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Non-compete Clause in UAE

Non-compete Clause in UAE

A non-compete agreement is a sort of “restrictive covenant” that companies commonly use to limit an employee’s ability to pursue a related profession after the employment relationship ends. A non-compete agreement is one of many contracts or agreements that an employer may ask an employee to sign, and these contracts can be difficult to navigate without the help of an employment attorney. Furthermore, many contracts can have a significant impact on an employee’s current or future income, as well as their future capacity to earn a living.

Non-compete agreements are often only enforceable if they are highly specific. Non-compete agreements must (a) be necessary to protect legitimate employer interests; (b) be reasonable in scope in terms of time and geography; (c) not be contrary to the public interest; and (d) be supported by consideration; that is, the employee must receive something in exchange for signing the agreement. The employer bears the burden of evidence in demonstrating that the non-compete complied with these conditions, and courts will rarely narrow too broad restrictive covenants; instead, they will declare them invalid.

Courts have typically identified three principal protectable employer interests: (1) trade secrets gained during his employment; (2) private business information; and (3) “good will,” which refers to appropriating an employer’s reputation or relationship with customers or clients for personal advantage. Outside of these strictly specified categories, employer interests should not be enforced.

Non-compete agreements that last more than a year are generally unenforceable. Covenants that limit an employee’s ability to compete outside of a reasonably limited geographical region will also be unenforceable.

There are numerous examples of non-compete agreements that are in the public’s best interests. If a well-qualified doctor was compelled to sign a non-compete to acquire a job in an area where doctors were few, that would be an example of a non-compete that was against the public interest.

Finally, there must be consideration: the employee must benefit from the transaction. When an employee signs a non-compete agreement at the start of his job, it is assumed that there is consideration; but, when an employee is requested to sign a non-compete agreement in the middle of his job, an employer must frequently offer something in exchange for the contract to be valid.