Dubai: If you have chosen to be a freelancer in the UAE to have more flexibility and control, what happens if one of your clients asks you to sign a non-compete clause? Are they entitled to enter such a clause in your contract? And how can it affect your work as a freelancer? Gulf News spoke with legal experts in the UAE to find out how the non-compete clause applies to freelancers or self-employed individuals in the country.
Who is considered a freelancer?
According to Article 8 (1) of Cabinet Resolution No. (1) of 2022 issued by MOHRE, the legal definition of freelance work is as follows: “Freelance is an independent and flexible work arrangement, whereby the natural person generates income by providing his or her services for a specified period of time or performing a task or providing a specific service, whether for individuals or establishments, where this natural person is in no way a worker for those individuals or establishments.”
Is it legal for freelancers to work for two clients simultaneously?
According to Hassan Tamim, CEO of Hassan Tamim Advocates and Legal Consultants, a freelancer is not tied down to a specific organisation or employer, because of the regulations set out in Article 6 (1) Of Cabinet Resolution No. (1) Of 2022 issued by MOHRE.
“Under the freelance contract, a freelancer, both a citizen and a resident, can work for different clients simultaneously in several companies, without the requirement of being sponsored by a particular institution or enterprise in the State,” Tamim said.
So, freelancers are essentially independent contractors, who earn money based on the tasks or projects that they are assigned.
“To sum it up, a freelancer is not an employee of a firm and may therefore be at liberty to complete different jobs concurrently by various individuals or firms unless contractually committed to working exclusively until a particular project is completed,” Tamim later added.
To sum it up, a freelancer is not an employee of a firm and may therefore be at liberty to complete different jobs concurrently by various individuals or firms unless contractually committed to working exclusively until a particular project is completed.
Are non-compete clauses for freelancers legal under UAE’s labour law?
Maria Reji, paralegal at MBH Advocates and Legal Consultants, also commented on how some freelancers may be asked to work exclusively for an organisation in certain cases, or be asked to sign a non-compete clause, stopping them from working for certain organisations.
“As per the UAE Labour Law, a company can include a non-compete clause, whereby the signatory will be restricted to work for competitors of the company for specific periods of time mentioned in the agreement,” Reiji said.
“The company can ask the freelancer to sign an agreement with a non-competition clause and can restrict him or her from working for another company. However, the company should mention the duration in this clause. Throughout the duration of the agreement, the recipient shall not, in any manner represent, provide services or engage in any aspects of business that would be deemed similar in nature to the business of the company,” she added
As per the UAE Labour Law, a company can include a non-compete clause, whereby the signatory will be restricted to work for competitors of the company for specific periods of time mentioned in the agreement.
What criteria should a non-compete clause fulfil?
If you do have a non-compete clause in your agreement, it is helpful to know what conditions of non-competition it should specify, as per the law.
Tamim broke down the main elements of a non-compete clause, that need to be clearly stated, as per Article 12 of Cabinet Resolution No. (1) Of 2022. These are:
1. Geographical scope
The clause should specify the geographical scope within which it will be applicable. For example, the individual will be asked to not work for certain companies within the country, or within the region.
“This condition prevents you from working with local competitors and is probably one of the most reasonable clauses that a client can ask for,” Tamim said.
2. Timeframe
“Non-compete clauses are usually put in place for a certain tenure. The article specifies the maximum period for the non-compete to be for two years,” Tamim said.
3. The nature of the work
“The non-compete requirement must be limited to the type of work, to the extent to which the employer has a legitimate interest. Absolute prohibition is a loss of the freelancer's freedom. If the non-compete clause does not determine the nature of the work, it would be invalid,” Tamim said.
Why do non-compete clauses exist?
According to Tamim, as per Article 910 of Federal Law No. 5 of 1985 on the Civil Transactions Law, a non-compete clause protects a business’s confidential information and inner workings from competitors.
“A non-compete clause (NCC) or covenant not to compete (CNC) is generally written into a contract to make sure that an employee or the contractor does not try or compete with the client. That includes all forms of ‘conflicting activities’. However, the main purpose of a non-compete agreement is to prevent you from working for the rival or competition. There is a possibility of ‘conflict of interest’ when employees of one company assist the other,” he said.
What can I do if I am asked to sign a non-compete clause?
If the situation arises where you have to sign a contract with a non-compete clause, Tamim advises freelancers to pay attention to the fine print, and consider the factors that might hinder work opportunities.
“These [clauses] are not necessarily written to bring in trouble for the freelancers. However, they can get too restrictive. That is where you should pay attention. If the clause is written in a way that will prevent you from doing a bunch of projects, it is probably not worth it,” he said.
However, he also advised freelancers to not immediately reject any offers that may have such a clause, either.
“Do not outright decline working with such clauses. In case the requests are reasonable and do not affect a big part of your business, feel free to go for it,” he added.
