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Discussion Starter · #1 ·
Hi, I worked as a manager in a company for 2 years and after 2 years I have joined another company, also as a manager. In previous company I used to deal & interact with company's clients. My new job is similar to previous job and here too I have to deal with clients.

Somehow, my previous employer found out that I joined another company and is extremely angry and wants to sue me! I should mention that I never used to get my salary paid on time, in my previous company. Even now, I have quite a few months' of salary pending for which my previous employer has given a post dated check. So non-payment payment & late payment of salary was a huge issue for everyone in the company! I still put up with that for 2 years but I couldn't take it anymore and joined another company.

But now the threat of non compete agreement is over my head and I am very scared. I have signed the labor contract which does have the non compete clause. I would like to know what are my chances, how enforceable is the non compete clause and what should be my next steps? Do the employers drag previous employees to court for this? Do they win or lose? Any help is much appreciated! Late payment of salary was a huge issue for everyone in that company and I still haven't been fully paid, and stuck with a post dated check.
 

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Hi,
Non-compete clauses can and are enforced by the courts, in the UAE.
If you are working in the same industry, same Emirate and with the same clients as your previous employer - and you signed a non-compete clause with your previous employer - then you are at risk.
The non or late payment of salary is a totally separate issue and is not relevant to a non-compete clause.
To succeed in a non-compete case - your previous employer needs to prove that your new employment is damaging their company financially. Normality this is proven by you poaching their clients away from them and losing them contracts that they would have normally expected to win (not always easy to prove!)
They also need to show that you were privy to important business information - costs, profit margins, company secrets, future plans etc. and that these have been shared and used by the new company - again not always that easy to prove.
Cheers
Steve
 

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I don't have any direct knowledge of enforcement in the UAE but have knowledge in general within a global company. My company take non compete and other clauses relating to moving to competitors very seriously and depending on the country enforce them rigourously where appropriate. In many routine situations we take thorough technical steps to establish if an employee has taken information or data with them as well as steps to establish what they were doing (from a technical perspective) in the days and weeks before they left.

Steve has given some good info but how it is enforced and their chance of success really depend on what you've signed and what was in your contract. As an example and depending on your role some clauses might prevent you working for a competitor for a given period of time, if you do breach it the matter is clear cut.

As has been said late payment is irrelevant.

My suggestion is to seek some professional advice from an employment lawyer.
 

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What the others have said is true, however, I disagree that the late payment is a separate issue. Under the new labour laws, companies HAVE to pay their employees on time, your company did not. More than 10 days late and you can file a case, in which case the company would be fined and have their trade license suspended and a block on recruitment. Therefore, given what your previous company did, it could well put them in breach of contract - that could be a bargaining chip. And if they're still doing it, well they could find themselves in an awful lot of trouble. Worth bearing in mind, SHOULD you choose to go to the MOL about it - and take other employees with you.
 

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What the others have said is true, however, I disagree that the late payment is a separate issue. Under the new labour laws, companies HAVE to pay their employees on time, your company did not. More than 10 days late and you can file a case, in which case the company would be fined and have their trade license suspended and a block on recruitment. Therefore, given what your previous company did, it could well put them in breach of contract - that could be a bargaining chip. And if they're still doing it, well they could find themselves in an awful lot of trouble. Worth bearing in mind, SHOULD you choose to go to the MOL about it - and take other employees with you.
Good point I hadn't looked at that as a bargaining chip if the pay is/was a genuine issue.
 

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Discussion Starter · #6 ·
Thank you kind folks all the detailed reply. Here is the thing, It has been 3 months already since I resigned from my previous company, and has been one week since I joined my new company. So my previous employer can not do anything as far as me joining a competitor is concerned. What I am concerned more about is that I have heard that he is very angry and is planning to sue me. Plus, the previous employer was notorious for non payment of salary to employees. Even now, I have a post dated check for almost 4 months of payment.
 

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What the others have said is true, however, I disagree that the late payment is a separate issue. Under the new labour laws, companies HAVE to pay their employees on time, your company did not. More than 10 days late and you can file a case, in which case the company would be fined and have their trade license suspended and a block on recruitment. Therefore, given what your previous company did, it could well put them in breach of contract - that could be a bargaining chip. And if they're still doing it, well they could find themselves in an awful lot of trouble. Worth bearing in mind, SHOULD you choose to go to the MOL about it - and take other employees with you.
Hi,
Yes - I agree with what you say - but when he left his original company he would have signed the form that stated he had received all outstanding monies, before his visa was cancelled.
It's therefore not possible to bring a case to MOL about payment issues when you have already left the company and have been fully paid.
He could get other employees to complain - but so many people here are frightened of their own shadows and don't want to rock the boat.
I worked for a company in Dubai that was terrible at paying employees. The only way to actually get paid was to leave! When I left they paid me the three months salary that i was owed along with 1 years commission (I was the head of sales and marketing!)
The tricks they played with the Indian employees were incredible.
To fool the WPS system - they would pay the employees their full salary - then ask the employees to pay half back to the company!
They never tried these tricks with me - but salary was always terribly late.
Cheers
Steve
 

