DLP Insights

A director’s waiver of remuneration must be explicitly stated

Categories: DLP Insights, Case Law | Tag: Dismissal, unlawful dismissal

30 Sep 2021

The Supreme Court of Cassation, in its Order no. 21172/2021, established that a director’s waiver of remuneration may be expressed by their conclusive conduct that unequivocally reveals their intention to waive the relevant right. However, the waiving act must be inferred not from the mere failure to request compensation, whatever the reasons, but from external circumstances which give a precise negotiating meaning to the conduct.

Facts of the case

In challenging his dismissal, a manager, who was also managing director, claimed his right to receive remuneration for the position held during the relationship.

The Court of Appeal, rejected the manager’s request, because there were elements that led to the presumption that the assignment was free of charge, including (i) the non-payment of a fee for the assignment period, (ii) the absence of any request on his part during that period, and (iii) the statement made by a witness regarding the decision of the Board of Directors, in the presence of the person concerned, not to pay remuneration.

The manager thus appealed to the Court of Cassation, arguing that he had never waived his right to remuneration for the office of managing director.

The Supreme Court of Cassation’s ruling

The Court of Cassation held that the manager’s claim was well-founded. It reiterated the nature of the director’s relationship as an organic identification with the company. Secondly, it affirmed the director could waive the remuneration, even if not done expressly, as long as with a conclusive conduct “that unequivocally reveals his actual and definitive waiving will.”

As for the notion of “conclusive conduct“, the Court of Cassation referred to a general principle according to which ” for silence to have a negotiating value, it is necessary either that the common way of acting or good faith, in the relations established between the parties, impose the burden or duty to speak, or that the silence of one can be understood as adherence to the will of the other, according to a given historical and social moment and considering the quality of the parties and their business relations.”

According to the Court of Cassation, the trial Court erred in considering the inaction of the parties and the alleged decision of the Board of Directors not to specify anything about the director’s remuneration to be significant. This is because the manager’s omissive conduct cannot be seen as a manifestation of will.

The Court of Cassation thus annulled the ruling and referred the parties to a different section of the Court of Appeal.

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