Emirates Law: Joining competitor and holding benefits

Query: I am employed in a company. My employer is asking me to sign a declaration that I will not join any of his competitors for two years. Is it legal for a company to demand such a declaration? I don’t want to sign any such document. Does the labour law oblige an employee to sign such a clause? Can my employer refuse to release my end-of-service dues in case I don’t sign such a clause?

Answer: Article 127 of UAE Labour Law states as follows: “Where the worker assigned to a worker allows him to become acquainted with the employer’s clients or to become familiar with the secrets of his business, the employer may require him to refrain, after the termination of his contract, from competing with him or participating in any enterprise competing with his own.

“Such an agreement shall be valid only on condition that the worker is at least 21 years of age at the time of its conclusion that the agreement is limited, as regards the time, the place and the nature of the business, to the extent necessary to safeguard the employer’s lawful interest”.

Therefore, the above article entitles the employer to request the worker to sign on the non-competition clause but the Labour Law does not oblige the worker to agree with such clause.

Finally the employer as per the labour law has no right to hold the employee’s end of service benefits in case he does not sign such clause.

Questions answered by Advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.