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Discussion Starter · #9 ·
Hi,
Yes - I agree with what you say - but when he left his original company he would have signed the form that stated he had received all outstanding monies, before his visa was cancelled.
It's therefore not possible to bring a case to MOL about payment issues when you have already left the company and have been fully paid.
He could get other employees to complain - but so many people here are frightened of their own shadows and don't want to rock the boat.
I worked for a company in Dubai that was terrible at paying employees. The only way to actually get paid was to leave! When I left they paid me the three months salary that i was owed along with 1 years commission (I was the head of sales and marketing!)
The tricks they played with the Indian employees were incredible.
To fool the WPS system - they would pay the employees their full salary - then ask the employees to pay half back to the company!
They never tried these tricks with me - but salary was always terribly late.
Cheers
Steve
I have not yet been paid for my last 3 months' salary. I have a post dated check, with a date to encash for December month!
 

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I have not yet been paid for my last 3 months' salary. I have a post dated check, with a date to encash for December month!
Did you sign the paper stating you had received all moneys due to you - before they cancelled your visa?
That's what the MOL go on - not a post dated cheque.
 

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Discussion Starter · #11 ·
Yes I signed. But even if we ignore this salary issue, going to the larger issue, about him suing me for joining another company; it has been 3 months already, and I have joined new company. I am just wondering how serious this issue is? I know he can only do a civil case against me, not a criminal one, but how serious is the issue? How often previous employers are able to successfully sue and recover money/penalty from employees joining rival companies?
 

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Yes I signed. But even if we ignore this salary issue, going to the larger issue, about him suing me for joining another company; it has been 3 months already, and I have joined new company. I am just wondering how serious this issue is? I know he can only do a civil case against me, not a criminal one, but how serious is the issue? How often previous employers are able to successfully sue and recover money/penalty from employees joining rival companies?
What was the wording of the clause that was written in your contract ? and have you done anything that breaches it ?
 

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It also depends upon whether the first firm and the second firm are in Freezones and also how long the non-compete clause lasts - it cannot be very long or open ended, as its unreasonable to stop someone from working for years.

If i was the OP, I'd point out to the original company that you'll take their post-dated salary cheques to the MOL and complain about them not paying your salary on time. That will really make them back off as they wont want an investigation. tell the company uou know of many people not getting paid on time and having to repay salaries after WPS entry and the company will back off.
 

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Yes I signed. But even if we ignore this salary issue, going to the larger issue, about him suing me for joining another company; it has been 3 months already, and I have joined new company. I am just wondering how serious this issue is? I know he can only do a civil case against me, not a criminal one, but how serious is the issue? How often previous employers are able to successfully sue and recover money/penalty from employees joining rival companies?
Hi,
For non-compete clauses to be enforceable a number of criteria need to be met.
Firstly, your contract must be reasonable- it cant restrict you from working in same industry for two years in the whole GCC.
A fair clause would limit you for 6 months in the same Emirate and same industry - especially if you have access to important company information.
Therefore, if you have joined new company after just 3 months and you are in the same Emirate and same industry and same customers and you had important company information and your old company can prove losses - then you are at risk of them having a successful case.
Cheers
Steve
 

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Discussion Starter · #15 · (Edited)
Hi,
For non-compete clauses to be enforceable a number of criteria need to be met.
Firstly, your contract must be reasonable- it cant restrict you from working in same industry for two years in the whole GCC.
A fair clause would limit you for 6 months in the same Emirate and same industry - especially if you have access to important company information.
Therefore, if you have joined new company after just 3 months and you are in the same Emirate and same industry and same customers and you had important company information and your old company can prove losses - then you are at risk of them having a successful case.
Cheers
Steve
So I understand that just being in "same Emirate and same industry and same customers and you had important company information" is not enough. Most important thing is they have to "prove losses" directly because of me joining new company. I am wondering how would they prove THAT? If they do not have any information of what exactly I am doing in my present company, just wondering how will they ever prove I am the reason they are losing business? That company was going down as it is, which is why they were not paying our salaries etc for months! It was a sinking ship and treated employees very badly, non payment of salary etc, among other things. I understand the theory of it all, but just wondering that in practicality how does proving THEIR loss of business due to ME, how does that even work?
 

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So I understand that just being in "same Emirate and same industry and same customers and you had important company information" is not enough. Most important thing is they have to "prove losses" directly because of me joining new company. I am wondering how would they prove THAT? If they do not have any information of what exactly I am doing in my present company, just wondering how will they ever prove I am the reason they are losing business? That company was going down as it is, which is why they were not paying our salaries etc for months! It was a sinking ship and treated employees very badly, non payment of salary etc, among other things. I understand the theory of it all, but just wondering that in practicality how does proving THEIR loss of business due to ME, how does that even work?
Hi,
Proving the loss will always be their biggest hurdle.
Good article here that expands further on my earlier posts.
https://www.stalawfirm.com/en/blogs/view/non-compete-clause-under-uae-labour-law.html

Cheers
Steve
 

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Good point Steve. So hang on Manish, you accepted a post dated cheque for your outstanding salary and signed the form stating you'd received all monies owing? Given what you're saying about the company's history of paying, what's the guarantee that cheque is good and not going to bounce?

