slideshow

Non-Compete Clauses in UAE Employment Contracts

Posted on 3rd May 2010 by Camille Paldi,

 

Non-compete clauses are generally held to be valid in executed employment contracts as long they restrain employees from working in the same field of work, reasonably protect the employer’s interests, are for reasonable lengths of time, and in a reasonable geographic scope of the world.  You do not have to sign a contract with such a clause and can always ask for the clause to be removed from the employment agreement.  Signing a contract with such a clause in the UAE may have adverse consequences if you wish to change employers while residing in the UAE.  However, for example, if you are on a three year limited employment contract and you complete the contract, there is no need to obtain a non-objection letter in order to gain new employment.  The provisions of law regarding non-compete clauses can be found in Article 127 of the UAE Labor Law, Federal Law No. 8 of 1980  and Articles 909 and 910 of the UAE Civil Transactions Law Federal Law No. 5 of 1985.

Article 127 of the UAE Labor Law, Federal Law No. 8 of 1980 states:

“Where the work assigned to a worker allows him to become acquainted with the employer’s clients or to become familiar with the secrets of his business, the employer may require him to refrain, after the termination of his contract, from competing with him or participating in any enterprise competing with his own.  Such agreement shall be valid only on condition that the worker is at least 21 years of age at the time of its conclusion that the agreement is limited, as regards the time, the place and nature of the business, to the extent necessary to safeguard the employer’s lawful interests.”

Article 909 of the Civil Transactions Law, Federal Law No. 5 of 1985 states:

  1. “If a worker, in the course of his work, has access to the secrets of the work or gets acquainted with the customers of the firm, the two parties may agree that the worker may not compete with the employer or take part in a work competitive to his work after termination of the contract.
  2. Nevertheless, such an agreement shall not be valid unless it is restricted to time, place, and type of work, to the extent which is necessary for protection of the legitimate interests of the employer.
  3. The employer must not abide by such an agreement if the contract is terminated with nothing occurring on the part of the worker that justified termination, nor may he abide by the agreement if he acts in a manner that justifies the termination of the contract by the worker.”

 

Article 910 of the Civil Transactions Law, Federal Law No. 5 of 1985 states:

“If the two parties agree that the worker shall be liable for damages if he does not abstain from competition with such liability being unreasonably excessive in order to coerce him to stay with the employer, the condition shall not be valid.”

Omer Eltom states that Cassation Petition Number 6 of 1996 confirms this law. 

“The rules established by the statutory provisions and the precedent are as follows:

  1. An employee is bound by any restraint clause in his employment contract and may be held contractually liable for any breach thereof unless the same is caused or motivated by a wrongful act on the part of the employer.
  2. An employer should not benefit from such a clause if he directly or indirectly causes the employment termination without justification.
  3. Such a restraint should be restricted to the necessary limits.
  4. A restraint clause does not affect the validity of a new contract entered into with a competitor in breach of the said clause.
  5. The right of the previous employer in case of a breach is restricted to compensation for the damage sustained.
  6. An action may lie in tort against the new employer on grounds of unlawful competition provided he is aware of the restraint clause.” (Omer Eltom, The Emirates Law in Practice, p. 316)

Analysis of Recent Case Law:

