The Abu Dhabi Global Market (ADGM) Court of First Instance has dismissed an employee’s claim for constructive dismissal and related compensation following a change in his employer’s business model in Malvern Tarirai Takawira v Plus Capital Limited [2026] ADGMCFI 0019. The judgment provides useful guidance for ADGM employers managing reorganizations and changes to employees’ roles and considers the relationship between the common law concept of constructive dismissal and the “termination for cause” provisions of the ADGM Employment Regulations 2024.
Background
The claimant was employed by Plus Capital Limited (the Company), an ADGM Financial Services Regulatory Authority (FSRA) regulated financial institution, as its compliance officer and money laundering reporting officer (MLRO) from October 2024, earning AED 29,000 per month. Shortly after joining, he was also assigned the internal titles of risk officer and data protection officer. Those additional responsibilities did not result in any change to his remuneration, working hours, or written employment contract, and he did not object or seek any corresponding change to his terms at the time.
In September 2025, the Company's shareholders decided to change its business model and began the process of voluntarily withdrawing its Financial Services Permission (FSP). The claimant was aware of this process and had been copied on internal correspondence concerning it. The Court also accepted evidence that, by early October 2025, the claimant had secured alternative employment with a tentative start date of December 1, 2025 and had asked to be released early from his contractual notice obligations. The Company subsequently provided references in connection with his search for alternative employment.
The FSRA approved the Company's withdrawal of its FSP on October 27, 2025. The following day, the Company sent an email to its staff explaining that it was no longer authorized to undertake regulated activities in the ADGM and that FSRA-approved roles, including compliance officer and MLRO positions, were therefore no longer required in its existing structure. However, the email did not terminate any employee's employment or vary their contractual terms. Instead, it explained that roles might continue, be adjusted or redefined, and that employees would be informed individually about the implications for their positions. It also stated that, where positions became redundant, the Company would follow the ADGM Employment Regulations and applicable employment contracts.
The claimant subsequently raised a grievance, alleging that the communications had caused him significant distress and uncertainty. The Company responded that his employment had not been terminated, his contract remained in force and no adverse employment action had been taken against him. It also explained that his position would be considered as part of the Company's wider business review.
On November 4, 2025, the claimant escalated his grievance and, three minutes later, submitted his resignation, alleging breach of contract, victimization, and breach of the implied duty of mutual trust and confidence. He subsequently commenced proceedings seeking approximately AED 1.97 million in compensation under five different heads of claim.
What Did the Court Decide?
The Court dismissed the claim in its entirety and ordered the claimant to pay the Company's costs.
Constructive Dismissal and Termination for Cause
A particularly interesting aspect of the judgment is the Court's consideration of how the traditional common law doctrine of constructive dismissal fits within the ADGM's statutory employment framework.
The Court considered the established English common law test in Western Excavating (ECC) Ltd v Sharp, under which constructive dismissal requires a sufficiently serious, repudiatory breach by the employer; the employee's acceptance of that breach; resignation in response to it; and no undue delay by the employee in accepting the breach.
However, the Court observed that the ADGM Employment Regulations 2024 now provide a statutory framework. Section 57 permits either an employer or employee to terminate employment immediately for cause where the other party's conduct is such that a reasonable employer or employee would consider immediate termination warranted. Where an employee terminates for cause, the employee is entitled to the wages and benefits that would have been received during the notice period.
Although the issue had not been fully argued before it, the Court considered that Section 57(1) was intended to embrace considerations similar to those underlying constructive dismissal at common law, and that applying either analysis would produce the same result in this case.
On the facts, there was no repudiatory breach by the Company. Its decision to withdraw its regulatory license and change its business model undoubtedly affected the claimant's role, but his employment had not been terminated and there was no evidence that the Company was even actively considering terminating his employment when he resigned.
Importantly, the Court distinguished constructive dismissal from redundancy arising from a genuine corporate reorganization. The withdrawal of the FSP meant that positions associated with the regulated business were no longer required. That was not conduct targeted at the claimant with a view to forcing him to resign. The Court considered that, insofar as roles ultimately became unnecessary, the more accurate characterization was redundancy resulting from corporate reorganization.
