New UAE Labour Law: What is the non-compete clause?
A detailed look at what the new law says about protecting an employer's rights.
Dubai: A new labour law is about to come into effect in the UAE, as Federal Decree-Law No. 33 of 2021 on the regulation of labour relations replaces Federal Law No. 8 of 1980 and its amendments.
One of the biggest changes in the new law is the clause on the non-competition clause.
As reported by Gulf News earlier, Article 10 of the new law, which regulates the non-compete clause of contracts, also brings certain changes made to the earlier law, further strengthening the rights of an employer.
The agreement would be required to consist of the following factors:
Speaking to Gulf News, Dr Ibrahim Al Banna, CEO of Ibrahim Al Banna Advocates and Legal Consultants, said: “Though the earlier law, through Article 127, restrains an employee from working for a prospective employer that carries out a business which competes with his or her former employer’s business, it was not mandatory for the former employer to restrain the employee by executing a ‘Non-Compete Agreement’. But the employer, as per the new law, shall be statutorily bound to, if it intends to protect its business interests, execute a Non-Compete Agreement with the employee.”
a) An ascertained duration, which shall not be more than two years during which the employee shall not work for a prospective employer which competes with the former employer;
b) The geography within which the employee shall be restrained from taking up an employment; and
c) The types of works which the employee shall not be allowed to take up for the ascertained period of time in order to shield the business interests of the former employee.
“Above all, the former employer shall, subject to whether the employee had access to information which is regarded as sensitive, execute a Non-Compete Agreement with the latter,” he added.
Here is a detailed look at what the law says on the issue:
ARTICLE 10 - Non-compete clause
1. Where the Worker performs a Work which gives him access to Employer's customers or business secrets, the Employer may make a provision in the Employment Contract that the Worker shall not compete with, or be engaged in any business which competes with him in the same Sector after the expiry of the Contract. Such clause shall specify the place, time and type of Work to the extent necessary to protect the legitimate business interests, and the non-competition period shall not exceed (2) two years after the expiration of the Contract.
2. This clause shall be void in the case of termination of the Employment Contract by the Employer in violation of the provisions hereof.
3. An action filed by an Employer for Worker's breach of the provisions of this Article shall not be heard after the lapse of (1) one year from the date on which the violation is discovered.
4. The Executive Regulations shall prescribe the provisions regulating this Article, the skill levels or positions that may be exempted from the provision of paragraph (1) above, in accordance with the conditions and controls set by the Regulations.