An accurate systematic reading of Article (83) of the Saudi labor law and the non-competition clause in labor contracts
An important judicial ruling in labor competition cases | a careful systematic reading of Article (83) of the Saudi labor law from the remarkable rulings issued by the labor court, that ruling confirmed the importance of proper regulatory adjustment in competition cases, and clearly distinguished between contractual restrictions and what is considered a prohibited competition system.
Summary of the judgment: the employer has agreed with the worker on a condition that he will not work for any competing establishment after the end of the contractual relationship. After the end of the contract, the worker joined another employer working in the same activity, so the former party initiated a competition lawsuit.
What was decided by the Labor Department The chamber decided that:
An agreement not to work for a competitor is not in itself a condition of non-competition within the meaning of a system.
This condition does not take into account the provision of the non-competition clause stipulated in Article (83) of the labor law.
The regulatory adaptation adopted by the court: the Chamber explained that the regulator is in Article (83) of the labor law:
The worker was not prevented from working for a competing facility after the termination of the contractual relationship.
It only restricts real competition, which is achieved when the worker:
By opening a private activity, or practicing an independent business, the former employer competes with him, taking advantage of what he has seen of secrets, clients or material information.
As for the worker joining a job with another employer— if it is a competitor —it is: legitimate work, remuneration for work, and it is not considered a prohibited regular competition according to the proper adaptation of the non-competition condition.
Result: in the absence of the realization of the fact of competition in the correct legal sense, the Labor Department ended up rejecting the lawsuit.
Systemic significance of the provision this provision confirms several important principles, the most prominent of which are:
The principle is to protect the worker's right to work and not to restrict it except by an explicit statutory provision.
That the restrictions contained in the contracts do not explain the expansion in such a way as to prejudice the freedom of work.
That competition claims require careful systemic adaptation, and not just the existence of a general contractual clause.
The summary of the judgment embodies an advanced judicial awareness, and confirms that the adjudication of competition claims is not based on the titles, but on the fact of the act and the extent to which it applies to the statutory concept of prohibited competition in the non-competition clause in accordance with Article (83) of the Saudi labor law.
It is an important reference for practitioners in labor and competition cases.