An Employment non-compete contract is a contract signed between an employee and employer specifying that an employee shall not affiliate with a competitor employer after the employment period completion in the specific time period and geographic territory. This contract also prohibits the employee from revealing information, data or business secrets to any other parties during or after the employment. The objective of employment non-compete clauses is to protect company’s secrets, data from competitor businesses.
According to UAE Federal Decree-Law No: (33) of 2021, regarding the regulation of labor relations in the employment contract can be mentioned about Non compete clause, Article 10 (1) states “If the Work entrusted to the Worker allows him to be aware of the Employer’s clients or to access the secrets of his Work, the Employer may stipulate in the Employment Contract that the Worker shall not, after the end of the contract, compete with him or participate in any competing project in the same sector, provided that the condition is determined in terms of time, location and type of Work to the extent necessary to protect the legitimate business interests, and the period of non-compete shall not exceed two years from the date of expiry of the contract”
According to the Cabinet Resolution No: (1) of 2022 On the Executive Regulations Article12 It is required for the application of the non competition clause stipulated therein that the following must be determined:
a. The geographical scope for the application of the condition.
b. The term of the condition, provided that it does not exceed two years from the date of expiry of the contract.
c. The nature of the work so as such nature seriously harms the legitimate interests of the employer.
The non-execution of the non-competition condition may be agreed on in writing in accordance with the following conditions:
a. Payment of compensation not exceeding three months of the worker’s wage agreed upon in the last contract of the previous employer by the worker or the new employer, and the prior written approval of the previous employer is required to do so.
b. If the contract is terminated during the probationary period.
c. Any Skill and occupational categories pursuant to the needs of the labor market in the country for which a decision is issued by the Minister in accordance with the labor classification approved by the Cabinet.
The non-competition clause does not apply if the reason for terminating the contract is due to the employer or to the breach of his contractual obligations.
In the event of a dispute over the non-competition clause and not to be settled amicably, the matter shall be referred to the judiciary,
The burden of proving the damage shall fall on the employer.
Some skill levels or professions that may be excluded by Ministry from the provision of non-compete law.
Time period of filing case is one year from the date of discovering the violation by the employer.
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imran_advocate@live.com
This article is under the supervision of Atty. Imran Khan, a legal consultant in Bin Eid Advocates
