Saturday, July 9, 2011

Dubai Court of Cassation clarifies terms for suing employee for joining competition

The Dubai Court of Cassation has ruled that that an employer has the right to seek compensation from an employee who breaches the terms of contract by joining a competitor, within two years of leaving office.
However, the court, while dismissing a case filed against an employee, observed that the employer should prove claims of damage caused by the action with clear evidence.
The pronouncements came during the hearings of a case in which a company sought Dh100,000 in compensation from one of his former employees for breaching the terms of contract by joining the company’s competitor.
The lawsuit was filed against a woman, a computer programmer, by a shipping company, which claimed that the defendant damaged the prospects of her former employer by joining its competitor and sharing the company’s internal secrets with her new employer.
The Court of First Instance, which first heard the dismissed it for lack of evidence of any damage caused by the employee’s actions, which prompted the plaintiff to appeal the verdict before the Court of Cassation.
The Court of Appeal upheld the ruling, but the company appealed the verdict once again before the Court of Cassation, which made the above observations.
The Court of Cassation rejected the company's appeal and based its ruling on the text of Article 127 of the law regulating labor relations.
The court said: “Although the employee had violated the non-competition clause mentioned in the contract, however, the breach did not result in harm to the company.”
The court added that the case documents are free from any evidence of damage to the company and hence, the plaintiff’s claims are not right.