Employer must have a solid case to sue over non-compete clause

Will an employer's suit, likely filed in revenge, stand up in court if the former employee found another job with a competitor?

I worked for a company in Dubai on a limited contract and resigned after eight months. The employer demanded that I pay them an amount of Dh8,000 comprising a visa cost of Dh3,600, medical insurance of Dh900 plus a month's notice period that I didn't serve of Dh3,500. As I had read here that I did not have to pay for all of this I filed a case against my employer at the Ministry of Labour (now the Ministry of Human Resources & Emiratisation). The verdict was given in my favour, saying that I only had to pay money for the notice period I didn't serve of Dh3,500. I now have a new job with a competitor company and my previous employer is now planning to file a case against me for joining a competitor. It seems to be revenge for filing a case against them. I don't want them to ruin my career, so what can I do? A G, Dubai

Firstly, I am always pleased to hear that someone has won a case against an employer that has acted unfairly and broken the law. The labour courts are helpful in cases like this and well organised. It does sound as if the employer is bitter at having been found, correctly, in the wrong but they must have a good case against A G if they are to win against him. He has not provided a copy of his previous contract of employment and there is only a case if the contract clearly included a clause to this effect. Article 127 of UAE Labour Law specifically states that where an employee performs a role which allows him to become familiar with confidential information, the employer may put in place an agreement with provisions that prevent an employee from working with a competing business after leaving service – but there are limitations. Any non-compete clauses must be reasonable and must only limit conduct in a way necessary to protect legitimate business and legal interests. With this in mind, the clauses must be limited in duration, geographical scope and the nature of the restriction.

It is important to note that the clause must be in a contract that has been agreed by both parties and cannot be added retrospectively. Restrictions of more than six months are unlikely to be upheld and the employer would have to prove that they have been disadvantaged in some way to make a monetary claim. There is also an expectation that such clauses are relevant to employees in senior positions, so if A G’s salary was Dh3,500 a month, the one-month penalty he had to pay to his previous employer, it is unlikely that he would have been in a senior position and party to particularly sensitive information. It is understandable that an employer would prefer their staff not to move to a competitor company, but it cannot always be prevented and they need to be reasonable in their expectations. If there was a valid clause I am surprised the employer did not bring this up at the time of the previous case.

Keren Bobker is an independent financial adviser and Senior Partner with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE.

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

Follow us on Twitter @TheNationalPF