Understanding the non-compete clause in employment contracts

Under Royal Decree 53/2023, the Labour Law regulates the non-compete clause in employment contracts to balance employers’ legitimate business interests with workers’ right to future employment. This clause prevents workers from competing with their former employers after the employment relationship ends, but only under strictly defined conditions.

In an exclusive interview with Times of Oman, Dr. Mohammed Ibrahim Al Zadjali, Founding Partner of Mohammed Ibrahim Law Firm, a leading law office in Oman, explained that “a non-compete clause is permitted only where the nature of the worker’s duties allows access to work secrets or knowledge of the employer’s clients that could enable the worker to compete with the employer.” He further noted that “the clause must clearly specify the time, place, and type of work to which the restriction applies.”

Dr. Mohammed stated that “the duration must not exceed 02 years and the geographical scope must be limited to the area where the employer actually operates. The employer cannot enforce the clause if the employer terminates the contract without the worker committing a breach that justifies such termination, or if the employer commits an act that justifies the worker terminating the contract.”

“If a worker breaches the agreement, the employer may claim compensation, but the amount must not be excessive or claimed with the intention of forcing the worker to remain in employment. However, if the employer is excessive in claiming compensation for such purpose, the clause shall be deemed void,” Dr. Mohammed noted.

“This framework ensures that employers can protect their confidential business information while workers retain the freedom to seek alternative employment opportunities without facing unreasonable restrictions,” he concluded.

(Mohammed Ibrahim Law Firm (info@mohammedibrahim.net), (+968 244 87 600) was established on 14th December 2006 and is serving clients through its offices in Muscat and Sohar, as well as operating on a request basis in other areas. It offers legal representation across a wide range of practice areas that include Labour Law, Corporate, Commercial, Contracts, Banking and Finance, International Trade, Foreign Investment, Insurance, Maritime Law, Construction and Engineering Contracts, International Arbitration, Intellectual Property and more).