Ask Gulf News: Is a non-compete clause enforceable after unfair termination in the UAE?

Question: I have a non-competition clause in my employment contract that applies for two years after the termination of my employment. My employer terminated my employment for reasons unrelated to my work or my conduct, and the termination letter states that I must comply with the non-competition clause. Am I legally required to do so?

Answer: The employer may not rely on the non-competition clause if the employer terminates the contract for no act on the part of the employee or committed an act that entitled the employee to terminate the employment contract.

Pursuant to Article 10 of the UAE Labour Law, an employer may include a non-competition clause in an employment contract where the nature of the employee’s work enables the employee to acquire knowledge of the employer’s clients or access the employer’s confidential information or trade secrets. To be enforceable, the restriction must be limited in terms of duration, geographical scope, and the nature of the work, and it must not exceed 2 years from the date of termination of the employment relationship, to the extent necessary to protect the employer’s legitimate business interests. However, Article 10 further provides that the non-competition clause shall be unenforceable “if the employer terminates the employment contract in violation of the provisions of the Labour Law”.

In addition, Article 851 of the Civil Transactions Law No. (25) of 2025 reinforces this principle by providing that “The employer may not invoke this agreement if they have rescinded the contract or refused to renew it without any act on the part of the employee justifying such rescission or refusal, nor may the employer invoke it if they have committed an act justifying the employee’s rescission of the contract.”