The Act contains several provisions that act as a non-compete and confidentiality clause between business partners and shareholders. Learn how our employment and incentive practice provides legal advice and services to impose competition bans on former UAE employees. Courts rely primarily on expert advice and tend to deny prejudice in the absence of sufficient evidence to support the claim. Ministerial Resolution 297 of 2016 aims to establish a mechanism for Article 127 of the United Arab Emirates Labour Act, which will be applied in practice. In particular, the resolution provides that the Ministry of Human Resources and Emiratiization (formerly known as the Ministry of Labour) may refrain from issuing a work permit (or revoke a work permit already issued) when a final court decision establishes that the person is violating the non-competition obligations that the person owes to his former employer (or would be if a new work permit is issued). This action can be taken by the department with respect to the duration of the non-competition restriction. For example, if the person has a six-month competitive restriction, the ministry may refrain from issuing a new work permit (or withdrawing a work permit already issued) for a period of six months starting at the end of the year. As a matter of provisional threshold, the contractual restriction of non-competition with respect to duration, geographic scope and activity should be limited to the extent necessary to protect the legitimate business interests of the former employer (in accordance with section 127 of the Labour Act) and, therefore, a company cannot invoke the resolution to impose an excessive or heavy restriction of competition. For a non-competition clause to be valid, it must comply with the five cumulative conditions set out in articles (127) of the Labour Act and (909) of the Civil Code1. If one of these conditions is not met, the non-competition clause is deemed invalid and workers are released from their obligations under this restrictive pact.
“If the worker`s work allows access to work secrets or knowledge with the company`s customers, both parties are allowed to agree that the worker is not allowed to compete with the employer or to compete with the employer at the end of the contract.” (2) “Provided that such an agreement is not valid, unless it is limited in time, place and working time so that it is necessary to protect the legitimate interests of the worker.” UAE labour law and the Civil Code provide for measures to protect confidential information and strengthen enforcement of non-compete agreements with workers. However, the impact is different for workers, business partners and shareholders. “If the work assigned to a worker allows him to know the employer`s clients or to have access to his trade secrets, the employer may require him not to compete with him at the end of his contract or to participate in a competing business of his own.