What is Non-Compete Clause as per New UAE Labour Law ?

A new labour law is about to come into effect in the UAE, as Federal Decree-Law No. 33 of 2021 on the regulation of labour relations replaces Federal Law No. 8 of 1980 and its amendments.

The new labour law – Federal Decree-Law No. 33 of 2021 on the regulation of labour relations – has updated the regulations for the private sector in the UAE. One of the many aspects covered in the new law includes the clause on the non-competition clause.

As per the Article 10 of the New UAE Labour Law on Non-compete clause:

1. Where the employee performs a Work which gives him access to Employer’s customers or business secrets, the Employer may make a provision in the Employment Contract that the employee shall not compete with, or be engaged in any business which competes with him in the same Sector after the expiry of the Contract. Such clause shall specify the place, time and type of Work to the extent necessary to protect the legitimate business interests, and the non-competition period shall not exceed (2) two years after the expiration of the Contract.
2. This clause shall be void in the case of termination of the Employment Contract by the Employer in violation of the provisions hereof.
3. An action filed by an Employer for employee’s breach of the provisions of this Article shall not be heard after the lapse of (1) one year from the date on which the violation is discovered.
4. The Executive Regulations shall prescribe the provisions regulating this Article, the skill levels or positions that may be exempted from the provision of paragraph (1) above, in accordance with the conditions and controls set by the Regulations.