No case against staffer joining rival firm
Dubai Court of Cassation rejected an appeal filed by a company against its former employee demanding million dirhams in compensation for breaching contract rules.
A health sector company had sued one of its former employees, who served as Director of Support Services, for resigning and joining a rival firm, which, it said, was against the conditions mentioned in the contract.
The company [plaintiff] claimed that the contract stipulated that the employee cannot join another firm in the same sector within Dubai and Sharjah.
The Court of First Instance dismissed the case. But the company moved the Court of Appeals. However, the plaintiff did not accept the judgment of the Appeals Court and challenged it before the Court of Cassation.
The plaintiff claimed that the employee transferred secrets of the company to the new firm that he joined, which is its competitor, thus causing damages.
The Court of Cassation rejected the appeal based on the text of Article 127 of the Labour Code, which provides that an employer may claim compensation for work damages if the employee breaches work contract but not for working with a rival firm.
The court also ruled that this was conditional, as the employer should provide evidence of damages.
The Court of Cassation ruled that as there was no evidence of any damage to the company because of the employee joining another firm, and, therefore, it cannot demand compensation.
The court explained that breaching ‘non-compliance’ rules can be applied on two conditions. One: causing damages to the company; Two: company should provide the Court with evidence of such damages.
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