FAQ: Former employee starts competing business or joins competitor; employer enforces restrictive non-compete clause.

Answer:

When a former employee starts a competing business or joins a competitor, employers frequently invoke non-compete clauses in the employment contract. UAE law recognises these clauses as enforceable — but subject to strict conditions. Overly broad clauses can be invalidated by courts, and the employee's ability to earn a livelihood is a factor courts actively consider. Both parties need to understand what is enforceable and what is not before taking or responding to legal action.

LEGAL BASIS

• Federal Decree-Law No. 33 of 2021 on Regulation of Employment Relationship — Article 10

CONDITIONS FOR A VALID AND ENFORCEABLE NON-COMPETE CLAUSE

Under Article 10 of Federal Decree-Law No. 33 of 2021, a non-compete clause is enforceable only if all of the following conditions are met:

• Duration: Must not exceed 2 years from the date of contract termination. Any clause specifying a longer period is unenforceable to the extent it exceeds this limit.
• Geographic scope: Must be limited to a specific geographic area where the employer has legitimate ...