A company employs an employee for a limited period. Before extending the agreement and payment of certain payments related to the finished period of employment, the company demands that the employee sign a waiver as to the previous period of employment. Is such waiver valid under law?
In recent years, the trend of the case law regarding signing of a waiver is that a waiver will not be deemed binding. Many times a waiver is drafted so that it is a pre-condition for payment to the employee, including uncontested funds. The Labor Courts held again and again that an employer may not demand signing of a waiver as a condition for payment of uncontested funds, even if it is a limited waiver under which the employee is given the opportunity to specify his claims regarding the payments owed. The case law is based on the rationale that there may be cases in which the employee does not know all his rights against the employer, and he is required to make further inquiries. In such a situation, the employee must not be required to limit himself, and certainly not as a condition for receiving his rights under the law.
In November 2018, the Tel Aviv Labor Court published a verdict deciding the case of a football player who was demanded by the team to sign a waiver at the end of each season when he came to receive the payments for the passing season. The Labor Court held that the waivers are invalid because there was a connection between the payment and the signing of the waiver, especially when the player’s signature was made on the date of receipt of the payments and before the payment was received. The waivers also did not specify the sums that the player was supposed to receive and allegedly waived, and for this reason too the waivers were held invalid, as the player did not receive details about the various components of the salary.
The issue of signing of a waiver by employees is sometimes raised also when no manipulation by the employer is involved. This may be the case, for example, when an employee returns to work after a period that he was not working for the employer, and the employer would like to ensure that no “baggage” exists as to the first period of employment, or when a third party purchases the activity of a company and would like to ensure that the employees hired may not in the future raise claims as to their first period of employment.
When an employer drafts a waiver, he should receive advice from lawyers with expertise in the field, in order to ensure that such are duly made, so that the waiver will be binding. A waiver must be clearly drafted, detailing the paid amounts or such components that the employee waives. In any case, it is important to remember that an employee may not be deprived of payments under law even if the employee refuses to sign a waiver.