Employer can’t ask a ban on a worker if he fails the contractual obligations

Non-competition clause does not apply if employer fails the contract, the clause included in employment contracts to prevent an employee from working for a competitor does not apply if the employer does not meet the contract obligations, said a senior Ministry of Labour official.

The clause included in employment contracts to prevent an employee from working for a competitor does not apply if the employer does not meet the contract obligations, said a senior Ministry of Labour official.

Humaid Bin Deemas, Acting Director General at the ministry, said that an employer cannot ask to enforce a ban on a worker who joined a competitor if he did not fulfil his contractual obligations.

Deemas was commenting on an employer who asked the ministry to enforce a ban on one of his previous employees because he broke the non competition clause but the ministry refused as the employer did not meet his contractual obligations according to a court ruling.

Restriction to freedom

"The non competition clause is a restriction to the worker's freedom therefore they are several rules that limit the use of the competition clause," said Deemas adding that it should not be applied without regulations. The non competition clause should not be applied for anybody who is below 21 years, it should only be applied for jobs in which the employee would have had access to the company's secrets or acquainted with its clients.

Also it should be only for a limited time period, according to article 127 in the labour law.

There are 2800 professions registered at the ministry of labour out of which only some can have a non competition clause to be included in the employment contract, according to Deemas. "It is important to understand that the non competition clause cannot be used merely as a mean to prevent the movement of workers and cannot be applied for all job categories." said Deemas. "The real purpose of the clause is to safeguard the employer's lawful interests," said Deemas.

"If a non competition clause is applied for example for constructions workers it is immediately considered not valid as the nature of the job does not enable the worker not have access on companies' secrets or make him interact with its clients," he said.

New regulations in UAE Labour Law aim to liberalise labour market

The aim behind the new labour law that will come into effect on January 1, is to lessen the control of employers over employees and liberalise the labour market, a top government official told .The source clarified that the new law completely scraps the "no objection certificate" (NOC).

"The new laws allow an employee to transfer his sponsorship after the contract with his current employer expires, but the employee must inform his sponsor that he will not be renewing his contract 30 days before its expiry," he added.

"The employee will be granted a period of 30 days once his contract expires to find a new job and sponsor. This period is basically given to the employee to complete procedures such as the issuance of a new visa in accordance with the Ministry of Interior's procedures and signing the contract with the new sponsor. However, if the period expires and the employee's paperwork is not completed, he will be considered illegal," added the source.Once the employer and employee's pact was regulated by a contract, the ministry would not be able to interfere in matters pertaining to both parties in accordance with Law number 129 in regard to regulating the relationship between both parties.

"When the contract expires, the employee is granted a special permit by the ministries of labour and interior, allowing him to stay in the country for 30 days to complete paperwork and finalise procedures for the new work visa under the new job and employer," the government official said.

Under the new system, if an employee completed the two-year working period, the employer had no right to force an employee to stay on the job and would no longer face a six-month ban, since the new system scrapped the NOC.

Humaid Bin Deemas, Acting Director-General of the Ministry of Labour, told once a job contract expired or was legally terminated, the Labour Ministry would have the authority to allow workers to take up new jobs without the consent of former employers or the so-called NOC.

"Workers, skilled and unskilled, who end their job contracts legally and complete at least two years of service, will get a labour permit outright," he said.Previously, these workers had to complete at least three years of service with their previous employers and had to obtain an NOC letter.Professional and skilled workers in the first three categories according to the Uniform Gulf Occupational Classification would also be exempt from the six-month ban.

He estimated these three categories (the first category with university or post graduate degrees, the second with less than university degrees and the third category including skilled workers with high school degrees) included 800,000 workers.

Bin Deemas said even for unskilled and semi-skilled workers, companies would lose the right to stop them from getting other jobs if the firm failed to honour its legal or contractual obligations, for example, by not paying salaries for 60 days and not offering proper accommodation. Workers, he said, could also take up new jobs if the employer stopped the business for economic or technical reasons and these workers reported the closure to the Labour Ministry within 60 days.

Bin Deemas said the UAE as determined to protect the rights and welfare of the workers as well as their employers "but these rights and benefits will be fulfilled in keeping with the law. It is not the employer's right to approve or disapprove switching of jobs. But it is his right that workers complete the job contract in the event of contracts with limited period".

Concerning fees, Bin Deemas said a resolution would be issued shortly determining a complete set of "more affordable fees".

Previously, workers had to pay job-switch fees, which were determined according to service of the worker, the category of the business among other factors and which reach up to Dh14,000.

