Article 83 Saudi Labor Law: The Best Guide for you

Article 83 Saudi labor law plays a pivotal role in defining and regulating non-compete clauses within employment contracts in Saudi Arabia. This article empowers employers to safeguard their legitimate business interests, including protecting client relationships, trade secrets, and other sensitive commercial information that could be exploited if employees join competing entities after leaving their position.

Proper knowledge of Article 83 not only helps prevent disputes but also provides a structured framework for resolving conflicts, protecting rights, and maintaining fair employment practices under the Saudi Labor Law.

Article 83 Saudi Labor Law

1. Under Article 83 Saudi Labor Law, if the nature of the employee’s duties enables them to become familiar with the employer’s clients, the employer may— in order to protect their legitimate interests— include a clause in the employment contract that prevents the employee from engaging in any competing activity after the termination of the employment relationship.
2.  For this clause to be valid, it must be clearly written and explicitly defined in terms of duration, geographical scope, and type of activity, provided that the restriction does not exceed two years from the date the employment relationship ends.
3. Article 83 Saudi Labor Law also applies when the employee’s role allows them access to the employer’s business secrets. In such cases, the employer may include a clause requiring the employee not to disclose these secrets after the contract ends. This clause must likewise be in written form and clearly specified in terms of duration, geographical scope, and nature of work.
4. In addition, Article 83 Saudi Labor Law grants the employer the right— as an exception to the general provisions— to file a legal claim within one year from the date they discover the employee’s breach of any obligations set forth in this article.

What are The Validity Requirements for a Non-Compete Clause Under Article 83?

For a non-compete clause to be legally enforceable under the Saudi Labor Law, it must meet several essential conditions:

• The clause must be in written form: Verbal agreements are not recognized. The non-compete clause must be clearly documented either within the employment contract or in a separate written agreement signed by both parties.
• The employer must have a legitimate business interest: The purpose of the clause must be to protect genuine commercial interests—such as client relationships or trade secrets—and not to restrict the employee arbitrarily.
• The nature of the employee’s role must justify the clause: The employee’s duties must allow access to clients or confidential business information. A non-compete clause cannot be imposed on roles that do not involve such exposure.
• The duration must be clearly defined: The period during which the employee is restricted from competing must be specified and may not exceed two years from the end of the employment relationship.
• The geographical scope must be specified: The clause must identify the region or territory in which the employee is prohibited from engaging in competitive activities.
• The type of work must be clearly limited: The restriction must apply only to the specific type of work or business activity that directly competes with the former employer.

Read also: Article 79 Saudi Labor Law: Guide to Employee Rights & Termination

How Many Procedures for Challenging a Dismissal Related to a Non-Compete Clause?

Although Article 83 does not explicitly outline the procedures for contesting dismissal decisions, an employee may challenge a termination that is connected to an alleged breach of a non-compete clause or if the clause was used as a pretext for unfair dismissal. The employee may proceed as follows:

• File a complaint with the Labor Dispute Amicable Settlement Department: The process begins with an amicable settlement attempt, which must be resolved within 21 days.
• Escalate the case to the Labor Court: If no settlement is reached, the employee may file a formal lawsuit before the competent Labor Court.
• Seek legal representation: Hiring an employment law attorney is advisable, particularly when the non-compete clause does not meet the legal requirements specified in Article 83.
• Obtain compensation in cases of unjust dismissal: If the court determines that the dismissal was unjustified or based on an invalid clause, it may order the annulment of the termination and award the employee the compensation stipulated in unjust dismissal cases.

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Etqan Law Firm Services in Non-Compete Clause Disputes

Etqan Law Firm is considered one of the leading entities in handling labor-related cases, particularly those involving non-compete clause disputes, provides a comprehensive range of legal services, including:

• Drafting and preparing employment contracts in compliance with Article 83 Saudi Labor Law, ensuring the protection of employers’ interests without infringing on employees’ rights.
• Legal representation before Labor Courts in cases related to non-compete disputes, along with presenting the necessary legal defenses.
• Providing legal consultations to both employers and employees regarding their rights and obligations under the latest updates of the Saudi Labor Law.
• Negotiating and drafting amicable settlements to avoid prolonged and costly legal disputes.
• Offering legal support to investors to safeguard their trade secrets and sensitive business information and ensure they are not misused after the employment relationship ends.

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Conclusion

Article 83 Saudi Labor Law provides a structured framework for non-compete clauses, balancing the protection of employers’ commercial interests with employees’ rights. By adhering to the legal requirements, defined scope, and legitimate business interests—employers can enforce non-compete agreements lawfully. Professional legal guidance, such as that offered by Etqan Law Firm, ensures compliance and protects the rights of all parties involved.

The Etqan Al Mutamayza Law Firm is ready to provide the essential support you need. You can reach their team at the following mobile numbers: +966550600204, +966551020060.

Additionally, feel free to visit our branches located at:

• Jeddah: Al-Aziziyah District, Mohammed bin Abdulaziz Street (Tahlia)
• Riyadh: King Abdulaziz Street, across from the Kingdom Tower
• Dammam: Al-Ashri’a Street, Al-Badeea, Dammam 32415.

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