http://www.hadefpartners.com/News/pageid/120-137/default.aspx?Mediaid=172


Posted on 3rd May 2010 by Camille Paldi


Comment on this post







Twitter

    • 29th July @camille paldi
    • Junk-rated sukuk top market on Saudi housing shortage - http://t.co/zIVrU5c1Kk #GoogleAlerts
    • 29th July @camille paldi
    • Kuwait preparing Islamic bond legislation to help finance budget-min | Reuters - http://t.co/mal6ykK2Xt #GoogleAlerts
    • 29th July @camille paldi
    • Indonesia sells 2.93 trillion rupiah of Islamic bonds, above target - The Economic Times - http://t.co/atpGqoXGEi #GoogleAlerts
    • 29th July @camille paldi
    • Markaz examines trends in the GCC bonds & Sukuk primary market - CPI Financial - http://t.co/4S4iuMeLNy #GoogleAlerts
    • 29th July @camille paldi
    • South Africa proposes extending Islamic bonds to corporate issuers - http://t.co/GkZrwp1FZE #GoogleAlerts
    • 29th July @camille paldi
    • China-led AIIB plans to use Hong Kong as sukuk issuance platform - http://t.co/lULDAilNMs #GoogleAlerts
    • 28th July @camille paldi
    • https://t.co/MbTmG92JBM
    • 28th July @camille paldi
    • Goldman Sachs : Islamic financing a viable option - http://t.co/0ZkiCSpSD3 #GoogleAlerts
    • 28th July @camille paldi
    • Jordan's Governorate Development Fund to offer Shariah compliant options - http://t.co/nuGUaHZR4v #GoogleAlerts
    • 28th July @camille paldi
    • South Africa Extends Islamic Finance To Listed Corporates - http://t.co/N0xIbpsCIJ - http://t.co/bAt401KqwY #GoogleAlerts
    • 27th July @camille paldi
    • EY: MENA governments considering new tax measures to meet budget expenditures - http://t.co/qgXbNuCLdY #GoogleAlerts
    • 27th July @camille paldi
    • CBB to launch who's who book for Bahrini women in the financial and banking sector - http://t.co/VxQHqYpR1i #GoogleAlerts
    • 27th July @camille paldi
    • Dubai Financial Market slides as oil price falls below $55 - http://t.co/ZMZwDO4iNR #GoogleAlerts
    • 27th July @camille paldi
    • Amanie And UNITAR To Hold Forum On Islamic Finance - http://t.co/ApzWs8KYl9 #GoogleAlerts
    • 27th July @camille paldi
    • CI: Kuwait's sovereign ratings affirmed - http://t.co/fr9HjXBYds #GoogleAlerts
    • 27th July @camille paldi
    • Islamic banking expanding to more fields in Pakistan - http://t.co/tlQaGyRw1C #GoogleAlerts
    • 27th July @camille paldi
    • Islamic economy increasingly good business for Japan and TaiwanIslamic Finance - Zawya - http://t.co/UQYkL8tKm4 #GoogleAlerts
    • 26th July @camille paldi
    • Growth in Cross border Sharia Compliant Trade - http://t.co/edrNl73ece - http://t.co/TfAfAEor1j #GoogleAlerts
    • 26th July @camille paldi
    • Double first boosts UK Islamic Financial hub aspirations - http://t.co/JDlN85Sfmy #GoogleAlerts
    • 26th July @camille paldi
    • CPI Financial | CPI Financial News | Banking and Financial News,Islamic Business and Finance ... - http://t.co/UeomKQAVSh #GoogleAlerts

Articles

Reforming Economics and Finance in the Light of Abrahamic Principles

Reforming Economics and Finance in the Light of Abrahamic Principles

Introduction

The modern day economic system is built upon and around interest-based lending, which allows one class of people to grow rich at the expense of the majority of the population. Interest has been prohibited in all Abrahamic religions for essentially the same reaso...

Posted on 1st July 2015 by Camille Silla Paldi

China's Entry to the Islamic Finance Market

China's Entry to the Islamic Finance Market

 

By Matthew Pendrey

Assistant Director at The Royal Bank of Scotland

 

 

In April 2015, Qatar International Islamic Bank signed an historical agreement with Southwest Securities, based in Chongqing, to develop Shari'ah-compliant finance across ...

Posted on 1st July 2015 by Matthew Pendrey

Islam Explains Why Interest is Prohibited in the Bible and Torah

Islam Explains Why Interest is Prohibited in the Bible and Torah

 

By Camille Paldi, CEO of FAAIF, camille@faaif.com

 

 

Lending money is not prohibited in the Bible. What is prohibited is charging abusively high interest. This is because high-interest loans...

Posted on 6th June 2015 by Camille Silla Paldi

The Changing Face of Banking in Dubai

The Changing Face of Banking in Dubai

The Changing Face of Banking in Dubai

Posted on 30th May 2015 by Matthew Pendrey

Video

Find all our videos here, and also a link to our YouTube video channel so you can view our 'video of the week'

Submit

We would like you to get involved with our site. So if you want to submit Articles, Videos, Events and Call for Papers, please click the button below:

Submit

Valid XHTML 1.1 |  Valid CSS |  Web Design in Durham and Newcastle |  Copyright © 2015

* Prices are converted at USD$0.2723 per AED 1