UAE: Have a non-competition clause in your contract? Here is how your rights are protected.

Dubai: Planning to switch jobs? If so, you might be thinking about whether you are legally allowed to work for the new company and if the non-competition clause would be applicable in your case.

On May 30, the Ministry of Human Resources and Emiratistion (MOHRE) took to its social media channels to highlight five ways in which an employee’s rights are protected, when it comes to the execution of a non-competition clause.

A non-competition clause (or non-compete clause) is a legal provision, that ensures that companies are able to protect confidential information from being leaked to other establishments in a competitive market. However, the implementation of the clause needs to fulfil various requirements, as mentioned in our detailed guide here.

In the social media post by MOHRE, the five conditions that protect employees' rights in the non-competition clause, are listed as follows:

1. Fixed term clause (place and time).

This condition that MOHRE mentions in its post is referred to in Article 10 (1) of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (UAE Labour Law), which states the following about a non-competition clause: “Such clause shall specify the place, time and type of work to the extent necessary to protect the legitimate business interests ...”

This means that the clause is only applicable within the scope of the place and time specified.

2. A written statement can be issued exempting the implementation of the condition after the end of the work contract.

A Cabinet Resolution was also issued this year, clarifying several aspects of the implementation of the new Labour Law.

Article 12 (4) of this resolution – Cabinet Resolution No. 1 of 2022 – states that: “It may be agreed in writing not to apply the non-competition clause after the termination of the employment contract.”

3. Two years maximum from the contract's expiry date.

This refers to the duration for which the non-compete clause would be applicable - which is two years from the date of the contract's expiry.

This provision is also mentioned in Article 10 of the Labour Law (referred to above). Article 10(1) goes on to state: “… and the non-competition period shall not exceed two years after the expiration of the contract.”

4. The clause is voided if the company terminates the employment contract in violation of the Labour Law.

The UAE Labour Law in Article 10 (2) states that: “This clause shall be void in the case of termination of the employment contract by the employer in violation of the provisions hereof.”

5. The lawsuit filed by the company against the worker for violating the clause shall not be heard after the lapse of one year from the date of discovery of the violation.

This, too, is mentioned in the Labour Law, Article 10 (3): “The claim filed by the employer for the worker’s violation of the provisions of this Article shall not be heard if one year has passed from the date of discovering the violation.”