UAE Legislation: Possibility to Prohibit Employees from Working for Competitors After Termination
Read more
Khaleej Times
www.khaleejtimes.com

UAE Legislation: Possibility to Prohibit Employees from Working for Competitors After Termination

According to the legislation of the United Arab Emirates (UAE), an employer may include a non-compete clause in the employment contract to prevent an employee from working in a competing business after the termination or expiration of the contract.

The applicable regulations are Federal Decree-Law No. 33 of 2021 on the Regulation of Labor Relations (hereinafter referred to as the 'Labor Law') and Cabinet Resolution No. 1 of 2022 on the implementation of this law.

Pursuant to Article 10(1) of the Labor Law, if an employee has access to the employer's clients or trade secrets, the employer has the right to stipulate in the contract that the employee will not compete or engage in a competing business in the same field after the contract ends. Such a clause must clearly specify the place, time, and type of work necessary to protect legitimate business interests, and the non-compete period must not exceed two years after the contract is terminated.

Article 10(1) of the Labor Law and Article 12 of Cabinet Resolution No. 1 of 2022 establish several requirements for such conditions. Firstly, the restriction must not exceed two years from the date of termination or expiration of the employment contract; this two-year period is the maximum set by law, but its applicability depends on the proportionality of the restriction to legitimate interests.

Secondly, the employment contract must define the geographical area to which the restriction applies. An excessively broad territory without justification based on the employer's legitimate interests may be challenged. Thirdly, the clause must identify the nature of the prohibited work related to activities that could cause serious damage to the employer's legitimate business interests; a general ban on any work in the industry, regardless of the employee's actual duties, may be deemed invalid.

Furthermore, the restriction must aim to protect the employer's legitimate interests, especially if the employee had access to confidential information or clients. It should not merely serve as a general limitation on the employee's ability to earn a living. Article 12(2) of Cabinet Resolution No. 1 of 2022 states that if a dispute over the non-compete clause is not resolved amicably and is submitted to court, the burden of proving damages lies with the employer.

An employee has the right to challenge the applicability of the non-compete clause if, for example, it does not sufficiently define the duration, geographical scope, or nature of the prohibited activity, or if it goes beyond what is necessary to protect the employer's legitimate interests. Article 10(2) of the Labor Law explicitly states that the non-compete clause will be voided if the employer terminates the employment contract in violation of the Law's provisions.

Moreover, Article 12(3) of Cabinet Resolution No. 1 of 2022 stipulates that the non-compete clause does not apply if the employment contract is terminated at the employer's initiative or due to the employer's breach of its legal or contractual obligations. Article 12(5) of Cabinet Resolution No. 1 of 2022 also provides for exceptions, including termination during the probationary period, employment in certain professional categories exempted by ministerial regulations, and a compensation agreement where the employee or new employer pays the former employer an amount not exceeding three months' salary, subject to the written approval of the former employer.

Before signing an employment contract containing a non-compete clause, employees are advised to ensure that the restriction clearly defines its duration, geographical area, and the nature of the prohibited work. It is also important to assess how reasonably this restriction relates to their actual duties, client relationships, and access to confidential information.

Employees should determine whether this clause would make it impossible to work in their profession in general, or if it only restricts specific competing activities. If an overly broad restriction is found, they should request clarification or attempt to negotiate. It is also worth considering obtaining a written waiver of the non-compete clause upon termination, if agreed upon with the employer.

It is necessary to carefully review any separate confidentiality, non-solicitation of clients, or intellectual property restrictions that may operate independently of the non-compete clause. In conclusion, the entire employment contract should be read thoroughly to fully understand its terms and avoid ambiguity in the wording.

Similar stories

GCC countries' companies increasingly hire temporary staff for project implementation
Read more
www.khaleejtimes.com

GCC countries' companies increasingly hire temporary staff for project implementation

A new study by the recruitment firm Hays showed that more than a third of organizations in the UAE and other Gulf countries have increased their use of contract or temporary workers compared to two years ago, as project-based hiring gains momentum.

According to two surveys conducted via LinkedIn, 38 percent of companies are using more contract personnel than before. In the first survey, which involved 1636 respondents, 26 percent indicated that usage remained about the same, 21 percent reported a decrease, and 16 percent stated that their organization does not use contract employees at all.

In the second survey, which gathered 1323 responses, employers were asked about the reasons for hiring contractors. The most frequent reason was managing demand based on projects, cited by about 43 percent of respondents. This was followed by the need for greater workforce flexibility (32 percent), while 15 percent pointed to risk reduction and compliance, and 10 percent reported hiring contractors to find the right specialist.

These results indicate that employers are primarily using contractors to execute projects rather than for risk management or regulatory compliance. Ryan Tagg, Senior Director at Hays Middle East, noted that temporary specialists offer a fast and flexible way to solve problems when a business requires additional expertise or project support.

He emphasized: 'What is particularly interesting is that project demand became the strongest factor in our recent survey. This suggests that organizations are thinking less about workforce size and more about its capabilities. They want access to expertise when they need it without necessarily increasing the permanent staff.'

This shift occurs against the backdrop of companies across the region continuing to implement growth plans, invest in technology, and adapt to changing skill requirements. Many projects require expertise only for a specific period, making contractor hiring attractive to both employers and specialists themselves.

Flexibility and blended workforces

Nearly a third of respondents named flexibility as the main reason for using contractors, reflecting the need to scale teams up or down depending on the project portfolio, market conditions, and business priorities. Tagg added that the line between permanent and temporary hiring is blurring. 'Organizations are now forming blended workforces that combine permanent staff with temporary specialists, allowing them to access skills more effectively while maintaining flexibility.'

As transformative projects continue in GCC countries, contract hiring is likely to play an important role in helping organizations obtain the necessary expertise to ensure growth while maintaining flexibility.

Employee refuses to resign, prefers the company to fire him
Read more
www.aajtak.in

Employee refuses to resign, prefers the company to fire him

One employee experiencing significant pressure at work sought advice from Reddit users. He wishes to leave his position, but instead of submitting a resignation, he hopes that the company will terminate his employment. After posting this message on social media, a discussion began about the reasons why some workers prefer to be fired rather than quit voluntarily.

Possible reasons for this choice include workplace stress, the size of the compensation package, and uncertainty regarding finding a new job in the current labor market. The employee shared his problem on the r/QuitCorporate forum on Reddit, asking how to ask his manager to let him go.

In his Reddit post, he described his situation: he works at a large company, but due to increased workload and new responsibilities, he no longer feels peace of mind. It is becoming increasingly difficult for him to meet his boss's expectations. The employee fears how he can meet established deadlines and goals, and he experiences tension before meetings. Furthermore, he worries about the potential negative impact of the current situation on his career.

The employee emphasized that he does not want to resign himself. One reason is the lack of guarantees regarding securing the next job after leaving. Therefore, he is concerned about financial security. He noted that if the company fires him, he might receive a severance package, which would provide him with some financial support and allow him to escape the stressful job. This hope is what led him to discuss possible termination with his manager.

However, according to him, his boss stated that the company's reduction process was complete, and he would have to wait about a year before the next phase began.

In his post, the employee also mentioned that he is willing to accept a lower salary in the future, but his main condition is the absence of excessive work pressure and achieving peace of mind. For him, the priority is not only high income but also the ability to work without constant stress.

After the post appeared, users offered various opinions on the matter. Some advise the employee to consider his options instead of waiting for the company to fire him. Others emphasize the need to find a balance between work and mental health. Nevertheless, it should be noted that this case is based on one employee's post on Reddit.

Popular