Abu Dhabi court dismisses firm's lawsuit against an employee for not complying with non-compete clause

Abu Dhabi Labour Court of First Instance dismissed a lawsuit filed by a company against a female employee, who had previously worked for the company and resigned but failed to comply with the non-compete clause.

The court attributed the dismissal to the lack of any evidence proving the harm suffered by the company as a result of the employee joining a competing company as well as to the fact that the non-compete clause was not signed by the employee.

Earlier, a company filed a lawsuit against an employee who worked for it in which it requested that the employee be obligated to pay it Dhs200,000 in compensation for the breach of the non-compete clause.

The employee was also requested to pay statutory interest at 5 per cent from the date of the claim until full payment plus fees, expenses and lawyer’s fees.

The company stated that the employee had worked for it with a basic salary of Dhs4,000 and a total of Dhs18,000 and that she resigned but failed to abide by the agreed-upon non-compete clause by working for a competing company.

As regards the company’s request to obligate the employee to pay Dhs200,000 for breaching the non-compete clause, the court explained that according to Article 10 of decree-law no. 33 for 2021, if the work assigned to the worker allows him to gain knowledge of the employer’s clients or have access to its work secrets, the employer may require that the worker under the employment contract shall not, after the expiry of the contract, compete with the employer or be engaged in any competing project in the same sector.

This means that there must be an agreement between the two parties for the employee not to compete and that the employer must have a serious interest that the employee will not compete after the expiration of the contract.

The breach of obligation alone is not sufficient for the obligation to be compensated but rather must result in harm to the person against whom the breach of obligation occurred, the court said.

Proving this harm is a basic condition for compensation and the burden of proof falls on the employer, it added.

Hence, the company should have proven the harm that resulted from the employee’s breach of the non-compete condition, it said.

Whereas the papers were devoid of any evidence proving the harm that befell the company as a result of the employee joining another competing company and due to the fact that the non-compete condition was devoid of the employee’s signature, the company is not entitled to compensation and therefore the lawsuit must be dismissed, the court concluded.