Post Termination Restriction Rights

There is always a concern that hovers over the Employer upon departure of the Employee, especially where the Employee has been privy to confidential information and know-hows of the Company.

The Ministerial Resolution No. 297/2016 published earlier this year paved way to enforce a post-termination restriction in order to safeguard the interests of the Employer.

Article 127 of the Federal Law No. 8 of 1980 (UAE Labour Law) expressly restricts the Employee from competing with the business of the Employer, post termination of the Employment relationship. However, it has been very difficult to attain an injunctive relief from UAE Courts, as significant damages need to be proved by the Employer.

Pursuant to Ministerial Resolution No. 297/2016; the Ministry is entitled to refuse to grant a new work permit or revoke an existing work permit issued to an individual for the duration of the non- compete restriction which can be for a maximum of two years; where a final court decision is awarded pursuant to Article 127 of the UAE Labour Law.

The effect of this Ministerial Resolution remains to be seen, however it has potentially strengthened an Employer’s ability to enforce non –compete clauses.

 

Written by Arihant Om Mohta

Associate/United Advocates

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