Abu Dhabi Labour Court clears employee of violating non-competition clause

Abu Dhabi Labour Court dismissed a lawsuit filed by a company against an employee who worked for it, in which it claimed that it suffered a loss due to the employee’s breach of the non-competition clause but did not specify the type of harm it suffered.

The court emphasised that the location limitation clause should not be absolute in a vast area of the country, as it infringes upon the worker’s right to work, which is guaranteed to everyone.

Earlier, a company filed a lawsuit against a female employee who worked for it through Ministry of Human Resources and Emiratisation’s committee, in which it requested the court to obligate her to pay it Dhs51,000 as compensation for the loss it suffered and the profit it missed due to her breach of the non-compete condition.

The company also requested the court to obligate the defendant to pay the incurred charges, expenses and fees with immediate enforcement.

The court explained that according to Article 10/1 of Federal Decree-Law no. 33 for 2021 regulating labour relations, if the work assigned to the worker allows him to know the employer’s clients or access his work secrets, the employer may stipulate in the work contract that the worker shall not, after the termination of the contract, compete with him or participate in any competing project in the same industry; provided that such condition is specific in terms of time, place and kind of work to the extent necessary to protect the legitimate business interests, and that the period of non-competition shall not exceed two years as of the expiry date of the contract.

The court stated that the aforementioned contract between the plaintiff and defendant did not include a spatial condition, although it did include a time condition.

Furthermore, the contract did not include a type-of-work condition, which was the prohibition of working within the geographical area necessary to protect the company’s interests from potential harm that could result from the employee working for another employer located in the same area where the company’s business and professional activity were situated, the court said.

Based on the above, the competition clause included in the contract generally violates the spirit and principle of Article 10 of the aforementioned Labour Law because the company did not specify the type of harm it suffered due to the employee’s shift to another entity, nor whether this directly and negatively affected the work she was performing.

This rendered the company’s request to be awarded the requested amount legally and factually unfounded, which was why the court ruled that the case be dismissed.