Non-compete clauses in the UAE: Can your employer stop you from working for a competitor?

You resign from your job and receive an offer from a competitor. Your employment contract contains a non-compete clause. Can your former employer prevent you from taking the new job?

The verdict: potentially, but not every non-compete clause is enforceable under UAE law.

I. What is a non-compete clause?

A non-compete clause restricts an employee, after leaving their employment, from competing with their former employer or participating in a competing business in the same industry.

Under Article 10 of Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relationships, an employer may include such a clause where the employee's work allows them to know the employer's clients or access its business secrets.

The purpose of the restriction must therefore be to protect the employer's legitimate business interests.

II. What makes a non-compete clause valid?

Article 10 expressly requires the restriction to be specific in terms of:

• Time : the non-compete period cannot exceed two years from the end of the employment contract ;

• Place : the geographical scope of the restriction must be defined ; and

• Type of work : the restricted activities must be identified.

  
  

Most importantly, these restrictions must be limited “to the extent necessary to protect the legitimate business interests” of the employer.

Article 10 also provides that the non-compete condition is null if the employer terminates the employment contract in violation of the Labour Law.

III. What if the employee still joins a competitor?

The fact that an employee joins a competitor does not, by itself, establish a breach.

The question is whether the employee's new activities actually breach a valid non-compete restriction meeting the requirements of Article 10.

Under Article 12 of Cabinet Resolution No. 1 of 2022, which implements the Labour Law, if a dispute concerning the non-compete clause is not resolved amicably, it may be referred to the competent court. The employer bears the burden of proving the damage resulting from the breach.

There is also a strict time limit: under Article 10(3), an employer's action for breach of the non-compete provision will not be heard after one year from the date the employer discovered the violation.

Hence,

For employers, the clause should therefore be carefully tailored to the business interest that actually requires protection.

For employees, the mere existence of a non-compete clause does not necessarily mean that every position with a competitor is prohibited.

This post is for general information only and does not constitute legal advice.