The government official added that the goal behind the ministry's new law was to bring the labour market's level on a par with that of Germany, Canada, the US and other Western countries, as well as cancelling the employers' monopoly of the labour market. The new rules defined three cases in which the worker shall have the right to get a work permit without fulfilling the condition of working at least two years with the employer:

When joining his new job, the worker should be classified in the first, second or third professional class and that his salary should be not less than Dh12,000, Dh7,000 and Dh5,000 if he is in the first, second and third class respectively. nNon-compliance of the employer with legal and labour obligations towards the worker or in the event the worker has no role in terminating the work relationship

Professional and skilled workers in three categories exempted from the six-month ban -Humaid Bin Deemas, Acting Director-General Ministry of Labour UAE

The new rules defined three cases in which the worker shall have the right to get a work permit without fulfilling the condition of working at least two years with the employer:

When joining his new job, the worker should be classified in the first, second or third professional class and that his salary should be not less than Dh12,000, Dh7,000 and Dh5,000 if he is in the first, second and third class respectively. (these three categories the first category covers skilled workers with university or post-graduate degrees, the second those with less than university degrees and the third category covers those with high school degrees) Non-compliance of the employer with legal and labour obligations towards the worker or in the event the worker has no role in terminating the work relationship;

Workers who complete at least two years of contract period will not need former employer's consent to switch jobs Beginning January 1, 2011, foreign workers switching jobs will not need a no-objection certificate from former employers as the Ministry of Labour will make the decision, a senior official said on Sunday."Workers, skilled and unskilled, who end their job contracts legally and complete at least two years of service, will get a labour permit outright," he said.

Previously, workers had to complete at least three years of service with the previous employers and had to obtain a no-objection letter to avoid a ban.

In the case of unskilled and semi-skilled workers, a company failing to honour its legal or contractual obligations will lose the right to stop them from getting other jobs. This includes not paying salaries for 60 days and not providing proper accommodation.Workers can also take up new jobs if the employer stops the business for economic or technical reasons and these workers report the closure to the Labour Ministry within 60 days.

Bin Deemas said "it is not the employer's right to approve or disapprove switching of jobs. It is his right that workers complete the job contract in the event of contracts with limited period."

No six-month work ban from January 1, 2011 in UAE

Expatriate workers can move to new employment without no-objection certificate if they have served out two-year contract.The Ministry of Labour has issued regulations allowing workers who finish their contracts to obtain new work permits without undergoing the six-month work ban, and allowing them to move to other firms without the employer's approval from January 1, 2011.

A worker with an expired contract can obtain a new work permit and shift to another employer without the passing of the currently legitimate six-month period and consent of his sponsor, according to the new resolution issued by the Minister of Labour Saqr Gobash.

The new regulations on conditions and criteria of issuing new work permit for a worker after the expiry of his service contract and transfer of sponsorship will take effect as of January 1, 2011 in implementation of the cabinet resolution No 25 of 2010 regarding internal work permit at the Ministry of Labour.

Once operational, the new regulations will replace the current formalities of transfer of sponsorship for expatriate workers.

The resolution says that the new employment permit will only be granted to the worker after the end of his work relationship with his employer without consideration of the legitimate six month period which is usually calculated after the cancellation of the worker's labour card.

But it stipulates two must-do conditions. firstly, the two contracting parties must have ended their work relationship cordially and secondly, the worker should have worked with his employer for two years at least- the duration of the new labour card which will be issued by early January.

The resolution defines two cases where the worker can obtain the new work permit after the end of the contractual relationship without the agreement of the two contracting parties.First, when the employer fails to honour his legally or contractual obligations. Second, in the condition of expiry of work relationship where the worker takes no responsibility such a complaint filed by the worker against his firm.

In this case, an inspection report should prove that the firm is out of business for more than two months and that the worker should have reported to the ministry.

The labour dispute should have been referred by the ministry to the court provided that the court hands out a final verdict ordering the employer to pay to the worker salaries of two months at least, compensation for the arbitrary sacking or terminating the contract prematurely, or any other rights.

The resolution also defines three cases where the worker shall have the right to get a work permit without fulfilling the condition of working two years at least with the employer.Firstly, when joining his new job, the worker should be classified in the first, second or third professional class and that his new salary should not be less than Dh12,000, Dh7,000 and Dh5000 in the first, second and third class respectively.Secondly, non-compliance of the employer with legal, labour obligations towards the worker or in the case where the worker has no role in terminating the work relationship.

Thirdly, shifting of the worker to another firm the employer owns it or has stakes in it.Minister of Labour Saqr Gobash said the new measures aim to infuse broader flexibility in the labour market and strike a balance in the contractual relationship between the employer and worker."The Ministry will only interfere in the employer-worker contractual relationship if it detects infringement in obligations stated in the labour contract," he explained, affirming the ministry's determination to guarantee rights of both parties legally as we live in the State of law and institutions.

