أسئلة وأجوبة
Are the non-compete clauses enforceable in case of resignation to take a better offer?
Currently working at Company X in Dubai. I recently got a stronger offer from Company Y, a much larger firm in the same industry but in a different free zone.
When I asked if Company X could match the offer, they proposed a bonus, not a salary adjustment. I resigned. While I didn’t disclose where I was going, they seem to know, and their legal team has started sending letters.
My contract has restrictive clauses, including: “For 12 months post-termination, the employee shall not, without prior written consent, (a) be employed or engaged in any capacity by any business in competition in the UAE with any Restricted Business; (b) have business dealings with any Client or Prospective Client in such competition.”
Friends in law say it’s too broad to enforce. I held a manager role, AED 30k/month, not C-level, though considered a key member. Despite the pressure, I believe they’re overreaching legally.
Please advise if these non-compete clauses are enforceable.
Dear questioner
UAE courts generally scrutinize non-compete clauses for reasonableness. Restrictions must be limited in terms of duration, geographical scope, and the nature of the prohibited activities.
The phrase "any business in competition in the UAE" is very broad, and courts may deem it unreasonable.
The restriction against "business dealings with any Client or Prospective Client" is also very broad and could be challenged.
If you need detailed advice, kindly share your WhatsApp number.
The UAE Labor Law governs non-compete clauses and sets specific conditions for their enforceability.
Courts will assess whether the clause is reasonable in terms of duration, geographic scope, and the nature of the restricted activities. Overly broad clauses are less likely to be enforced. The employer must demonstrate a legitimate business interest that needs protection, such as trade secrets, confidential information, or client relationships. If you need further clarification kindly share your WhatsApp number. We will discuss the possibilities in detail.
Dear Inquirer
We are pleased to serve you and address your inquiries.
The non-compete clause must be specific in scope and duration and must not be arbitrary.
Contact us via email or call our offices in Dubai or Sharjah.
Jasim Al Haddad Advocates & Legal Consultants
Based on the information provided, it is likely that the non-compete clause in the employee’s contract may be considered too broad to be enforceable.
The UAE courts have consistently taken a strict approach to enforcing non-compete clauses, requiring them to be reasonable, necessary, and not contrary to public policy.
The employee’s friends in law may be correct in their assessment that the clause is too broad to be enforceable.
However, the final determination would depend on the specific circumstances of the case and the interpretation of the UAE courts.
Greetings,
Non-compete clauses in the UAE are enforceable only if reasonable in scope, duration, and geographic limitation.
While a 12-month restriction is common, the broad wording of your clause may be challenged in court, especially if it unfairly restricts employment opportunities.
Factors like your role, access to sensitive information, and industry competition will impact enforceability.
Given the legal pressure from your former employer, we strongly recommend a detailed legal review to assess risks and defense strategies.
Book a consultation with Future Vision for Advocacy and Legal Consultancy to protect your rights or proceed with legal representation if needed.
Let us know how you’d like to proceed.
We are happy at Future Vision Law Advocates and Legal Consultancy to assist you and provide the best legal services that meet your needs.
To contact us, you can call or WhatsApp us.
Dear Sir/Madam,
Thank you for providing a detailed account of your current employment situation and the non-compete clauses in question.
Based on the information you've shared and current UAE labor laws, please consider the following professional assessment:
1. Validity of Non-Compete Clauses:
- The clause specifies a duration (12 months) and geographical area (UAE), which aligns with basic legal requirements.
- However, the scope of restricted activities ("any business in competition" and "any Client or Prospective Client") may be considered overly broad.
2. Enforceability Considerations:
- While non-compete clauses are generally enforceable in the UAE, they must meet specific conditions of reasonableness.
- Courts evaluate factors such as the nature of the employee's work, level of access to confidential information, and potential harm to the employer's legitimate business interests.
- Your position as a manager (not C-level) and salary level (AED 30k/month) may influence the court's view on the necessity and reasonableness of such broad restrictions.
3. Recent Legal Developments:
- The UAE's new labor law, effective from 2022, has introduced more stringent regulations on non-compete clauses, emphasizing reasonableness in terms of duration, geographical scope, and nature of restricted activities.
4. Potential Legal Challenges:
- The broad scope of the clause may be challenged as an unreasonable restriction on your right to work.
- Courts have the authority to modify ("blue pencil") overly broad clauses to make them more reasonable rather than invalidating them entirely.
5. Employer's Burden of Proof:
- Your former employer would need to demonstrate that your new position poses a genuine threat to their legitimate business interests.
- They must also prove that any claimed damages are a direct result of your breach of the non-compete clause.
Given these factors, while the non-compete clause in your contract may be enforceable to some degree, its broad nature could face challenges in court.
However, it's important to note that even if parts of the clause are deemed unreasonable, the court may modify rather than completely invalidate it.
Considering the complexity of your situation and the recent changes in UAE labor regulations, it is strongly advised that you consult with a legal professional specializing in UAE labor law.
They can provide personalized advice based on the specific details of your case and the most current legal interpretations.
Should you require any further clarification or assistance, please do not hesitate to contact us.
Yours sincerely,
ABDUL WAHIED
Dear K.,
Thank you for your inquiry. Based on UAE law, non-compete clauses are enforceable but must be reasonable in duration, scope, and industry restrictions.
Key Points:
Duration: A 12-month restriction may be excessive for a managerial role. A shorter duration (e.g., 6 months) is likely more reasonable.
Geographic Scope: A restriction across the entire UAE may be too broad and could be limited to the regions where your former employer operates.
Industry Restrictions: The vague term “Restricted Business” makes this clause potentially unenforceable. It needs to be clearly defined to be valid.
Client Restrictions: Broad restrictions on working with clients may also be unenforceable without clear definitions.
Next Steps:
- Challenge the clauses based on their overreach and vagueness.
- Consider negotiating a revised agreement with Company X.
- If needed, pursue legal action to contest the enforceability of the clause.
Please let me know how you’d like to proceed.
Best regards,
Mohammed Salah
Legal Consultant
