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UAE: Will employees be banned for violating non-compete clauses? – information

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KT readers ask legal experts about ramifications of accepting job offer in these circumstances


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published: Sunday, July 2, 2023 at 8:38 am

Last updated: Sunday, July 2, 2023 at 8:55 am

question: Does Dubai enforce non-compete clauses? I signed this clause when I took up my current job. Now, I got a better quote from another company. What happens if I accept a new job? Will I be banned? What can I do to prevent this or any other consequences?

answer: Based on your inquiry, it is assumed that you are currently employed by a mainland employer in Dubai. Therefore, the provisions of Federal Decree No. 33 of 2021 on the Employment Relationship and Cabinet Resolution No. 1 of 2022 on the implementation of the Federal Decree No. 33 of 2021 on the Employment Relationship shall apply.

In the UAE, employers can include a non-compete clause in an employee’s employment contract to prevent the employee from joining a competitor when the employment contract is terminated or resigns. The validity period of non-competition clauses in labor contracts of laborers shall be calculated from the last working day of laborers in the employer, and the validity period shall not exceed two years. The first paragraph of Article 10 of the “Labor Law” stipulates: “Where the work performed by the laborer requires contact with the client or business secrets of the employer, the employer may stipulate in the labor contract that the laborer shall keep the secret.” Do not compete with yourself, nor engage in business that competes with your peers. The clause shall specify the place, time and type of work within the scope necessary to protect legitimate business interests, and the non-competition period shall not exceed (two) two years after the contract expires. “

If an employee violates the non-competition clause mentioned in the employment contract, the employer may file a complaint and/or initiate legal proceedings to the Ministry of Human Resources and Emiratisation within one year of discovering the violation. The non-compete clause in the labor contract signed by the employer. This is in accordance with Section 10(3) of the Employment Act.

However, certain employees may be exempt from the non-compete clause due to their occupation/title, even if the non-compete clause is mentioned in the employment contract. This is in accordance with Article 12(5)(c) of Cabinet Resolution No. 1 of 2022, which states, “An employee shall be exempted from the non-compete clause under Section 10 of the Employment Act in the following cases:

– Any professional category required by the national job market and determined by the Minister in accordance with the Employee Classification Resolution approved by Cabinet. “

According to the law above, you can join a prospective employer if that employer is not a competitor of your current employer. Additionally, you can join a future employer in a different role or appointment than your current role or appointment with your current employer. Also, even if you join a competitor of your current employer, it is your current employer’s burden to prove in court that you were employed by that competitor and caused financial damage. This is in accordance with Article 12(2) of Cabinet Resolution No. 1 of 2022, which stipulates that “if a dispute arises due to the non-competition clause and cannot be resolved amicably, the issue shall be referred to the judiciary and the judiciary shall be held accountable” . The burden of proving alleged damage shall be on the employer. “

The Employment Act and its subsequent ministerial resolutions do not provide for the banning of an employee if a court proves that the employee has breached a non-compete clause in an employment contract with a former employer. Courts, however, can quantify breaches of contract through the way employees pay monetary compensation to their former employers.

Additionally, non-compete clauses can be enforced in the UAE depending on the geographical area, nature of work and non-compete clause clauses in employment contracts. This is in accordance with Article 12(1) of Cabinet Resolution No. 1 of 2022, “According to the provisions of Article 10 of the Decree Law, the application of the non-competition clause stipulated therein shall comply with the following provisions:

a. Geographical scope to which this provision applies.

b. The term of the clause, provided that it does not exceed two years from the contract expiry date.

c. The nature of the work, which causes significant harm to the legitimate interests of the employer. “

Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates. He is admitted to practice law in Dubai, UK and India. Full details of his firm are available at: www.amalawyers.com. Readers may email questions to: news@khaleejtimes.com or to Legal View, Khaleej Times, PO Box 11243, Dubai.

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