Breaking a limited contract

As per Article 116 of the UAE Labour Law, you shall be required to compensate your employer for any loss he may sustain as a result of the termination of the contract, provided that the amount of compensation shall not exceed half the workers remuneration for three months or the residual period of the contract whichever is shorter unless the contract contains a provision to the contrary. Therefore, you need to inform your employer in advance that you wish to resign.

However, the employment agreement, according to Article 113, can be terminated only by both parties’ acceptance. This can be done through submitting a resignation to the employer and giving a notice period of 45 days.

In terms of wife and mother sponsorship, you are entitled to the same as long as you are drawing a monthly salary of over Dh5,000. However, you need to prove, through court, that they are your wife and mother. Your marriage certificate needs to be authenticated as well from the court. Finally, you shall be required to submit a tenancy contract.

Retirement age

I would very much appreciate if you kindly tell me about the right retirement age as per the UAE Labour Law. From what I know it was 60 years. But now I heard it is 65 as per a new law. If it is really changed where can I get a confirmation in writing?

As per Article 73 of the new Retirements and Pensions Law, the age of the employee needs to be not below 18 years, and not above 60. The term of the age shall then be approved and authenticated, under Law No. 8 of the year 1973 which streamlines the civil service in the federal government, by a birth certificate or another official certificate. Otherwise, the age of the insured shall be affirmed by a medical authority concerned. Such a competent medical decision is final and irrevocable. The department concerned here is the UAE General Pensions and Social Security Authority.

Non-competition clause

When I joined a small company here in May 2010, the owner made me sign an agreement whereby I cannot resign or join another company before staying in service for five years, otherwise I will have to pay Dh12,000 for all visa and labour card fees. Is this legal? The employer said this is legal formality here in the UAE; is he right? I am on an unlimited visa and contract. If I resign after two years or after I finish my contract, do I need to pay the said Dh12,000? Please advise.

Your employer is entitled to prevent you from joining another competitor for a certain period providing that you both agreed on this term while concluding the contract of employment. You may not violate this condition if you put your signature on it. Failing to abide by this clause, you shall be required to pay the Dh12,000, costs of the visa and labour card, of course if you insist on resigning. You need to pay nothing if you complete the period set in the non-competition clause, however.

For more clarification on the term, a labour contract may contain a condition specifying that after the completion of the contract, the employee shall not work with a competitor of the employer. This is to protect the interests of the business of the employer. The UAE Labour Law states that if the job allotted to the employee allows him to know the employer’s clients or to know the secrets of the job, the employer may stipulate that after the end of his contract, the employee shall not compete with him or share information in any competing project.

A non-competition agreement may be signed before or during the term of the employment, but as per the law, it will only come into effect on termination of the employment contract. The employers may include a clause in the labour contract or sign an additional agreement banning the employees from working for competitors for a certain period. In order to apply non-competition clause certain conditions have to be fulfilled. The agreement shall be, as far as time, place and nature of work are concerned, limited to what is necessary to protect the legal interests of the employer. If the job assigned to the employee allows him to know the secrets and know-how of the employer’s business dealings, then the employer may impose non-competition clause. In the event that the employee works in a company, where such secrecy nature does not apply, then the non-competition clause cannot be used.

To impose a non-competition clause against an employee, the non-competition agreement signed between the parties is to be restricted as per the provisions mentioned in the UAE Civil Code and the labour law. Such a stipulation shall not be valid unless it is clearly restricted to certain time, place and type of work, in a sufficiently determined manner so as to constitute a real protection of the legitimate employer’s interests. If the employer terminates the employee or the employee terminates the contract due to a reason that is ascribed to the employer’s fault, then the non-competition conditions shall not be applied against the employee.

Compiled by Ahmed Shaaban

Yousuf Alsharif is Former Deputy Chairman of the Sharjah Consultative Council, Emirati Legal Consultant with Yousuf Al Sharif & Associates, Advocates and Legal Consultants, with Masters Degree in law. Readers may e-mail their questions to: news@khaleejtimes.com or send them to (Legal View), Khaleej Times, Dubai P.O. Box 11243.