I have just received a job offer from a Dubai-based corporation. I inked a non-compete agreement with my current employer. What legal actions can be brought against me, and how can I defend myself?
It is assumed, based on your questions, that you are presently employed by a mainland employer in Dubai. Accordingly, the provisions of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations and Cabinet Resolution No. 1 of 2022 on the implementation of Federal Decree-Law No. 33 on the Regulation of Employment Relations apply.
In the UAE, an employer may include a non-competition clause in an employee's employment contract to prohibit the employee from working for a competitor upon the contract's termination. The duration of this non-competition condition cannot exceed two years.
This is in accordance with Article 10(1) of the Employment Law, which states: "Where the employee performs a job that gives him access to the employer's customers or trade secrets, the employer may stipulate in the employment contract that the employee shall not compete with or be engaged in any business that competes with it in the same sector after the contract expires. This clause shall specify the place, time, and nature of the work to the extent required to protect the legitimate business interests, and the non-competition period shall not exceed two years following the contract's expiration.
Moreover, in the event of a breach of a non-competition clause outlined in an employment contract by an employee, an employer may be required to file a complaint with the Ministry of Human Resources & Emiratisation in the United Arab Emirates and/or initiate legal proceedings within one year of discovering the breach. According to Article 10.3 of the Employment Law, this is the case.
Despite the inclusion of a non-competition clause in the employment contract, certain employees may be exempt from the non-competition clause due to their profession or designation. This is in accordance with Article 12(5)(c) of Cabinet Resolution No.1 of 2022, which states, "The employee shall be exempt from the non-compete clause specified in Article 10 of the Employment Law under the following conditions:
Any professional categories that are in demand on the national labour market, as determined by the Minister in accordance with the Cabinet-approved classification of employees.
According to the aforementioned legal provisions, you may join the prospective employer if it is not your current employer's competitor. As an employee, it is recommended that you hand over and/or delete all the documents/information contacts of your clients, customers, dealers, suppliers, and colleagues, as well as obtain written confirmation from your employer that you have handed over/deleted all the documents/information in your possession.
In addition, even if you join the prospective employer, you may contemplate joining in a role/designation that is distinct from your current role/designation.
However, even if you join a competitor of your employer, it is the responsibility of your employer to substantiate in court that your employment with the competitor resulted in financial loss. This is in accordance with Article 12(2) of Cabinet Resolution No.1 of 2022, which states, "If a dispute arises over a non-compete clause that cannot be resolved amicably, the matter shall be referred to the judiciary, and the burden of proving the alleged damage shall rest with the employer."
In the event that you join the competitor of your current employer and the current employer is able to prove in a court with jurisdiction in the UAE that your employment with the competitor has caused financial loss to the current employer, you may be required to compensate the current employer according to the court's ruling.
