employment contract
You must understand the contract termination law before you plan to resign from your job. Image Credit: Agency

Employer refused my resignation due to loan I took from the company


I have been working in a private company for two years. Two months ago, I took a loan from the company, and now I submitted my resignation from work, but the employer refused my resignation because of the loan I took from the company. The loan expires in December 2023, and accordingly, the employer is asking me to resign after December.

My question, does the employer legally have the right to refuse my resignation because of the loan I took?

In the employment contract, a fine of 50,000 dirhams is mentioned in the event of working with a competing company. Is the employer entitled to apply this fine if I work with a competing company? Please advise


To answer this question, I would advise the following:

As per Article 42 of the Labour Law, the employment contract is terminated based on the wish of either party, provided that the provisions regarding termination of the employment contract and the notice period agreed upon in the contract are observed; which means that the employer cannot prevent you from resigning provided that he has the right to deduct the loan from your end of service benefits as per Article 51 of the same law which states that (The employer may deduct from the end of service benefits any amounts payable under the law or a judgment, in accordance with the conditions and procedures specified in the Implementing Regulation hereof)

As the work assigned to the worker allows him to gain knowledge of the employer’s clients or have access to its work secrets, the employer may require that the worker under the employment contract shall not, after the expiry of the contract, compete with the employer or be engaged in any competing project in the same sector, provided that the requirement is specified, in terms of time, place and type of work, to the extent necessary to protect the legitimate business interests.

The non-competition period shall not be more than two years from the expiry date of the contract. This requirement shall be nullified if the employer terminates the employment contract in violation of the provisions.

So you are bond to the non-competition clause you had signed. If you worked to a competing company, the employer should file a case in front of the court in order to apply such fine and he should prove that you are really competing him. The employer cannot take such fine by his own without following the legal procedures. Article 12 of the Implementing Cabinet Resolution states that (If a dispute arises over the non-competition clause and it is not settled amicably, the matter shall be referred to the judiciary and the burden of proving the alleged damage shall lie with the employer. It may be agreed in writing not to apply the non-competition clause after the termination of the employment contract.)

The worker shall be exempted from the non-competition clause stipulated in Article (10) of the Decree-Law under the following conditions:

a. If the worker or the new employer pays to the previous employer, compensation not exceeding three months of the worker’s wage as agreed upon in the last contract, subject to the previous employer’s written consent thereto.

b. If the contract is terminated during the probationary period.

c. Any professional categories that are in demand in the national labor market and determined by resolution of the Minister in accordance with the workers’ classification approved by the Cabinet.