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Want to Join a Rival Firm? Can Your Employer Take Legal Action Against You?

Non-compete clauses are permissible but must be reasonable and justifiable

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Pavitra Shetty

Published on May 29, 2024, 08:43:03

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can employee join rival firm, employer, legal action, uae labour law

The UAE's labour market, known for its dynamic and diverse workforce, is governed by a set of regulations designed to balance the interests of both employers and employees.

Among the most debated topics are non-compete clauses and the conditions under which an employer can influence an employee’s ability to join rival firms or compel them to leave the country. This article delves into these issues within the framework of UAE law.

Legality of Non-Compete Clauses

Non-compete clauses are contractual agreements that restrict employees from joining competing firms or engaging in similar business activities for a specified period and within a certain geographical area after leaving an employer.

These clauses are included in employment contracts to protect the employer’s business interests, particularly their trade secrets, proprietary information and client relationships.

The UAE's Federal Decree-Law No. 33 of 2021, also known as the UAE Labour Law, addresses non-compete clauses.
According to Article 10 of the Labour Law:

  •  Employers can include non-compete clauses in employment contracts, provided these clauses are reasonable in scope, duration and geographical area.
  • The restriction must not cause undue hardship to the employee or be against public policy.

For a non-compete clause to be enforceable, it must meet the following criteria:

Legitimate Business Interest: The clause should protect legitimate business interests, such as confidential information or unique business methods.
Reasonableness: The duration, geographical scope and type of restricted activity must be reasonable and not excessively broad. Typically, a duration of six months to one year and a specific geographical area are considered reasonable.
Written Agreement: The non-compete clause must be explicitly stated in writing within the employment contract and agreed upon by both parties.

In case of a dispute over a non-compete clause, the UAE courts evaluate the reasonableness and necessity of the restriction. The courts may strike down or modify overly restrictive clauses that unfairly limit an employee's ability to find new employment.

Forcing Employees to Leave the Country

In the UAE, employment visas are linked to specific employers. When an employee resigns or is terminated, their employment visa is typically cancelled. This does not inherently mean that the employee must leave the country immediately, as they may have a grace period to find a new job or switch to a different visa type.

Employers cannot force an employee to leave the country against their will. However, once an employment visa is cancelled, the individual must comply with immigration laws, which may require them to either secure a new visa or exit the country.

Under the UAE Labour Law, employees are protected from unjust treatment and have the right to seek new employment.
Employees should be aware of the following:

Notice Period: Employees are generally required to serve a notice period as stipulated in their employment contract, which cannot exceed three months.
End-of-Service Benefits: Employees are entitled to receive their end-of-service benefits, including gratuity, upon termination or resignation, provided they meet the eligibility criteria.
Labour Disputes: Employees can file a complaint with the Ministry of Human Resources and Emiratisation (MoHRE) if they believe their employer is acting unlawfully or unethically.

Practical Considerations

Employees should carefully review and negotiate non-compete clauses before signing employment contracts. Seeking legal advice to understand the implications and ensure the terms are fair and reasonable is advisable.
Employees planning to leave their current job should:

Understand their contractual obligations, including notice periods and non-compete clauses.

  • Ensure they receive all due compensation and benefits.
  • Stay informed about their visa status and explore options for visa transfer or renewal.

The UAE's labour laws provide a framework that seeks to balance the interests of employers in protecting their business and the rights of employees to seek new employment opportunities.

Non-compete clauses are permissible but must be reasonable and justifiable. Employers cannot force employees to leave the country, though visa regulations must be respected.

By understanding their rights and obligations, employees can manage their  job transitions more effectively and ensure they are treated fairly within the bounds of the law. For employers, adhering to legal standards in drafting and enforcing employment contracts is crucial to maintaining a fair and lawful workplace.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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