If a company grants an employee access to confidential
information, know-how or its customer base, it is usually in the
employer's interest to prevent the employee from taking
advantage of such knowledge and seeking employment with a
competitor. The employer can try to prevent this risk by agreeing
on a non-competition clause which covers a period after the
termination of the employment relationship (so-called
post-contractual non-competition clause). Both the labour law and
the civil law of the United Arab Emirates ("UAE") contain
A post-contractual non-competition clause may stipulate the
employee's obligation for a particular period of time after the
termination of the employment relationship in an agreed territory
not to work for a competitor, not to compete by offering own
services, not to conduct business with (potential) customers of the
previous employer and/or not to hire the former employer's
A post-contractual non-competition clause can only be agreed
upon in a legally effective way if the employee's work actually
enables him to have access to company secrets or maintain relations
with customers of the employer.
Furthermore, the employee, who shall be a party to a
post-contractual non-competition agreement, must be at least 21
years of age. Such agreement has to be restricted with regard to
the applicable time, geographical scope and type of work.
Aforementioned criteria must be limited to the extent necessary to
protect the employer's lawful interests.
A provision that leads to a factual employment ban of the
employee or that covers a territory in which the employer has not
conducted any business yet is likely to be considered invalid. In
addition, a post-contractual non-competition clause, which was
initially concluded in a legally effective manner, might later not
be enforceable should the employer's termination lack a valid
reason or should the employment relationship be terminated by the
employee due to an act of the employer justifying such
3. Legal Effect
A breach of a valid and enforceable post-contractual
non-competition clause renders the employee liable to pay damages
to the employer. The employer bears the burden of proof for the
contractual breach as well as the actual damage sustained. Should
the court deem a non-competition clause partially invalid, for
instance because the court considers the agreed period of
non-competition as too long, the court can reduce said obligation
to a reasonable duration.
Besides the civil liability, a breach of a non-competition
clause may under certain circumstances also entail a criminal
liability of the employee.
It is not mandatory under UAE law that the employer pays an
allowance to the employee for observing the post-contractual
4. Practical Approach
Should the employer be located outside a free zone, a
post-contractual non-competition clause can be agreed upon in the
standard employment contract of the Ministry of Human Resources and
Emiratisation. The employment contracts of some free zones already
contain respective provisions by default. Other free zones provide
an additional template including a post-contractual non-competition
clause that can be signed and registered along with the standard
Do you have any questions?
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ANDERS LEGAL CONSULTANCY
Sama Tower, Office 806
Sheikh Zayed Road
PO Box 333 558
United Arab Emirates
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