6/2010 concerning Labour in the Private Sector. Its implication. The obligation of either party to an employment contract upon rescission of an employment contract of indefinite duration does not exceed payment in lieu of notice if the prescribed period was not observed before rescission. Contravention of this: renders the judgment defective and requires its cassation. Rule: It is established—in the jurisprudence of this Court—that if an employment contract includes a clause permitting either party to terminate it unilaterally before the end of its term, the contract is regarded as being of indefinite duration. The provision in Article 44 of Law 6 of 2010 concerning Labour in the Private Sector that: "If the employment contract is of indefinite duration, either party may terminate it after notifying the other party, and notice shall be given as follows: A- At least three months before termination of the contract in respect of workers employed on a monthly wage. B- If the party terminating the contract fails to observe the notice period, that party shall be obliged to pay the other party payment in lieu of the notice period equal to the worker’s wage for the same period" indicates—as disclosed by the explanatory memorandum to this Law—that the procedure required upon termination of a contract of indefinite duration is to notify the other party at least three months before termination of the contract for workers paid monthly. It fixed the compensation payable by the party terminating the contract upon failure to observe this at the wage equivalent to the same prescribed notice period. Thus, the legislature made clear in Article 44 of Law 6 of 2010 concerning Labour in the Private Sector that the obligation of either party to an employment contract upon rescission of an employment contract of indefinite duration does not exceed payment in lieu of notice if the prescribed period was not observed before rescission. Although the court of merits has full authority to interpret instruments, documents and contracts, this is conditional upon its interpretation being one that the wording of those instruments and documents can bear. Accordingly, and since it is established from the employment contract concluded between the appellant company and the respondent, which governs the relationship between the parties, that its sixth clause included a provision permitting either party to terminate it before the expiry of its term, provided that written notice of not less than three months is given, this contract is therefore a contract of indefinite duration. The appellant’s obligation towards the respondent as a result of its rescission of this contract does not exceed the value of the wage equivalent to the same period prescribed for the written notice agreed upon in the sixth clause of the contract, namely three months. Since the challenged judgment departed from this view and awarded the respondent two hundred thousand dinars as compensation for the remainder of the contract term on the ground that it was a fixed-term contract, it is defective in a manner requiring its partial cassation in this respect.