Non-Competition Provisions and Non-Disclosure Clauses in UAE

UAE is a highly competitive market for businesses. Nonetheless, it has stringent laws and regulations that govern it. Similarly, for the protection of intellectual property and competition, there is a proper regulatory framework to administer it. Several concerns must be addressed and thus, regulations allow it in a better manner. The employment contracts in the UAE normally contain clauses for non-competition. It also outlines the non-disclosure clauses to make the agreement clearer. Lawyers in Dubai are specialized drafting Non-Disclosure and Non-Competition contracts and clauses in contracts. You can meet with our lawyers in Dubai. Online session can also be booked.

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UAE Labour Laws

UAE Labour Laws have a provision that enforces confidentiality, non-closure disclosures, and non-competition clauses. However, AUE courts have the right to interpret the cases in the light of the regulatory framework. It is necessary to understand the non-competition clauses. It is a provision added to the employment contract to prevent the employee from engaging in activities that could harm or damage the employer’s business after the employment finishes. It protects the interests of the employer and ensures the confidentiality.

Part of Employment Contracts

This restriction is part of the labour employment contract which is significantly used in various sectors of UAE. Mainly it is part of technology, finance, consultancy, and many other sectors. It is highly in use where the sensitivity of the information is high and the client relationship may be affected. The lawyers having legal expertise in Labour Law, are called as labour and employment lawyers.

Clauses and Disclosures

The clauses and disclosures are specifically designed to protect businesses and companies from unfair competition. Besides, it also prevents them from unauthorized sharing of information. Therefore it enforces confidentiality in case a labor switches to the competitor.

Non-Competition

Non-competition and non-disclosure clauses NDA are termed as very powerful land robust tools to protect the business interests in the UAE. They are enforceable and UAE courts will interpret them following the UAE labor laws. The clauses help in balancing the employee and employer relationship. Furthermore, a solid legal framework allows for meeting the challenges. It allows both parties to remain fair and does not in their dealing. It is advisable to consider a lawyer when drafting the clauses.

They can guide you carefully and include them as a part of an employment contract to necessitate it under rights and obligations. One of the main features of the non-competition clauses is that they should be clear, concise, specific, and reasonable in scope. It is enforced once it forms part of the employment contract.

Restricted Activities

There are certain types of restricted activities that should be categorically mentioned. It defines the nature of work or business activities that the employee cannot undertake. Besides, geographical scope is discussed in the contract. The clause included in the agreement will limit the employee from working in the specific regions where the employer operates.

Additionally, the time limit is also established clearly. A reasonable timeframe is set up to restrict the employee from work. As per the UAE law, it can be done for 2 years. The non-competition clause should be valid and legitimate which aligns with the business interests. This will show that the clause only protects a legal and fair business interest. This may include trade secrets or client relationships. According to the Federal Decree Law of UAE governs the non-competition clause. It was introduced in 2021 and is enforceable. Under the federal law of 2021, the clause should not be unreason to limit the employee.

However, it is also important for the employer to prove that the clause is essential for their business and its activities’ protection. Moreover, in case an employer terminates the contract without giving any reason it becomes invalid and not enforceable. Nevertheless, they are highly used by employers and businesses in the UAE. Still, there are several instances where the non-competition clauses are disputed. UAE courts received plenty of cases related to non-competition clauses. Some of the key challenges include the following:

If the clause is unreasonable and restricts the employee with vague, unclear, and ambiguous reasoning, this can be turned into invalid and illegal by the UAE courts. Moreover, if the scope of the clause is over and unjust, this will be declared null. Employer needs to provide valid and legitimate proof and witness of harm to the employer. If the employer fails to do so, it will be turned down by the UAE court.

UAE Courts

UAE courts emphasis employees’ rights. In case, the rights to work are exploited with a non-competition clause then it will be declared invalid.

On the other hand, it is another clause that is included in the employment contract. A non-disclosure clause NDA is included to protect the confidential information. Any private information shared with the employees during employment is protected by the clause.

Non-Competition Clauses

However, non-competition clauses are time-bound and geographically restricted. In the non-disclosure clause, there are no restrictions in terms of timeframe, scope, or geography. The prime aim is to safeguard sensitive information from unauthorized sharing with competitors or others. In the UAE, employers are allowed as per the law to use the Non-disclosure clauses NDA. They are normally used to protect the intellectual property rights IP, trade secrets, client information, supplier data, business strategies, financial data, technology information, proprietary processes, and the list goes on.

Some of the eminent elements of NDA include a clear and concise definition of confidential information. The employment agreement should specify the type of information to remain private. Furthermore, the NDA could last for an indefinite time. Therefore, it is essential that it align with the nature of the information and the needs of a business. The time duration can go from a year to infinite.

Legal Expectations in NDAs

There are certain legal exceptions in NDAs. Disclosures are allows under specific circumstances which may inculcate the legal obligations or required as per the law.

There is a difference between non-competition and non-disclosure clause NDA. The key aim is the same. Both are enforced to safeguard the employer’s or business interests. However, there are some differences.

NDA prevents confidential information while the non-competition clause is there to prevent unfair and undue competition. The NDA has no definite time duration while non-competition is usually exercised for 2 years’ time. For NDA indefinite time depends on the nature of the confidential information.