Decision of the Jordanian Court of Cassation, in its Legal Capacity, Regarding the Termination of a Fixed-Term Employment Contract By Unilateral Will.

Ⅰ. Case summary

The decision of the Jordanian Court of Cassation, in its legal capacity, regarding the termination of a fixed-term employment contract by unilateral will.

Component 1: Citing the case and background information.

Case name: Decision of the Jordanian Court of Cassation, in its legal capacity, regarding the termination of a fixed-term employment contract by unilateral will.

Court: The Jordanian Court of Cassation in its legal capacity.

Subject of the lawsuit: The legality of terminating a fixed-term employment contract based on a contractual condition that grants the employer the right to unilateral termination. Legal field:  Jordanian Labor Law – Contracts – Contractual Liability – Public Labor Law.

Subject of the dispute: The legality of a contractual clause that allows the employer to terminate a fixed-term employment contract of his own free will with prior notice, and the extent to which the worker is entitled to compensation for the remainder of the contract term.

This case is considered one of the most important recent cases in Jordanian judicial jurisprudence, as it has sparked widespread legal debate about the relationship between the principle “the contract is the law of the contracting parties” and the protective nature of Jordanian labor law. The ruling addressed the delicate issue of whether a fixed-term employment contract may include a condition that allows the employer to terminate the contract before its expiration without the need for any legally specified reason.

The importance of the decision lies in the fact that it aimed to strengthen the binding force of the contract and give contractual will a broader role in regulating the relationship between the worker and the employer.

Critics of the ruling, however, believe that this approach could weaken the legal protection provided to the worker as the weaker party in the contractual relationship.

The importance of this case is also highlighted by the fact that it reflects a development in the trends of the Jordanian judiciary compared to previous efforts that were strict in protecting the worker and considered any condition that detracts from his legally established rights as a invalid condition for violating public order.

Introduction

Ⅱ. Component Two: Introduction and Facts

The employment contract is considered a special contract, as it is not only based on the principle of the authority of the will, but is also governed by peremptory rules aimed at protecting the worker as the economically and socially weaker party. For this reason, the legislator interfered in regulating many of its provisions and prevented agreements that violated the minimum rights established for workers.

One of the most prominent forms of protection provided by Jordanian labor law relates to fixed-term employment contracts. Jurisprudence and the judiciary have long held that this type of contract binds both parties until its expiration, and it may not be terminated before that date except in exceptional cases specified by law, such as those stipulated in Article 28 of the Labor Law.

However, the decision under study represented an important shift in this direction, when the Jordanian Court of Cassation considered that the existence of an explicit contractual clause granting the employer the right to terminate the contract unilaterally makes the exercise of this right legitimate as long as the worker agreed to it when signing the contract.

This ruling sparked widespread debate among jurists and legal practitioners, with opinions divided between those who considered it a consecration of the principle of contractual freedom and the achievement of economic flexibility, and those who saw it as a derogation from the protective guarantees guaranteed to workers by labor law.

Ⅲ. Facts

The facts of the case can be summarized as follows: The plaintiff was working under a fixed-term employment contract that included Clause (19), which gives the employer the right to terminate the contract of his own free will with one month’s prior notice. The employer terminated the contract based on this clause, but the worker considered the termination illegal and demanded compensation for the rest of the contract period. On the other hand, the defendant argued that the termination was based on a valid contractual condition agreed to by the worker, and that the contract was the law of the contracting parties. The dispute reached the Jordanian Court of Cassation to decide on the legality of this condition, and whether it conflicts with the peremptory rules in the Labor Law, in addition to determining the worker’s right to demand compensation for the remaining period of the contract. The importance of the case is highlighted in that it reflects the tension between the principle of contractual freedom and the philosophy of social protection on which labor law is based.

 Ⅳ. Component Three: Legal Issues

The first case

Is it permissible to include in a fixed-term employment contract a condition that gives the employer the right to terminate it of his own free will?

The second case

Is this condition a violation of the peremptory rules of Jordanian labor law?

The third case

Is the worker entitled to claim compensation for the remainder of the contract term if it is terminated based on the contractual condition?

The fourth case

To what extent does the rule «legal passport contradicts guarantee» apply to this case?

Ⅴ. Component Four: Arguments presented

First: The plaintiff’s arguments

The plaintiff relied on the fact that a fixed-term employment contract is binding on both parties until its expiration, and may not be terminated early except in cases stipulated by the Labor Law. She also argued that Clause (19) violates peremptory rules because it gives the employer the right to unilateral termination without a legal reason, which empties the contract of its nature as a fixed-term contract. She stressed that the Labor Law aims to protect the worker as the weaker party, and that any condition that detracts from this protection is invalid even if the worker agrees to it. She added that terminating the contract without compensation for the remaining period wastes job stability, based on previous judicial rulings that considered such conditions to be in violation of the Labor Law.

