Can Legal Representatives Waive Compensation Rights Under Director Contracts?

Waiver of Compensation Rights: Can Legal Representatives Give Up Their Entitlement?

At Stojković Attorneys (STATT), one common question we address is whether a legal representative working under a director’s rights and obligations contract—outside of an employment relationship—can waive their right to compensation. This article explores the legal framework surrounding this issue, focusing on Serbian law and judicial precedents.

Legal Framework for Director Contracts in Serbia

The Labor Law, specifically Article 48, governs the rights and duties of directors in Serbia. Directors or legal representatives can either establish an employment relationship with an employer or enter into a director’s rights and obligations contract (management contract) outside of this relationship. Under this arrangement, the individual is still entitled to compensation for their services and other contractual rights and obligations.

The Right to Compensation for Legal Representatives

According to the Labor Law, a director engaged under a director’s contract is entitled to compensation for their work. The law does not stipulate a minimum amount, meaning compensation can be symbolically agreed upon.

Moreover, the Constitution of the Republic of Serbia guarantees that everyone has the right to fair compensation, ensuring dignity and legal protection in employment matters. No individual can waive these fundamental rights, even under a director’s contract.

Can Compensation Be Waived? Legal and Constitutional Implications

Attempts to waive compensation rights—such as through debt forgiveness agreements—have been made, especially in cases involving director contracts. However, these attempts have been consistently rejected by Serbian courts. The Ministry of Labor has also reinforced the stance that compensation is a mandatory element of such contracts and cannot be waived.

Judicial Precedents on Waiving Compensation Rights

Several key judicial decisions shed light on the legal standpoint regarding compensation waivers:

• Supreme Court of Cassation Decision (Rev2 2437/2015): This ruling emphasized that waiving the right to severance pay or compensation in an employment relationship is a violation of constitutional rights. Such agreements are deemed invalid.
• Appellate Court in Belgrade Decision (Gž1 398/2014): The court reiterated that no one can waive their right to legal protection in case of employment termination, including the right to severance pay.

The Legal Standing: Waiver of Compensation Has No Legal Effect

A legal representative, or director, cannot legally waive their right to compensation under a director’s rights and obligations contract. Any agreement attempting to do so is deemed null and void. Furthermore, directors can still claim their compensation within a three-year period, as stipulated by Article 196 of the Labor Law.

Conclusion: The Inalienability of Compensation Rights for Directors

In conclusion, the waiver of compensation rights under a director’s contract holds no legal weight. Any attempt to forgo compensation or other employment-related rights would be considered invalid, offering no legal effect. Directors and legal representatives are entitled to fair compensation, and such rights are protected by both the Constitution and Serbian labor laws.