The employment relations are regulated by Federal Decree-Law No. (33) 2021 and its implementing regulations. The potential consequences of non-compete clauses and employee obligations are important, particularly in terms of the commitment and confidentiality that employees are required to maintain for their employers.

Legal provision under the Labour Law in UAE (Federal Decree-Law No. (33) 2021 and its implementing regulations )

• Defining Non-Compete Clauses- Employers are permitted to include non-compete clauses in employment contracts according to Article 10 of UAE labour law. According to these non-compete clauses, the employee may restrict their employees from engaging in activities that compete with their employer’s business interests for a specified period after leaving employment. Furthermore, in accordance with Cabinet Decision No. 1/2022, these non-compete clauses must specify the geographical scope, duration (not to exceed two years from the date of contract expiration), and the nature of the work that causes significant harm to the employer’s legitimate interests.
• The Execution and Legal Recourse: If an employer finds that a former employee has violated a non-compete clause by diverting clients to other companies, the employer may pursue legal action in order to enforce the non-compete clause and take legal action against the former employee. The procedures for enforcing non-compete clauses are described in Article 12 of Cabinet Decision No. 1/2022, which emphasizes the employer’s responsibility for showing the adverse effects of the employee’s actions on their legitimate business interests.
• Breach of Contract and Employee Obligations: Article 16 of labour law states that employees are obligated by a general duty of commitment and confidentiality during and after their employment. This obligation extends beyond the non-compete clauses that are typically found in employment contracts. This obligation prohibits the unauthorized disclosure of confidential information of the business, such as client databases and business strategies, that are highly important to an employer’s competitive advantage.

Legal provision under the Cyber law in UAE (Federal Decree-Law No. 34/2021 on Concerning the Fight Against Rumors and Cybercrime)

According to Article 45 of the Cyber Law, which states that anyone who discloses confidential information obtained ex officio or as a result of their profession or business using information technology methods without the consent of the party concerned with the secret to disclose or use such information may be sentenced to imprisonment for not less than six months and/or a fine of not less than AED 200,000 and not more than AED one million. 

If the offender uses the information to benefit himself or another person, this will be considered an aggravating circumstance.

Legal provision under the UAE Penal Code law in UAE (Federal Decree-Law No. 31/2021 on the Issuance of the Crimes and Penalties Law)

Article 432 of the Penal Code states that anyone who the by virtue of their profession, occupation, status, or specialism has access to a secret but discloses such secret in other than the cases permitted by Law, or who uses such secret for their own benefit or the benefit of another person, may liable to imprisonment for a period not less than one year and a fine not less than AED 20,000 or both of these two penalties. Furthermore, should the offender be a public official or someone assigned to a public service and reveal the secret during or in their term of duty the penalty may be temporary imprisonment for no more than five years.

Employers may pursue legal action against former employees who violate non-compete clauses by transferring clients to other companies, however the viability of the legal action depends upon how straightforward and enforceable the clauses are in the employment contracts.