Non-Compete Agreements

Non-Competition Agreement is between employer and employee, which means the employee is bound to some extent not to join competitors, competition, or the same industry. Employees can also be bound not to join specific competitors in a defined territory. Non-Disclosure is also part of these agreements, where, the employee is not permitted to share business information, business secrets, client details and any relevant business information with anyone. The breach makes the employer open a court case against the employee/employees. Law provides the right to employers to take legal action against the employees.

UAE Labour Law suggests non-competition for not more than 2 years. The area or geography must be clearly mentioned in the contract. Article 10 UAE of UAE Labour Law throws light on the Non-Competition Clause between employers and employees. If the contract is terminated by the employer, then Non-Competition is not applicable except in certain conditions. Check with our Emirati Labour and Employment Lawyers for the details.

As per OLD UAE Labour and Employment Law, it has to be signed when an employee signs the contract with the employer. At the time of contract termination or expiry, the employee can’t be forced to sign a new non-competition or to sign the non-competition from the beginning. It can only be signed at the beginning. Employees can’t be pressured to sign non-competition if they did not sign it before. However, it is mandatory to add the clause in the Employment Contract now. Now non-competition is part of Labour and Employment Contracts.

Non-compete agreements contain Duration (Time Period), Territory/Region, List or details of competitors, Scope of the agreements, Damages and compensations etc.

It has to be drafted as per the Law. It should not be acceding the reasonable limits set by the Law. Any Non-Compete clause which is contradicting the Labour and Employment Law can also be challenged.

Previously, Non-Competition was not mandatory. Now it’s the mandatory part of the Employment Agreement. Employees carrying forward the OLD Contracts into the new work year, under the same OLD contract, still can’t be forced. Non-disclosure is also part of the Non-Competition Agreement. Non-competition is not complete without non-disclosure, though they both are distinct from each other. Therefore, it is always advised that non-competition must be included in non-disclosure, or both clauses must be the part of Labour and Employment Agreement. Another name for non-disclosure is NDA.

• Such clauses save a business and individual from losses incurred due to sharing sensitive business information, trade or business secrets etc.
• Secret Information can be kept saved.
• Nobody can breach the company policies and share confidential information with anyone.
• Business is secured and protected.
• Employees can’t influence the employers.
• Sales can’t be compromised.
• Business planning becomes protracted when stops sharing with competitors.
• It saves a company from several disputes and issues.

It is an important part to be understood and to be added in Labour and Employment Contracts, but very carefully. Therefore this is advised to consult Labour and Employment Lawyers first, so the employer can be saved from any inconvenience in the future.