Second: The defendant’s arguments

The defendant argued that the contract concluded between the two parties included a clear and explicit text granting the employer the right to terminate the contract of his own free will, and that the plaintiff signed the contract of her own free will without coercion.

It was also based on the principle “the contract is the law of the contracting parties”, considering that the parties are free to regulate their contractual relations as long as the terms of the contract do not violate an explicit legal text.

She pointed out that granting the employer the right to terminate in exchange for prior notice achieves a balance between the interests of both parties, as it allows greater flexibility in managing the labor relationship in a manner consistent with economic and practical conditions.

It also argued that the exercise of the right established under the contract could not be considered an error or arbitrariness requiring compensation, because what was done was an implementation of a legitimate right previously agreed upon by the parties.

It also relied on the jurisprudential rule that “legal permissibility contradicts guarantee”, considering that the use of the contractual right to termination does not entail legal liability as long as it is done within the agreed upon limits.

She added that the development of economic life requires flexibility in contracting, and that tightening the restriction on terminating fixed-term employment contracts may reflect negatively on the labor market and employment methods.

Ⅵ. Component Five: Court reasoning and analysis

The Jordanian Court of Cassation tended to give priority to the binding force of the contract, considering that the condition contained in Clause (19) is valid and binding on both parties as long as the worker explicitly agrees to it when signing the contract. The court held that the contract is the law of the contracting parties, and that the employer’s exercise of his right to terminate in accordance with the agreed upon mechanism does not constitute arbitrary dismissal and does not result in compensation for the remainder of the contract term, based on the rule «Sharia passport contradicts guarantee». However, this approach has been widely criticized, as critics of the ruling considered that the court treated the employment contract as an ordinary civil contract, ignoring the protective nature of the labor law and the imbalance between the worker and the employer. They also believed that allowing the termination of a fixed-term contract under a contractual condition empties it of its content and weakens the worker’s job stability. On the other hand, supporters of the ruling believe that the decision restored consideration to the principle of the binding force of the contract and gave the parties greater flexibility in organizing the labor relationship in line with modern economic developments, and also reflects an improvement in Jordanian judicial jurisprudence compared to previous more stringent trends in worker protection.

Ⅶ. Component 6: The Referee and Ratio Decidendi

The ruling

The Jordanian Court of Cassation ruled that the contractual clause that gives the employer the right to terminate a fixed-term employment contract of his own free will while adhering to the notice period is valid.

It also considered that the use of this right does not constitute arbitrary dismissal, and does not entitle the worker to claim compensation for the remainder of the contract period.

Ratio Decidendi

The legal principle established by the Court is that the contractual clause authorizing early termination of a fixed-term employment contract is binding if expressly accepted by both parties, and that the exercise of the contractual right does not require compensation as long as it is carried out within the agreed limits.

Ⅷ. Component Seven: Critical Analysis

This decision represents a significant shift in Jordanian judicial jurisprudence, as it reintroduced the relationship between contractual freedom and protective rules in labor law. On the one hand, the ruling strengthened the principle of binding force of the contract and gave the parties greater flexibility in organizing the employment relationship in line with modern economic requirements. The other hand, the ruling was widely criticized because it weakened the protection provided to the worker and treated the employment contract as a traditional civil contract, despite its legal specificity. His critics also believed that allowing the condition of early termination without compensation might limit job stability and encourage the imposition of conditions that detract from the worker’s rights. Therefore, the decision remains the subject of jurisprudential and judicial controversy over the extent of its compatibility with the philosophy of labor law based on protecting the weaker party in the contractual relationship.

Ⅸ. Component Eight: Conclusion

The decision of the Jordanian Court of Cassation under study represents an important judicial effort in the field of fixed-term employment contracts, as it tended to give priority to contractual will and give the contract broader binding force.

The court considered that the condition that allows the employer to terminate the contract of his own free will is valid and binding if the worker expressly agrees to it, and that the exercise of this right does not entail compensation for the remainder of the contract term.

However, this approach has sparked widespread controversy due to its potential weakening of the legal protection provided to workers, especially in light of the special nature of the employment contract and the real inequality between its parties.

In any case, this decision reflects the flexibility of Jordanian judicial jurisprudence and its ability to adapt to economic and social changes, and will remain the subject of an important discussion about the limits of contractual freedom and the extent to which it is permissible to agree on what may detract from labor guarantees.

Reference(S):

1. Jordanian Court of Cassation (Civil Bench), Decision on the Unilateral Termination of a Fixed-Term Employment Contract (Jordan).
2. Labor Law No. 8 of 1996, as amended, Official Gazette (Jordan).
3. Civil Code No. 43 of 1976, Official Gazette (Jordan).