Non-compete clause

Attorney Fajer Ahmed

A non-compete clause is written in contracts to prevent a person from competing with a business. This is usually included in employment contracts or in partnership agreements. The point of a non-compete clause is that as a company, you want to make sure that all the time you spent training an employee shouldn’t ultimately benefit your competitor. It’s a protective measure, and I understand why some companies that need someone with a very specific or unique experience would want to lock in their employees and not have them work at competing businesses.
I also understand how this might make it difficult for the worker who might need to leave the job because of some violations or if the work environment is not positive. Today, I will be looking at questions I have received regarding non-compete clauses in employment agreements.

Tech startup
Question: I am starting a business in Kuwait for a tech startup and as partners entering a business, can we have a non-compete clause?
Fajer: Yes, it is legal and actually very common to have a non-compete clause under the articles of association of a company, especially for the partners that are working or managing the company. I would highly recommend such a clause for my clients.

Labor law
Question: Is it legal for an employment contract to include a non-compete clause? I was terminated and am now working for another restaurant. But my boss is accusing me of competing with his business, and wants to file a lawsuit against me. Is this possible?
Fajer: There is no mention of a non-compete clause in the Kuwait labor law, even though it is common to see non-compete clauses being interpreted or explained in labor laws internationally. There have been court verdicts regarding the legalities of non-compete clauses with the verdicts varying depending on the following circumstances, as an example:

1. Location of the competing company – if the competing company is in another governorate than the company that the employee used to work for, then the court may see it as non-competitive, with a different clientele.

2. Nature of the work done – for example, since you are in retail, it would be difficult to stop you from continuing to work in retail, as it is a vast field unlike for example a programmer who might be working on something very specific.

Therefore, answering whether a non-compete clause for an employee is legal or not is a grey area and there is no concrete answer. With that said, my understanding from reading the verdicts is that employees as a general rule should have the freedom to work where they would like to, and this is based on article 41 of Kuwait’s constitution: “Every Kuwaiti shall have the right to work and to choose the nature of his occupation. Work is the duty of every citizen. Dignity requires it and public welfare ordains it. The state shall make work available to citizens and shall see to the equity of its conditions.”

I hope the above helped. If you have a concern, please email us at info@ftl-legal.com

By Attorney Fajer Ahmed

This article was published on 19/02/2018