Abu Dhabi, UAEThursday 12 December 2019

'Can my former employer enforce a non-compete clause in Dubai?'

The UAE resident wants to move to an accountancy role eight months after leaving a sales position

The reader has a number of queries about the terms of his contact. Getty Images
The reader has a number of queries about the terms of his contact. Getty Images

I used to work for a Dubai company in a sales role. Around eight months ago I resigned, giving one month's notice period, as per my employer's policy. I have now returned to Dubai and am about to get a visa from another company in the same line of business but I will be working as an accountant. My last employer has sent me a notice saying I cannot work for this other firm due to the non-compete clause of Article 127 in their contract of employment. Is this a problem for me or can I now take up this accountancy role for the new company? SS, Dubai

Non-compete clauses are a common employment contract feature in the UAE but there are limitations. The wording of Article 127 in the UAE Labour Law is: “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.”

The wording says that an exclusion is limited with regards to the time it is valid and the clause is there to protect a company rather than to prevent individuals from taking another position for an indefinite period. 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. There is no mention of the duration of a clause but it would not be expected to be for longer than six months. Any claim for longer is unlikely to be upheld, especially as SS will not even be working in a sales role in his new job.

Such clauses must be specific in relation to geographical scope and the actual role. The onus is also on the employer to prove to a court they will suffer an actual financial loss should the employee work for another company and there is a cost to a company for undertaking this action.

Few of the non-compete clauses I have seen are generally included to prevent employees seeking alternative employment. In this case, my view is that the previous employer is acting unfairly in sending such a notice and that their claim is invalid and would not be supported in court.

I have outstanding credit cards with two banks, ABN Amro and First Gulf Bank, from 2009. I couldn’t go back to Dubai to make payment and both banks have since merged or been taken over so I don’t know how to make contact with them or what to do about the debts. I believe there is a police case against me from at least one of the lenders. Would my debts prevent my family — specifically my children — from entering Dubai Airport, as I was their sponsor? My children intend to travel to Dubai in a few days’ time and I am worried for them. PKS, India

Under UAE law, only the person whose name is on the debt, whether a mortgage, personal loan or credit card, is liable for it. A husband or wife is only accountable for their spouse’s debts if they are a guarantor or they handed over a security cheque to the bank for it. The same applies to children of any age. In this case PKS’s children have no liability for the debts that he has in the UAE and cannot be held responsible.

Both banks are now trading under different names and PKS can contact the new companies to make enquiries about repaying his outstanding debts, as he will not be able to return to the UAE until he has agreed a repayment strategy and the banks lift any cases against him. ABN Amro’s main banking operation in the UAE was acquired by Royal Bank of Scotland (RBS) at the end of 2009 but RBS closed in the UAE in August 2015. Anyone with an account or who owes money can contact the bank on rbs.balance.claim@rbs.com. First Gulf Bank is now part of First Abu Dhabi Bank and most of the original branches are still operating. There are contact details on the site: www.bankfab.ae.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 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

Updated: March 31, 2019 07:48 AM

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