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Working for Competitor?
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.
Dear Sir,
I was working as a sales representative for medical-dental supplies in Dubai. I completed my 2 years contract with them. But in my contract, it was mentioned the second party cannot work with a competitor in UAE for 2 years after resignation or cancellation according to article 127
I worked with them for 2 years. My contract was completed in 2020 September. Now I have a job offer from a similar job file from a company from Dubai. So can I work with them? My question is my previous employer can stop me from working in a competitor. ? ( i had completed 2 years full contract period with them)
Please advise me
Thank you
Sameer
Is your position strategy to company? Do you work in senior position with strategic business information? Non-compete clauses are a common employment contract feature in the UAE agreed upon between an employer and an employee. but there are limitations.
Dear Deena
Can you please confirm that Article 127 is applicable at the time of resign or company terminate or 2 years contract is finished and renewing it
When Article 127 applicable
Thanks
Hi, do you have the non-compete clause mentioned in your employment contract?
Hi ,
My name is Jitendra , I have completed 2 years contract with Pvt LLc dubai company, I could get job opportunity with competitors only .
In my contract I was written that I can not work with competitors for 2 years.
So, what I have to do , shall I say good bye to previous experience and become a fresher to look job in new field or I can start my own business similar with my employer .
Or my my could open a trading licence , where she shall sponser me to work in that field.
So many confusions in my mind.
Kindly advice
Thanks and regards
Jitendra Talreja
hi sir,i ask about same competitor because my previous company she give a case to me claiming commitment to the non competition clause.even my 2 years contract is finish,the ajman branch is already close?thank you in advance for your answer
Mr. Deepak,
the employer filed an abscoding complaint to us in MOL, we appealed in the court and and settled. the court said to our employer that she needs to lift the absconding complaint since we showed to all our court hearing. we filed in the tasheel for the withdrawing of the abscon complaint but the employer said to us that she will not remove the abscon complaint if we will not sign an aggreement that we are not allowed to work with the same line of business. but before we join in the company, we didnt sign any non compete clause.
hope to hear from you soon.
Ms. Tammy
Tammy, what sort of work were you doing? Was it strategic or senior level management wherein you had strategy insight?
I believe what your employer is seeking is beyond what is understandable!
Non compete clause should be signed in the beginning of employment and not after resignation!
Sir,
many thanks for your quick response, my work is sales executive to an office supplies, my concern now if the absconding complaint will be withdraw since we settled already in the court and the case is dismissed since we showed up to our all our court hearings.
many thanks again.
Mr. Deepak,
my work is sales executive to an office supplies, my concern now is the absconding complaint the employer filed to me. is this will be withdraw since we showed to all court hearings.
please advice.
hi sir,i ask about same competitor because my previous company she give a case to me claiming commitment to the non competition clause.even my 2 years contract is finish,the ajman branch is already close?thank you in advance for your answer
Is your position strategy to company? Do you work in senior position with strategic business information?
Hi Sir
They can sue you even you are not sign any competitor clause on your contract..?
Or they can sue you only if you have a non competitor agreement as mentioned in yiur contract?
Orly,
This depends on the level of your internal company knowledge.
Hi Sir
They can sue you even you are not sign any competitor clause on your contract..?
what should be a maximum term for an employer to put in non-competitor clause, either leaving the company or while renewing the Visa.
Suppose it’s my time for annual leave and on the same time if I will resign the job then will I be able to get my leave salary or no?
Yes, You are entitled to get the leave days basic salary.
Hi
I would like to know if there is the competitor clause in the job offer letter but not in the contract is that applicable and if you join non free zone then? please need advice thanks
Hi,
I have renewed my visa after completing my first visa successfully in LLC company in DUBAI.my new visa
has been renewed about 9 months ago but now I want to resign my job due to family issues, am I liable to pay
any penalties for the company plz reply.
If you are in Limited Contract of employment you have to compensate employer if you are resigning.
Hi,
I have been working for LLC company in Sharjah from which I have resigned in August 2015. I have joined a free zone company after that. My old company has filed a complaint against me in MOL for non competent clause which was is my labor contract.
My question is that whether the non competent clause is valid even if I join a free zone company?
Please advise ASAP.
Thanks.