Host
There’s just so much more to hear. Download our podcast at Dubai1038.com. Drive Live, Talks Legal. Our guest today is Ludmila Yamalova from Yamalova & Plewka. Ludmila, great to see you.
Ludmila Yamalova
Good to be here.
Host
So last week, we were super busy. We’re reminding everyone again, if you want to ask Ludmila a question, you know what you need to do: text us at 4001 via the free messaging app, or you can call us at 423 1010.
Now we have a couple of topics, and I want to start with this one straight away, Ludmila. The first one is this: how should a non-compete clause be drafted in a contract? How should it be structured? This is something you probably get approached with quite frequently. I guess this also depends on whether salaries are commission-based, because we get lots of messages about that and how it affects people in the long term.
Ludmila Yamalova
Yes, and what’s important to clarify is the definition of non-competition. What we see over and over again is that there’s a blending of a few separate legal principles into one, all being referred to as non-competition. In reality, non-competition, as it is often referred to here, actually consists of several distinct parts.
One is the non-competition agreement, which is based on the departing party agreeing not to compete with their previous business.
The second is the non-solicitation agreement, which is the agreement that the party—let’s say the employee—will not solicit employees of their previous company.
The third is the confidentiality agreement, which ensures that the party will not share confidential information.
Each of these principles is separate. So, there are three legal theories here, but they’re often merged into one. Unfortunately, this causes a lot of problems and ultimately a lack of protection.
We’ve seen clients who say they have a non-competition agreement, but when we read it, it only refers to restrictions on confidentiality. Confidentiality is a very different legal principle. It deals with the use of information that belongs to another party. It’s not about competition directly—it’s about property.
Host
Can you elaborate on confidentiality?
Ludmila Yamalova
Sure. Confidentiality is often linked to criminal sanctions in the UAE. For example, using someone else’s property for the benefit of another party constitutes corporate theft. That’s why breaches of confidentiality often fall under criminal law here, not just civil.
What’s important is understanding the separation of these principles. They should be outlined separately in contracts. Depending on the business, some of these principles may be more critical than others. For instance, confidentiality is so crucial that even if it’s not included in a contract, it’s still covered by UAE law.
Host
Let’s take an example. Say I was a heart surgeon—not that I’d be any good at it—and I wanted to move to another hospital. My current contract says I can’t work for any neighboring hospitals due to a non-competition clause. How enforceable is that in a specialized field like heart surgery?
Ludmila Yamalova
Non-competition clauses in the UAE are enforceable, but only under two key conditions.
First, the clause must be properly drafted. Many non-competition clauses here are not, and they’re therefore not enforceable.
Second, non-competition is enforceable in the sense that an employer can claim retroactive damages. However, courts here do not issue injunctions to prevent someone from working. Instead, they grant compensation to the previous employer for damages suffered due to competition.
For a non-competition agreement to be enforceable, it must be narrowly and specifically drafted in terms of scope, geography, and term. For example, saying, “You cannot work as a doctor in the UAE” is too broad and won’t hold up in court. You’d need to specify a smaller geographic region or a specific set of responsibilities.
Host
What about the term? We often hear about one- or two-year restrictions.
Ludmila Yamalova
Two years is typically considered too long. Six months is more reasonable. If a non-competition clause prevents someone from practicing their trade entirely, it’s unlikely to be enforceable unless the employer compensates them for the restricted period.
For instance, an employer might pay a heart surgeon not to work for a year to protect proprietary knowledge. In such cases, the clause would be enforceable.
Host
And does this apply to commission-based roles, like sales agents?
Ludmila Yamalova
Yes, but it still depends on reasonableness. For example, it’s harder to justify a non-competition clause for an office assistant because their work is too general to constitute competition. Non-competition must directly relate to competition that harms the previous business.
Host
What about cases of stolen proprietary information? Say I’m a salesman and I take my company’s customer database to a competitor.
Ludmila Yamalova
That’s theft, not just a breach of non-competition. In the UAE, this is a criminal offense under federal law. Even if the information is used in a non-competing business, selling or using that data is still theft.
The challenge is proving the theft. Companies must protect proprietary information with clear labels and secure systems. Without this, it’s harder to prove ownership and enforce legal rights.
Host
Thank you, Ludmila. Let’s take a call. Juma, you’re on the line.
Juma
Hi. I had an investor visa with dependents under my sponsorship. When I transitioned to a local company, I canceled their visas and my own. But due to delays, their grace period expired, and I had to pay fines. Now immigration is withholding my deposit due to the overstay. What can I do?
Ludmila Yamalova
Legally, dependents are your responsibility as the sponsor. Their overstay and the deposit forfeiture fall on you. However, if your new employer agreed to cover transition costs, you might have grounds to claim compensation from them. Otherwise, it’s best to negotiate with your employer.
Juma
The delay was caused by immigration, not my employer.
Ludmila Yamalova
In that case, there’s little recourse. Government delays are not attributable to your employer. Unfortunately, you may need to accept this as a cost of transitioning.
Host
Thanks for your call, Juma. That’s all we have time for today. Ludmila Yamalova from Yamalova & Plewka, thank you so much for your insights.
Ludmila Yamalova
It was a pleasure.
Host
There’s just so much more to hear. Download our podcast at Dubai1038.com.
