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Non-competition clause


My contract is unlimited and includes a special condition stating ‘Employee not allowed to work in a competitive field of the entity for two years in UAE’. If I resign, can my employer issue me a labour ban and immigration ban? Is there any provision in the labour law to lift these bans?
My notice period is two months. In case I do not serve it will it be considered a violation of the labour law?


As per UAE Labour Law, article (127) which states: “Where the work assigned to a worker allows him to become acquainted with the employer’s client or to become familiar with the secrets of his business, the employer may require him to refrain, after the termination of his contract, from competing with him or participating in any enterprise competing with his own. Such agreement shall be valid only on condition that the worker is at least 21 years of age at the time of its conclusion that the agreement is limited, as regards the time, the place and the nature of the business, to the extent necessary to safeguard the employer’s lawful interest.”

As for a ban, the Ministry of Labour has issued an order that no ban will be imposed on the questioner if he has completed two years. Work within the agreed notice period mentioned in the employment contract to avoid any violation.

Non-competition clause, as stipulated in Article 127 of the Labour Law, is not binding upon the worker unless the worker has agreed to the same, the Labour Law does not entitle the employer to oblige the worker to sign the said article and therefore the worker is free to sign or not or otherwise his refusal to sign is not against the law. (GN)

Working with a competitor
My previous employer has filed a case against me in the Dubai court saying I have joined his competitor company. They are asking to pay Dh50,000. My present company is dealing totally in different products. How may I defend myself?

You have to deny all the charges as the burden of proof lies up on the claiming party. Since, your previous employer is claiming that you have joined a competitor, he must prove in the court that your current employer is the competitor. Furthermore, you can submit a copy of the licence of your current company and the product you are dealing in. Please note that you must appear before the court and deny the charges. Otherwise, if you do not deny the charges, as per law, the court has to give judgment on the basis of claim of your previous employer. (KT)

When I joined a small company here, the owner made me sign an agreement whereby I cannot resign or join another company before staying in service for five years, otherwise I will have to pay Dh12,000 for all visa and labour card fees. Is this legal? The employer said this is legal formality here in the UAE; is he right? I am on an unlimited visa and contract. If I resign after two years or after I finish my contract, do I need to pay the said Dh12,000? Please advice.

Your employer is entitled to prevent you from joining another competitor for a certain period providing that you both agreed on this term while concluding the contract of employment. You may not violate this condition if you put your signature on it. Failing to abide by this clause, you shall be required to pay the Dh12,000, costs of the visa and labour card, of course if you insist on resigning. You need to pay nothing if you complete the period set in the non-competition clause, however.
For more clarification on the term, a labour contract may contain a condition specifying that after the completion of the contract, the employee shall not work with a competitor of the employer. This is to protect the interests of the business of the employer. The UAE Labour Law states that if the job allotted to the employee allows him to know the employer’s clients or to know the secrets of the job, the employer may stipulate that after the end of his contract, the employee shall not compete with him or share information in any competing project.

A non-competition agreement may be signed before or during the term of the employment, but as per the law, it will only come into effect on termination of the employment contract. The employers may include a clause in the labour contract or sign an additional agreement banning the employees from working for competitors for a certain period. In order to apply non-competition clause certain conditions have to be fulfilled. The agreement shall be, as far as time, place and nature of work are concerned, limited to what is necessary to protect the legal interests of the employer. If the job assigned to the employee allows him to know the secrets and know-how of the employer’s business dealings, then the employer may impose non-competition clause. In the event that the employee works in a company, where such secrecy nature does not apply, then the non-competition clause cannot be used.

To impose a non-competition clause against an employee, the non-competition agreement signed between the parties is to be restricted as per the provisions mentioned in the UAE Civil Code and the labour law. Such a stipulation shall not be valid unless it is clearly restricted to certain time, place and type of work, in a sufficiently determined manner so as to constitute a real protection of the legitimate employer’s interests. If the employer terminates the employee or the employee terminates the contract due to a reason that is ascribed to the employer’s fault, then the non-competition conditions shall not be applied against the employee.
 

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