The elaborate clauses protect interests and prohibit anti-competitive activities. While the wording provides for an obligation for shareholders or members to compete directly or indirectly with the activities of the corporation or corporation, it also provides for a general duty of confidentiality for information received from both parties. Finally, it provides for a non-solicitation clause that prohibits shareholders/partners from attracting clients of the company/company for their own purposes and benefits. Non-compete obligations come into force on the date of termination of the employment contract after notification of the notice period. In the absence of notice, this restrictive agreement applies from the date on which the employee is no longer employed by his former employer. Article 909 clearly states that if the employee has direct access to company secrets – trade secrets and/or confidential information about customers, customers, partners, etc. – the employer may enter into a non-compete obligation to protect his sensitive information. However, the admissibility of such an obligation of non-competition must respect the following restrictions in order to ensure enforceability: it is clear to us that the obligation of non-competition is an exception and restricts the freedom of the worker and the free movement of persons at work, so that the judiciary explains it narrowly and tightens the conditions for its application. The Ministry of Labour was referred to the bank and lifted the conditions of the employer`s consent to the transfer. This authorisation is valid from 2010. In accordance with Article 910 of the Civil Code of the United Arab Emirates [3], the employer may also include a penalty liability clause as part of the agreement. Such a clause may indicate a reasonable amount to be paid in the event of a breach of the clause by the employee.
However, this clause may be considered invalid in court if the compensation is exorbitant. In many jurisdictions, the general position regarding post-termination restrictions is that they are illegal because they seek to restrict trade. However, the starting point at Eau is that post-termination restrictions (and in particular non-compete obligations) are legal. The United Arab Emirates contains the legal provisions on non-competition or restrictive agreements in article 127 of the Federal Labour Code Act No. 8 of 1980 (the Labour Code), articles 909 and 910 of Federal Law No. 909. 5 of 1985 on the Civil Transactions Act (Civil Code), section 379 of the Federal Act No. 3 of 1987 on the Criminal Code (Criminal Code) and the Commercial Companies Act. The non-competition obligation can be defined as a restrictive clause imposed on the employee in his agreement in order to refrain from taking a company or participating in acts in direct competition with that of the employer for a certain period of time, geographical limit and field of activity at the end of the employment contract. In addition to civil liability, a breach of a non-compete obligation may also result in criminal liability on the part of the employee.
But what if there is criminal liability for the employee in case of breach of the non-compete obligation? Courts assess the non-competent clause on the basis of various relevant factors such as the value of the information, the amount of compensation or the actual damage suffered by the employer, among others, before enforcing the non-compete obligation. For example, if the employer`s business is not well established internationally, but the non-compete obligation prevents the employee from joining a foreign business that competes with the employer`s, the court may find this clause invalid because it is an unfair restriction and not all the conditions for enforcing the non-compete obligation are met. The Law on Commercial Companies contains provisions on transparency between them and the non-disclosure of company secrets to third parties, as well as on the non-resumption of the management of a competing company without the necessary consent. It is very difficult to win a case in the case of a non-competition obligation without sufficient proof of the actual damage suffered by the employer as a result of the employee`s breach of the non-compete obligation. A post-contractual non-competition obligation can only be legally agreed if the employee`s work effectively gives him access to trade secrets or the maintenance of relations with the employer`s clients. If the non-competition obligation contains a predetermined financial penalty against the employee for breach of his obligations under the non-competition obligation, the burden of proof lies with the employee. In a decision of the Dubai Court of Cassation, the court ruled that if the restrictive agreement determines the amount of compensation to which the former employer is entitled in the event of a breach by the former employee, the burden of proof lies with the former employee. If the employee succeeds in proving that no harm was caused to the former employer, no compensation is payable.4 The non-compete obligation must contain specifications to the extent necessary to protect the employer`s interests, and the uae courts will also declare these agreements valid if they are imposed on an employee in charge of the work, who must establish a relationship with the employer`s customers or have access to confidential data or to business secrets of the employer`s company. For example, this clause may be considered valid for the employee who is considered for the role of an officer or executive employee for the reasons that he or she may have access to such information that may jeopardize the employer`s business if it is passed on to competitors rather than an employee of the company. It remains to be seen how the resolution will work in practice, including whether it can form the basis of a stand-alone claim (or whether it should be part of a civil claim for financial damages, as mentioned above, or should be filed as a counterclaim to an employment action filed by the employee). In any case, the company would have to bear the costs of filing (or defending) a lawsuit and wait for a final verdict.
In addition, in practice, the final decision of the court would probably be obtained after the expiry of the individual`s contractual non-compete obligations (and it therefore remains to be seen whether, if the claim is successful and to give teeth to the decision, the employee`s work permit can be withdrawn from the new employer). Also, the resolution cannot be trusted if the former employee wants to join a competitor in a UAE free trade zone (or is not regulated by the ministry) because they would not need a work permit from the ministry to join the new company. The said law contains several provisions that are considered a non-competition and confidentiality clause between business partners and shareholders. .