‘Do I have to sign a two-year non-compete clause if I quit my job?'

The Abu Dhabi resident’s company issued a new employment contract following her resignation

The UAE resident wants changes made to the contract before starting the new job. Getty Images

I am under my husband’s sponsorship and for the last two years I have been working for a company with a work permit. The permit (labour card) expires on March 4. On January 31, I handed in my notice and the notice period ends on April 30. As my current work permit expires before the notice period expires, the company I work for has asked me to sign a new MoHRE (Ministry of Human Resources and Emiratisation) employment contract. 

The new contract includes a very specific two-year non-compete clause. The original contract just mentioned article 127 of UAE Labour Law, but no duration was stated. My questions are as follows: 1. Can the company now unilaterally change the terms of the employment contract and insist on me signing the two-year non-compete clause? 2. The company said the two-year duration is a standard MoHRE clause and cannot be changed. Is this correct? 3. If I refuse to sign the new contract, what are the consequences? Would this result in a ban? ZA, Abu Dhabi

When someone is on a fixed-term contract, they can usually just advise the employer that they do not wish to renew prior to the end date of the contract and the service ends upon contract expiration. I would not advise signing a new contract for another two years, no matter the terms, as any employee who breaks the terms of a fixed-term contract is subject to a penalty, equivalent to up to 45 days salary per Article 116 of UAE Labour Law. In a situation like this, the logical course of action is for the employer to renew the labour card and to continue on an unlimited contract for a short period.

A new contract can have new terms but no one should sign a contract that they are not happy with. The employer is not being honest either as there is not a standard period of time for a non-compete clause issued by the MoHRE. A two-year period is not reasonable and is not how the law is supposed to work. The purpose of non-compete clauses is to prevent senior employees from using a company’s sensitive information, not to stop employees from taking on new employment.

This is clear from the wording of Article 127 of UAE Labour Law: “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 average employee is not party to corporate secrets and no period of time is mentioned. Any time limitation is expected to be reasonable, certainly not longer than six months. Any claim for longer is unlikely to be upheld, doubly so for non-management roles. 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. In most cases, such clauses are a lazy threat to an employee and would not be enforced if the employer decided to take on the effort and cost of going to court.

In such a situation, if the employer won’t provide a reasonable contract for the notice period, I suggest that ZA seeks advice from MoHRE for confirmation that she will be able to leave service at the end of the original contract. If MoHRE agrees that ZA can leave, then there will be no ban.

I have been in my job for just three months and still on probation but I was ill recently and had to take three days off. I managed to get to the doctor to get a certificate stating I was unfit for work. Management has said they are happy with my work, but I have now found out that they will not pay me for these three days and that the law says they cannot pay me. Is this correct? CM, Dubai

Article 83 of UAE Labour Law states: “During the probationary period, the employee is not entitled to any paid sick leave.” Legally an employee is not entitled to be paid, but this is also at the employer’s discretion. They can choose to pay if they wish but have the right not to.

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