A good loophole' to non-competitive clauses, is if you have a USP. Legally a company can't prevent you using your USP to earn a living.
 

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So I understand that just being in "same Emirate and same industry and same customers and you had important company information" is not enough. Most important thing is they have to "prove losses" directly because of me joining new company. I am wondering how would they prove THAT? If they do not have any information of what exactly I am doing in my present company, just wondering how will they ever prove I am the reason they are losing business? That company was going down as it is, which is why they were not paying our salaries etc for months! It was a sinking ship and treated employees very badly, non payment of salary etc, among other things. I understand the theory of it all, but just wondering that in practicality how does proving THEIR loss of business due to ME, how does that even work?
the way i understand it...

a non compete essentially is to protect an organization against loss of business... they just need to prove that there can be *potential* loss of business and that is sufficient to enforce a non compete...

under most scenarios, a non compete is enforceable if it of a duration of 12 months or less, and prevents you from soliciting the business of clients of your previous organization that is related to their primary activities... you do not actually have to *win* any business with those clients, just the fact that you approach them with the intention to solicit business is sufficient... where the clients are geographically does not matter...

that basically means if you were a medical devices salesman with a company selling medical devices that is having business with hospital xyz, and join another company that is *also* selling medical devices as a medical device salesman or similar and attempt to solicit business with hospital xyz to sell them medical devices, then you are in breach of your non compete...

if on the other hand, you join a office supply company and attempt to sell hospital xyz printers and copiers, then you are *not* in breach of your non compete...

proving an actual loss only matters when they are trying to recover damages due to *actual* loss of business... they do not necessarily need to take you to court to recover actual damages, they can take you to court and get an order against your present employer requiring them to terminate your services if they can convince a judge that you are in breach of contract with them...

they are two different things...

getting back to the issue of how your previous employer will find out anything / prove anything etc, then a court can (and likely will, if it goes that far) compel your present employer to provide all that information and your present employer will have no choice in the matter...

now here is the kicker... if you do get dragged into court, you will need an attorney regardless of if you win or lose and this can turn out to be quite expensive, and if you lose, you will be required to pay their costs as well as court costs... plus any damages that could have been stipulated in your contract if you were found in breach of the non compete clause...

the fact that you were not happy with your old employer or they were not paying you on time has no bearing on the non compete issue... you keep repeating that in your posts, but it is meaningless... from a legal standpoint, you have been paid everything you were due...

don't mean to piss in your pond but you may be in a bit of trouble here...
 

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...Therefore, given what your previous company did, it could well put them in breach of contract - that could be a bargaining chip...
any decent non compete clause will be wrapped in a "if any other clause in the contract is found to be blah blah then the remainder of the contract is still enforceable blah blah...
 

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the way i understand it...

a non compete essentially is to protect an organization against loss of business... they just need to prove that there can be *potential* loss of business and that is sufficient to enforce a non compete...

under most scenarios, a non compete is enforceable if it of a duration of 12 months or less, and prevents you from soliciting the business of clients of your previous organization that is related to their primary activities... you do not actually have to *win* any business with those clients, just the fact that you approach them with the intention to solicit business is sufficient... where the clients are geographically does not matter...

that basically means if you were a medical devices salesman with a company selling medical devices that is having business with hospital xyz, and join another company that is *also* selling medical devices as a medical device salesman or similar and attempt to solicit business with hospital xyz to sell them medical devices, then you are in breach of your non compete...

if on the other hand, you join a office supply company and attempt to sell hospital xyz printers and copiers, then you are *not* in breach of your non compete...

proving an actual loss only matters when they are trying to recover damages due to *actual* loss of business... they do not necessarily need to take you to court to recover actual damages, they can take you to court and get an order against your present employer requiring them to terminate your services if they can convince a judge that you are in breach of contract with them...

they are two different things...

getting back to the issue of how your previous employer will find out anything / prove anything etc, then a court can (and likely will, if it goes that far) compel your present employer to provide all that information and your present employer will have no choice in the matter...

now here is the kicker... if you do get dragged into court, you will need an attorney regardless of if you win or lose and this can turn out to be quite expensive, and if you lose, you will be required to pay their costs as well as court costs... plus any damages that could have been stipulated in your contract if you were found in breach of the non compete clause...

the fact that you were not happy with your old employer or they were not paying you on time has no bearing on the non compete issue... you keep repeating that in your posts, but it is meaningless... from a legal standpoint, you have been paid everything you were due...

don't mean to piss in your pond but you may be in a bit of trouble here...
In theory - you are right.

In practice - previous employer will need to prove a financial loss, to succeed in court.
 
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