The claimant's chronology also undermined his case. He had already secured alternative employment before the FSRA approved the withdrawal of the Company's FSP, and the Company itself had assisted by providing references. The Court therefore rejected the suggestion that his resignation had been forced by the Company's conduct. It also held that a reasonable employee would not have considered immediate termination for cause under Section 57 warranted in the circumstances.
Additional Duties Did Not Entitle the Employee to Additional Pay
The claimant also sought AED 348,000 for having been given the additional risk officer and data protection officer titles.
The Court rejected this claim. The additional titles were an internal role adjustment which did not result in additional working hours, and the claimant's contract expressly excluded additional or overtime payment for work outside normal working hours. Significantly, he had not objected when the responsibilities were assigned and had not raised the issue in his grievance or relied upon it when resigning. The Court considered that he had implicitly consented to performing the duties without additional compensation.
Mental health, Discrimination, Harassment, and Victimization claims
The claimant sought more than AED 1 million in relation to alleged mental health impacts, harassment and loss of dignity.
Those claims were also rejected. The Court found no evidence of discrimination or victimization and considered that the Company's communications represented a fair and transparent attempt to manage a difficult situation resulting from its change of corporate direction.
The claimant had also failed to establish that the Company's actions had caused damage to his mental health. The Company had not been informed of any mental health condition during his employment and there was no expert evidence demonstrating that his employment had caused or damaged his mental health.
A separate claim based on the Company's alleged failure to respond to a mental health risk was similarly dismissed. The Court noted that the first reference to mental health appeared in the claimant's escalation email sent only three minutes before his resignation. There was no supporting expert evidence, and his complaint concerning insurance coverage arose only after his resignation.
What Does This Mean for ADGM Employers?
The judgment is reassuring for employers undertaking genuine reorganizations, but it also highlights several practical steps that can reduce the risk of such exercises generating employment claims:
- A genuine business reorganization is not constructive dismissal: A decision to discontinue a business activity may have significant consequences for an employee's role. That does not necessarily mean that the employer has repudiated the employment contract or created circumstances justifying immediate resignation. The Court drew a clear distinction between legitimate organizational change and employer conduct targeted at an employee with the object or effect of forcing that employee out.
- Communication matters: The Company's contemporaneous emails were important evidence. Its communication explained why the regulatory roles were no longer required, made clear that employment had not been terminated, and stated that individual roles would be considered as part of the ongoing business review. The Court repeatedly referred to the Company's approach as transparent and relied upon the documentary record in rejecting the claimant's allegations.
- Take care to distinguish a redundant role from termination of the individual: The disappearance of an employee's existing function does not itself necessarily terminate the employment relationship. Employers should therefore be precise when communicating organizational changes: explaining what has happened to the role, what remains under review and what process will follow can be critical.
- Respond promptly and substantively to grievances arising during a reorganization: The Company's written response expressly confirmed that the employee remained employed, addressed his concerns, and explained the next steps. That contemporaneous evidence assisted the Company considerably when the employee subsequently alleged that it had engineered his departure.
- Health and well-being complaints should still be treated seriously: Although the mental health-related claims failed on the evidence in this case, the judgment should not be read as diminishing employers' obligations under the Employment Regulations. Where an employee raises a health or wellbeing concern, employers should consider it promptly, document their response and assess whether any workplace measures or other action are reasonably required.
Looking Ahead
The decision provides helpful guidance on Section 57 of the ADGM Employment Regulations 2024. In particular, the Court's view that the statutory test for termination for cause is intended to encompass considerations similar to the common law doctrine of constructive dismissal is likely to be of interest in future ADGM employment disputes.
There is, however, an important qualification. The Court expressly noted that the relationship between Section 57 and the common law doctrine had not been fully argued before it. Similarly, the Court declined formally to decide whether the notice-period payment prescribed by Section 57(2) operates as a ceiling on an employee's recovery; indeed, it observed provisionally that the provision appeared more likely to prescribe a minimum rather than a maximum payment.
For employers, the broader message is that a well-documented and genuinely business-driven reorganization will not ordinarily amount to constructive dismissal merely because it materially affects an employee's existing position. Clear communications, careful adherence to contractual and statutory requirements, and a documented process for dealing with affected employees