UAE Employment Law Outlines Restrictions and Requirements for Enforcing Non-Compete Clauses

Under Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations and Cabinet Resolution No. 1 of 2022, mainland employers in Dubai may include a non-competition clause in employment contracts if an employee's role provides access to clients or commercial secrets, according to legal guidance published by Khaleej Times.

Article 10(1) of the Employment Law stipulates that an enforceable non-compete clause must specify the geographical location, duration, and specific nature of work strictly necessary to safeguard the employer's legitimate business interests. In all circumstances, the duration of the restriction cannot exceed two years from the last working day of employment. Furthermore, under Article 10(2), the non-compete restriction becomes void if the employer terminates the employment contract unlawfully.

Under Article 12(2) of Cabinet Resolution No. 1 of 2022, if a non-compete dispute cannot be resolved amicably and moves to court, the burden of proof rests entirely on the employer to demonstrate that the former employee joined a competitor and inflicted quantifiable financial loss or damage. Article 10(3) of the Employment Law requires employers to initiate court proceedings within one year from the date the violation was discovered.

Article 12(4) and Article 12(5) of Cabinet Resolution No. 1 of 2022 also outline conditions where non-compete obligations do not apply. The clause may be waived by mutual written consent after employment ends, or if the employee or new employer pays compensation not exceeding three months of the employee's last agreed salary with the former employer's written consent. Non-compete requirements are also exempt if the contract is terminated during probation, or if the role falls into specific professional categories determined by the authorities to meet domestic labor market needs.