Working for Competitor?
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I have been asked many times about working for a competitor after resignation by readers. Today I would like to educate you on this. UAE Labour Law is fair to employee and employers. There are rights mentioned for both the parties. This is the reason you should make a point to read and understand your rights as per UAE Labour Law.
Article 127 – Trade Secret
Lot of companies in UAE have contracts and work that will put the employees in close proximity to clients and business secrets. In many cases this comes down to the survival of the business. In such case if an employee resigns and joins a competitor, your company may be at the receiving end as this may affect the business. Therefore, UAE Labour Law provides to protect the right of the employer.
When you sign your contract, your employer in most cases will mention this that after your resignation, you may not work for a competitor or start a business in the same/similar industry. This is mentioned in the Article 127 of the UAE Labour Law.
However, as an employee, you are provided your rights as well. The agreement should be specific as to place, time and nature of work. For example, this can not be enforced worldwide or even within UAE it needs to specific to places like Dubai, Abu Dhabi or there should be a maximum term like 6 months or 1 year up to which you will not be able to start a similar business or join a competitor.
This mostly happens in Technical industries, Banks where the stakes of businesses are very high and dependent on information and technology. However, this is not limited to particular industries.
Why companies do this?
First reason is obvious; you may have information of your companies clients which are crucial to companies business;
Secondly, you also may have knowledge of business process, suppliers which took your company many years to achieve and if someone steals the idea, it works as a detrimental factor;
Thirdly, your company spends sizeable amount of money and resources on your training. Hence, they have interest to retain you and if that is not possible, restrict you from joining competitors.
Can my employer sue me if I join a competitor?
Yes, as per the law, your employer can sue you under below circumstances:
- You have joined a company which is directly associated with the same kind of business like your previous company;
- Your new designation at your new company is similar to the one at your previous company;
- When you joined the new company, it has actually caused damage to your previous employer in the form of financial losses, loss of client or loss of confidentiality pertaining to trade secrets;
- You have signed an offer letter/ Contract which mentions the non compete clause and that you have agreed not to join your competitor.
So if you have plans to leave the job to join a competitor, your company can restrict this lawfully if their interests are affected.