UAE: Can Employer Refuse NOC To Employee For Joining Competitors?

(MENAFN- Khaleej Times) Published: Sun 6 Oct 2024, 9:07 AM

Question: I joined a company in mainland UAE around 6 months ago. Upon completion of the probation period, I was told that the company was not performing well financially, so I was terminated. Now I have a job offer from a new company, which is a competitor of my current employer. But the current employer is neither cancelling my visa nor giving me NOC. Can I file a case against the employer? Please guide me about my rights.

Answer: In the UAE, an employer may refuse to provide NOC (no objection certificate/letter) to an employee if he or she intends to join a company that is a competitor.

Article 10(1) of the Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations states everything related to a non-competition clause in an employment contract. It read as,“Where the employee performs a work which gives him access to employer's customers or business secrets, the employer may make a provision in the employment contract that the employee shall not compete with or be engaged in any business which competes with him in the same sector after the expiry of the contract. Such clause shall specify the place, time, and type of work to the extent necessary to protect the legitimate business interests, and the non-competition period shall not exceed two years after the expiration of the contract.”

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However, a non-competition clause may not apply in case the termination of the employment contract is attributed to the employer. This is in accordance with Article 12 (3) of the Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationships in the UAE which states,“The non-competition clause shall not apply if the reason for terminating the contract is attributed to the employer or the breach of his legal or contractual obligations.”

A non-competition clause may not apply to an employee if he or she agrees with an employer in writing that the non-competition clause in an employment contract does not apply on termination of an employment contract. This is in accordance with Article 12 (4) of Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relations, which states,“It may be agreed in writing not to apply the non-competition clause after the termination of the employment contract.”

Moreover, the provisions of non-competition may be exempted as mentioned in Article 12 (5) of Cabinet Resolution No. 1 of 2022 which states,“An employee shall be exempted from the non-compete clause provided for in Article (10) of the Employment Law under the following conditions:

a. If the employee or the new employer pays compensation not exceeding three months of the employee's wage agreed upon in the last contract to the former employer, and the former employer's written consent thereto is required.

b. If the contract is terminated during the probationary period.

c. Any professional categories according to the needs of the employment market in the UAE, as determined by the decision of the Ministry under the employment classification approved by the Cabinet.”

Furthermore, an employer needs to initially cancel a work permit of an employee once an employee is terminated or resigns from employment. An employer needs to follow the procedures related to the cancellation of a work permit as per the guidelines of the Ministry of Human Resources and Emiratisation (MoHRE). This is in accordance with Article 7(3) of the Cabinet Resolution No. 1 of 2022, which states,

“Procedures for cancelling work permits:

a. The submission of an application for cancelling the work permit shall be through the channels specified by the Ministry.

b. Completion of the required data and attached documents.

c. Payment of the fines for delays in issuing the work permit or for failure to renew it, if any.

d. Acknowledgement by the establishment of granting the employee all of his entitlements.

e. Any other conditions determined by resolution of the Minister or whomsoever he delegates."

Based on the provision above, you may not require an NOC from your employer. Furthermore, your employer should not deny cancelling your work permit and UAE residency visa because you are joining a competitor entity of your current employer in the UAE. If your employer does not cancel your work permit and UAE residency visa, you may file a complaint against your employer with MoHRE in accordance with the provisions laid down in Federal Decree Law No. 20 of 2023 Amending Certain Provisions of Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationships.

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