Post-Termination Restrictions in the UAE: Are They Actually Enforceable?

When an employment relationship ends in the UAE, the obligations between an employer and employee do not always end with it. Post-termination restrictions which are clauses designed to limit what a departing employee can do after leaving a company, are an increasingly common feature of employment contracts across Dubai, Abu Dhabi, and Sharjah. Yet they remain widely misunderstood by both sides.

Whether you are a business owner seeking to protect your client base and confidential information, or an employee unsure of what your contract actually allows you to do after resignation, understanding these restrictions under UAE law is not optional, it is essential.

This comprehensive guide explains everything you need to know about post-termination restrictions in the UAE, including their legal basis, enforceability, and how to act if things go wrong.

What Are Post-Termination Restrictions?

Post-termination restrictions, also known as restrictive covenants, are contractual clauses that limit a former employee’s professional activities after their employment ends. Most employees pay little attention to them when signing a contract, and that is precisely when it matters most to read them carefully.

The most common types include:

• Non-compete clauses: preventing the employee from joining a competing business or setting up a rival company within a defined time and geographic area
• Non-solicitation clauses:  restricting the former employee from approaching or poaching the employer’s clients or customers
• Non-dealing clauses: preventing business dealings with certain clients, even if those clients make contact first
• Confidentiality obligations: requiring the former employee to protect trade secrets, proprietary data, and sensitive business information, often indefinitely

The Legal Framework: UAE Labour Law and the Civil Code

Post-termination restrictions in the UAE are governed by two key pieces of legislation.

Article 10 of Federal Decree-Law No. 33 of 2021 (the current UAE Labour Law) expressly permits employers to include non-compete restrictions in employment contracts, provided the employee’s role gave them access to the employer’s clients, trade secrets, or confidential business information. The law requires restrictions to be specific across three dimensions:

1. Duration– capped at two years from the date of contract termination
2. Geography -limited to areas where the employer legitimately operates
3. Type of business activity -must relate specifically to the employer’s actual line of work, not entire industries or sectors

Articles 909 and 910 of the Civil Code (Federal Law No. 5 of 1985) further reinforce this framework, requiring that any restriction extend no further than is reasonably necessary to protect the employer’s legitimate business interests. A clause that is excessively broad, for example, one that bars an employee from working anywhere in the Middle East for five years is almost certainly unenforceable.

Important note for free zone employees: Businesses operating within the DIFC or ADGM are governed by separate employment regulations. Crucially, the DIFC and ADGM courts can grant injunctive relief,  a significant difference from mainland UAE, making post-termination restrictions far more immediately enforceable in those jurisdictions.

Are Post-Termination Restrictions Enforceable in the UAE?

Yes, but with significant limitations that every party should understand before relying on them.

The Biggest Limitation: No Injunctive Relief on the UAE Mainland

The most critical constraint for employers is the absence of injunctive relief in mainland UAE courts. An injunction, a court order that immediately stops a former employee from joining a competitor or disclosing confidential data, is not available under the UAE mainland legal framework. It is only available within the DIFC and ADGM.

On the mainland, an employer’s remedies are compensatory only. This means the employer must wait for the breach to occur, demonstrate that actual financial loss resulted directly from it, and then pursue a civil claim for damages. Quantifying that loss is notoriously difficult, making enforcement expensive and uncertain.

The Reasonableness Test

Before any court awards compensation, it will assess whether the restriction is reasonable. This involves two stages:

1. Is there a legitimate business interest to protect? The most recognised interests include trade connections, goodwill, and confidential information.
2. Does the clause extend no further than necessary to protect that interest? An employer seeking to prevent client poaching may not need a full non-compete clause, a narrower non-solicitation clause might suffice and be far more defensible.

Courts have discretion to modify overly broad clauses rather than simply voiding them, but there is no guarantee any modification will favour the employer.

How to Strengthen Your Business Protection: What Employers Should Do

Given the enforcement limitations, proactive and expert contract drafting is your most powerful weapon. There are four tools every employer should consider:

1. Precise, Role-Specific Drafting

Generic, copy-paste restrictive covenants are a liability, not an asset. Each clause must be tailored to the specific role, seniority level, and the employee’s access to sensitive information. A senior business development manager with relationships across your entire client portfolio requires a very different clause from a junior administrator.

2. Liquidated Damages Clauses

A liquidated damages clause pre-estimates the financial loss the employer would suffer from a breach, removing the difficult burden of proving actual loss in court. It also acts as a powerful deterrent. UAE courts retain discretion to adjust any stated amount if deemed unreasonable, but the clause shifts the burden of proof to the former employee,  a significant practical advantage.

3. Garden Leave Provisions

A garden leave clause allows the employer to place a departing employee on paid leave during their notice period, preventing access to colleagues, clients, and confidential systems before departure. During garden leave, the employee remains bound by their employment contract. Any work performed for a competitor during this period constitutes a breach of UAE immigration regulations, exposing the employee to substantial fines and potential labour bans.

4. Confidentiality Obligations and Criminal Deterrence

Confidentiality clauses work hand-in-hand with non-compete restrictions. Under Article 379 of the UAE Penal Code, an employee who discloses trade secrets may face criminal prosecution, a minimum detention period of one year and/or a fine of at least AED 20,000. The prospect of criminal proceedings is often a more effective deterrent than any civil remedy.

Additionally, under Article 64 of the Commercial Transactions Law (Federal Law No. 18 of 1993), claims can be brought against a new employer if they knowingly induced the employee to breach their contract or disclose a competitor’s confidential information.

What Employees Need to Know Before Signing or Leaving

For employees, the key message is this: do not ignore restrictive covenants. They are easy to overlook when starting a new job and potentially very costly when leaving one.

Before accepting a new role that may conflict with your existing contract, ask yourself:

• Does my current employment contract contain a non-compete or non-solicitation clause?
• Is the restriction specific about duration, geography, and type of work, or is it vague and sweeping?
• Has my employer included a liquidated damages clause that could expose me to financial liability?
• Does my new role genuinely place me in competition with my former employer, or is it in a different segment of the market?

Even if a restriction appears overly broad, never assume it is automatically unenforceable without taking legal advice first. Courts may narrow rather than void such clauses, meaning you could still be held to a modified version of the restriction.

Can Action Be Taken Against the New Employer?

Yes, in some circumstances. Under Article 64 of the Commercial Transactions Law, a new employer who knowingly encourages a former employee to breach their restrictions ,or who actively benefits from the disclosure of a competitor’s confidential information can be drawn into legal proceedings. Compensation is the available remedy, and the reputational risk alone is often sufficient to deter new employers from encouraging breaches.

How FranGulf Can Help

Post-termination restrictions sit at the intersection of employment law, contract law, and civil litigation, three areas where experience and precision genuinely matter. At FranGulf Advocates & Legal Consultants, we help both employers and employees navigate this complex terrain across Dubai, Sharjah, and the wider UAE.

Our corporate lawyers advise businesses on drafting legally robust, enforceable employment contracts, including non-compete clauses, garden leave provisions, liquidated damages clauses, and comprehensive confidentiality agreements tailored to your specific industry and workforce.

Our civil litigation team represents clients in disputes arising from breaches of restrictive covenants, pursuing or defending compensation claims with a clear-eyed understanding of what UAE courts will and will not enforce.

Whether you need a contract review, fresh drafting, or active legal representation, FranGulf provides the expertise and local knowledge to protect your interests.