Court Rejects Company’s Lawsuit Against Employee Over Non-compete Clause

The Abu Dhabi Labour Court of First Instance has dismissed a lawsuit filed by a company against a female employee who resigned after previously working for the firm but allegedly failed to comply with a non-compete clause.

 

The court said the case was dismissed because no evidence was presented proving the company had suffered any damage from the employee joining a rival firm, and also because the employee had not signed the non-compete clause.

Earlier, the company had filed a lawsuit demanding the employee pay Dh200,000 in compensation for breaching the clause.

 

The company also requested statutory interest at 5 per cent from the date of the claim until full payment, in addition to fees, expenses and lawyer’s charges.

 

According to the company, the employee had worked with a basic salary of Dh4,000 and a total salary of Dh18,000 before resigning. It alleged she breached the non-compete agreement by taking a job with a competitor.

 

On the compensation demand, the court referred to Article 10 of Decree-Law No. 33 of 2021, which allows employers to include non-compete conditions in contracts if an employee’s role gives access to clients or work secrets. Such conditions require a mutual agreement and must protect a legitimate interest of the employer.

 

The court clarified that a breach alone is not enough to merit compensation -- the breach must also cause actual harm, and the burden of proof lies with the employer.

 

It added that proving harm is a fundamental requirement for compensation.

 

Since the documents lacked evidence of any harm caused by the employee joining a competitor, and as the non-compete condition did not bear the employee’s signature, the company had no right to damages. Therefore, the lawsuit was dismissed, the court concluded.