x

Abu Dhabi, UAEMonday 18 June 2018

Can my Abu Dhabi employer make me sign a non-compete clause?

The Dubai resident was asked to sign the document three years after joining the firm

Under the instruction of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, the tourism fee, municipality fee and per room, per night hotel fees have been reduced. Alex Atack / Bloomberg
Under the instruction of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, the tourism fee, municipality fee and per room, per night hotel fees have been reduced. Alex Atack / Bloomberg

I have worked in Abu Dhabi on an unlimited contract for the last seven years. The company asked me to sign a document that says "I will not work in any company competitor or client for the next two years". This was an internal document and not part of the contract given to the Ministry of Labour. My issue is that the company hasn’t paid salaries for the last four months and I got a job offer from one of our clients but this was through a recruitment company not directly from the client. Is this internal letter still valid? It was given to me three years after I started working for the company and I had no choice in signing it. KL, Dubai

While non-compete clauses are not uncommon, they should be included in an official contract of employment although they can be added at a later date, with the agreement of the employee. As KL has signed paperwork, even without any real choice, it may be enforceable. However, there are other issues to consider that may override this. There is an expectation that such clauses are relevant to employees in senior positions and someone who is not in a senior role should not have such limitations, as an employer is not permitted to restrict an ex-employee’s activities simply to suit them. A clause referring to a two-year period is highly unlikely to be upheld, as that is deemed unreasonable. Such clauses must be specific in relation to geographical scope and the actual role, plus a client may not necessarily be a competitor. The onus is also on the employer to prove to a court that they will suffer an actual financial loss should the employee work for another specific company. Few of the con-compete clauses I have seen would ever stand up in court and they are generally included to prevent employees seeking alternative employment.

In this case, KL’s employer has also not paid his salary for four months. This should have been picked up by the Ministry of Human Resources and Emiratisation’s (MoHRE) Wages Protection System by now so the Ministry may well already be aware of this issue. The employer is in breach of UAE Labour Law, specifically Article 121, which states: "The worker may leave work without notice in the following cases … Should the employer breach his obligations towards the worker, as set forth in the contract or the law." This means that an employee can leave without giving notice provided that no salary has been paid for three months or more. In this situation, an employee should register a case with MoHRE before leaving. In this situation an employee will not receive any employment ban.

_____

Read more:

'Can I attend a family wedding during my probation period?'

'Is my Dubai employer allowed to scrap the flight allowance?'

What UAE gratuity payment is my maid entitled to?

_____

I want to leave my company, as I need to return home for family issues and other personal reasons. My employment visa was given to me earlier this year and I will probably finish my six-month probation period soon. I am in the process of giving one month’s notice to leave the company. Do I need to bear the expenses for the visa costs being incurred by the company? I expect the company to ask me to pay an amount as a penalty to leave the company sooner. What are the consequences I have to bear if I leave? VP, Sharjah

It transpires that VP is on a limited employment contract, so the terms that apply on leaving are very different to an unlimited contract. Not only does she have to give notice but she will also be liable for a penalty for breaking the terms of the contract of employment. As stated in Article 116 of UAE Labour Law: "Should the contract be rescinded by the worker … the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract." This is equivalent to 45 days of pay, less any days of annual leave accrued and not taken. This is all that an employer can deduct and they are not permitted to pass on any of the costs in employing VP. No end of service gratuity is payable in this case. An employment ban would usually also apply for breaking a limited contract but as VP will be leaving the UAE this will not make a difference. However, she needs to be aware of this in case she wishes to return in the next six to 12 months as it may prevent her from taking up another job in the UAE until the ban has expired.

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.