Mutual Legal Obligations between Two Parties

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The purpose of this obligation is the prevention of disclosing the works secrets to others, a matter which shall represent damages for the interest of the facility, its owner or its respective owners.

The employment contract is a binding contract upon both parties which shall resulted in mutual legal obligations between the parties along with the contractual obligations set out by the contract; provided that the contract’s conditions shall not be contradict with the provision of law, regulations and public morals, unless it was better for the laborer. Among such legal obligations and impacts arising from the employment contract for the worker which was set forth by the law is his obligation to maintain the secrets of the work and not disclose them to a third party, whether individual or entity, paid or unpaid. The purpose of this obligation is the prevention of disclosing the works secrets to others, a matter which shall represent damages for the interest of the facility, its owner or its respective owners.

The secrets of the work shall be all matters, the worker may know during the course of his work such as secrets or knowledge of the clients of the entity in which he works, including the method of production, the material used, the dealings of the entity and others as what is happened in various professional institutions, which may allow him inevitably knows the clients of this entity and attempt to attract the clients to  him in the case of competing the entity he works therein after the termination of the contract, resignation or expiration of the contract.

The worker shall be maintained such secrets during the course of his execution of the contract and after expiration thereof as well. However, the worker shall after the expiration of the contract shall use such secrets for his own interest, if such secrets shall be one of his inventions issued therewith a patent.

Therefore, the employer may see that the legal obligation by maintaining the secrets of the work does not provide him an adequate protection, whereas the worker after the end of his contract may exercise an activity similar to what is carried out by the employer, a matter which shall represent a danger on the employer, if the worker under working with the employer has the ability to get acquainted with the secrets of work and the knowledge of the employer’s clients, this may oblige the employer to add a condition to the employment contract that prevent the the worker from competing the employer or engaging in an activity similar to the activity practiced by the employer. Such condition shall not be deemed contrary to the law. The laws shall set out that it may list such condition in the employment contract.

For Instance, the article 909 of the Emirati civil law shall stipulate that:

  1. If the worker shall carry out a job that allow him to know the secrets of work or the clients of the entity, the parties may reach an agreement that the workers shall not compete the employer or engage in a work that may compete the employer after the expiration of the contract.
  2. Such agreement shall not be valid, unless it was defined by a time, place and the kind of work to the extent necessary to protect the legitimate interests of the employer.
  3. The employer shall not commit to such agreement, if the employer shall terminate the contract without making any thing by the worker that may justify such termination. The employer shall not commit to the agreement, if he makes anything that justifies the termination of worker’s contract.
Case Study

“the two articles, 127 of the Labor Relations Regulation Act and 909 of the Civil Transactions Act, state that there should be agreement between the parties not to compete and that the business owner should take serious interest in implementing the non-competition clause after the employee’s contract has expired this should be important to the employer due to the employees exposure to data such as client name and case details that could jeopardize the employers work. The prohibiting of competition is relatively restricted by time, place, type of tasks as well as within the limits that helps the previous employer achieve the success of his business. This is due to the absolute prohibition of competition clause being unjust towards the employee and allows the employee to request compensation from his previous employer for the damage of not being able to work. This means that in accordance with the provision of article 127 of the above-mentioned labour law, the worker’s breach of obligation to refrain from conducting any work for a competitor for a specified period after the termination of his service to the employer resulted in the employer’s right to claim compensation for the damage caused by the worker’s breach of his obligation. However, it is not only important to prove that the employee has breached the no competing clause but to also prove that the previous employer has attained damage due to the employee’s breach

(Appeal No. 183/2017 Labour Appeal – Dubai Discrimination – 31/10/2017)

The provision in article 127 of the Labour Act and article 909 of the Civil Transactions Act states that there must be an agreement between both parties not to compete and that the employer should be seriously interested in requiring that the worker does not pursue working for a competitor after the contract expires and that this interest is founded on the fact that the worker’s work allows him to know the employer’s clients or know the secrets of his business. The prohibition of competition is relatively restricted by the legislator to time, place, and type of work and to the employer’s extent of legitimate interest, as the prohibition of absolute competition is a complete waste of the freedom of the worker. The worker is required to compensate for the breach of the non-competition clause of the contract as such. The extraction of the availability of the conditions mentioned or not, as well as the breach of the worker’s condition of competition, is the responsibility of the concerned court should the presented papers prove that a legitimate breach with damages caused to the previous employer has taken place.

(Appeal No. 87/2008 Labour Appeal – Dubai Discrimination – Hearing 22-12-2008)