Wednesday, April 6, 2011

The absolute prohibition of an employee working for a competitor is a restriction of his liberty- Dubai court of Cassation

If an employee chooses to work for a rival firm after the end-of-service period, the employer need not necessarily impose an absolute ban on the person. "The absolute prohibition of an employee from working for a competitor is a restriction of his liberty, ruled the court.
Alternatively, the ban can be specific only to the extent of protecting an employer's interests. For instance, a ban can be imposed if certain issues can be proved such as the person's inside knowledge of the company secrets, or the adverse effects on the employer due to the crucial time an employee left the company, etc. These should be mentioned under 'non-competition' section of the contract terms.
The new legal principle was pronounced when a case came up for hearing with regards to an employer requesting the court seeking Dh5million compensation from an ex-employee as he left the company to work for a competitor. The move was against the contract signed by both the parties, which states that he cannot work for a competitor before the lapse of two years from the end of the working relationship, said the plaintiff (the company owner).
The plaintiff said in his petition that the defendant worked as the Director-General in his company. He then quit and worked for a competitor before completing two years.
This was in violation of the contract between them, the plaintiff claimed.
He said the company faced a loss of about half a million dirhams as well as faced delays in a project because of the defandant's acts and sought Dh5m compensation from him.
The Court of First Instance dismissed the case but the plaintiff moved the Court of Appeals which upheld the lower court's ruling. Later the company owner moved the Court of Cassation.
The Court of Cassation, in turn, ruled the documents proved that the defendant had moved to the new company with the knowledge and consent of the owner (plaintiff) of the company, which meant that the company waived the "non-competition" condition included within their employment contract.
The court also refused to accept allegations that the defandant caused the company losses in one of its projects because there were no documents to prove the same.
The court added that it was clear all the company's contracts and project correspondence was made under the provisions of the owner of the company and its director of marketing which meant it is not serious.

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