"Giving the private sector more freedom of movement will have automatic impact on employers by the way of preserving their interests through creating many options for recruiting skillful workers as per the supply-demand equation.

He indicated the new measures were subject to dialogue and consultation with local stakeholders in implementation of directives of the wise leadership for crafting policies and legislations that fit well into the developments in labour market and curb any malpractices.

"The new regulations constitutes key elements of labour reforms which part of them have already executed and the other parts will be in place in the near future," he said.These measures, he said, were expected to play a major role in advancing efforts towards creating an efficient labour market and sharpening competitiveness and transformation towards a knowledge-drive economy.

"UAE End of Service Gratuity (EOSG) 2025: New Calculation Rules and Contract Types"

💰 UAE End of Service Gratuity (EOSG): New Calculation Rules and Contract Types (2025 Update)

The calculation and entitlement rules for the End of Service Gratuity (EOSG) have been entirely updated under the Federal Decree-Law No. 33 of 2021 (the New UAE Labour Law), effective from February 2, 2022.

1. The Core Calculation (Article 51)

The calculation method (21 days for the first 5 years, 30 days thereafter) remains, but the maximum cap is removed, and the calculation basis is confirmed.

Old Law (Article 132)	Current Law (Article 51)
Calculation: 21 days for the first 5 years, 30 days for subsequent years. Maximum Cap: Total gratuity cannot exceed 2 years' salary.	Calculation: Same rates apply. 21 days for the first 5 years, 30 days for subsequent years. Maximum Cap: REMOVED. The total gratuity is not capped at two years' salary.
Part of the Year: Entitled to a prorated amount after one year of service. (Article 133)	Part of the Year: Confirmed. The worker is entitled to a prorated amount for the fraction of the year, provided one full year of service is completed.
Leaves Without Pay: Not included in the service period. (Article 132)	Leaves Without Pay: Confirmed. Periods of unpaid leave are excluded from the service period calculation.

2. The Calculation Basis: BASIC Salary Only

The current law explicitly confirms the calculation basis.

Old Law (Article 134)	Current Law (Article 51)
Basis: Calculated based on the last basic salary. Confusing Point: Stated allowances "shall be included in the basic salary" (which was legally disputed).	Basis: Calculated exclusively on the Basic Salary. Clarified: The law confirms that allowances (housing, transport, commission, etc.) are NOT included in the gratuity calculation.

3. Contract Type Distinction: UNLIMITED is ABOLISHED

This is the most critical change. The distinction between Unlimited and Limited contracts for EOSG calculation is GONE because the Unlimited Contract type is abolished for new/renewed contracts.

Old Law (Articles 137 & 138)	Current Law (Article 51 & 42)
Unlimited Contract Resignation: Reduced Gratuity (1/3 or 2/3 reduction based on service period).	Fixed-Term Contract Resignation: NO REDUCTION. The worker is entitled to the full gratuity regardless of the length of service (after 1 year), provided they comply with the lawful termination (notice period).
Limited Contract Resignation: Forfeiture unless service exceeded 5 years.	Forfeiture: ELIMINATED. There are no reductions or forfeitures for an employee's resignation under the new law, provided they follow the lawful notice period.

4. Forfeiture and Dismissal (Article 51 & 44)

The conditions for the worker being banned from gratuity have been streamlined and simplified.

Old Law (Article 139)	Current Law (Article 51)
Forfeiture: Worker dismissed under Article 120 (gross misconduct) OR worker voluntarily resigns without notice (unlimited contract) OR limited contract worker resigns before 5 years.	Forfeiture: The worker forfeits the entire gratuity ONLY if they are dismissed for one of the 11 specific reasons listed in Article 44 (Gross Misconduct).
Voluntary Resignation: Forfeiture is ABOLISHED for lawful resignation.

5. Death, Savings, and Pensions (Article 51)

• Death: Confirmed. If the worker dies, the employer must pay the full gratuity to the heirs.
• Savings/Pension Funds (Article 140 & 141): Confirmed. The worker retains the right to choose between the gratuity or any better terms offered by a savings/pension scheme, provided the scheme terms allow it.

6. Return Tickets (Not in EOSG Law)

The obligation for return tickets is NO LONGER tied to the EOSG Law but to the general conditions of the employment contract (Article 13).

• Current Rule: The employer is responsible for the worker's return ticket to their home country upon termination of the contract, unless the worker joins a new employer in the UAE, or the worker is dismissed for gross misconduct (Article 44 reasons).