UAE Employment Contract Restrictions

Have you ever wondered what could happen when you leave your employment tonwork for a competitor company?

The majority of UAE Employment Contracts would have certain restrictions preventing existing employees from damaging the business after their departure. There restrictions are commonly referred to as "restrictive covenants".

Here are some examples.

1. Clauses restricting work with competitors or setting up a business in competition with the employer.
2. Clauses preventing employees from enticing other employees to leave their jobs.
3. Non- dealing causes ti prevent exiting employees room dealing with the suppliers and service providers of the company.
4. A non- solicitation clause that prevents the poaching of clients and customers for the company.

Employees should take these restrictions very seriously.

With regards to the first restriction, it is worth noting that the UAE courts will consider the reasonableness of the restriction and if it is fair. For example, does the restriction apply to the whole of the UAE or just the Emirate of Dubai? Does the Employee's skills and experience require them to remain in that industry and work for a competitor? How long is the duration of the restrictions?

As a rule of thumb, a restriction that is intended to last for more than two or three years is likely to be struck down by the courts as being unreasonable.

The next concern should be  the actions that the employer can take against  the existing employee for breaching those terms in the Employment Contract.

The following actions can be taken against you:

(a) a claim for compensation from the employee for a specific amount, for any damage or direct and actual financial losses incurred by the employer;

(b) sue for releasing confidential company information to the employer's competitors and third parties, if it is deemed to put the employer at a competitive disadvantage; and

(c) file a criminal complaint for breach if it can be proven that confidential information in hard copy was taken from the employer's premises.

Contact us for further guidance.

Arkhurst & Abdellah Solicitors

Creative Tower, 17th & 18th Floors

P.O. Box 4422, Fujairah.

Tel: +971525359633