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Abu Dhabi, UAESaturday 22 September 2018

Can I move to a rival company if I have a non-compete clause on my UAE contract?

The Dubai employee says his employer did not show him the clause when he first signed his employment contract

Keren Bobker says UAE employees on a fixed-term employment contract face a penalty if they leave early. Photo: Getty Images
Keren Bobker says UAE employees on a fixed-term employment contract face a penalty if they leave early. Photo: Getty Images

I joined a company a few months ago and signed a contract but have found out that they only showed me part of it and there are extra pages. I have proof that they only sent me three pages as it was by e-mail and I have a copy. The part I did not see says: ‘Worker undertakes in the case of resignation not to join rival for two years in the UAE’. I have recently received a better job opportunity but the problem is that the two companies have a similar type of business. Will I be able to join the new company without getting into trouble? Can I leave straight away as I am still in the six month probation period? SF, Dubai

While employers are permitted to add a non-compete clause to a contract this must be with the employee’s knowledge and if it can be proven that SF was not shown the full contract that it should not be enforceable. Article 127 of UAE Labour Law states: "should the work entrusted to the worker enable him to meet the clients of the employer or know the business secrets thereof, the employer may require from the worker not to compete with him or participate in any competing project upon the termination of the contract. For the validity of such agreement, the worker shall be 21 years old at least upon the conclusion thereof, and the agreement shall be limited, with regards to time, place and type of work, to the extent necessary for the protection of the legal interests of the employer". There is also an expectation that such clauses are relevant to employees in senior positions and someone who is not in a senior role and also who has only been with the company a few months should not have such limitations placed upon them. A clause referring to a two-year period is highly unlikely to be upheld.

If an employee wishes to resign during their probationary period they must give proper notice in accordance with UAE Labour Law which specifies a minimum notice period of 30 days or they could receive an employment ban of six months. I understand that SF is on an unlimited contract so, assuming his job is designated as skill level one to three, there will not be a ban upon resigning provided the proper notice is given and worked. Employees in categories four and five, primarily unskilled workers without qualifications, will receive a ban if they resigned without having completed less than six months' service

My residency visa will expire on August 15 and although I am on an unlimited contract I have given my employer notice to this date as I do not want to continue. I expected to serve one month’s notice per the company policy. The problem is that I signed an offer letter that states three months’ notice but I don’t think there is anything saying that in my labour contract. A recent e-mail from the HR department says one month but they want me to serve two months. What can I do? NG, Dubai

Anyone with a residency visa should have an official contract of employment and where the employment is not in a free zone a copy will be lodged with the Ministry of Human Resources and Emiratisation (MoHRE). This will include the period of notice required. Although the terms can be varied, with agreement from both parties, in the event of a dispute the wording on this contract will be the deciding factor. Employees can obtain a copy from the MoHRE website at http://www.mohre.gov.ae. As it is mandatory to have a residency visa in place for anyone to work legally and an employer cannot insist on someone working for longer than the notice period, I suggest that it may be in the employer’s interest for service to end on August 15 rather than paying for a new visa that must be cancelled very soon after.

I have to complete a form for my offshore bank but am unsure as it is asking for a Tax Identification Number. I don’t pay tax on my earnings and have not heard of this in the UAE. Also will this mean I have to pay tax somewhere? JG, Abu Dhabi

In the vast majority of cases the liability to tax on income is based on residency. I have established that JG is British and UK non-resident for tax purposes which means that he is not liable to pay tax on his earnings or interest from his offshore account. The request for a Tax Identification Number (TIN) is a common request from banks and insurance companies these days and for people who are resident in the UAE, the response should be ‘not applicable’ as the UAE does not currently issue this for individuals.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only

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