Management Agreements
Ensure Leadership Success Through Personalized Management Agreements
A well-structured management agreement is crucial for senior executives, clearly outlining additional responsibilities, liabilities, and compensation structures, ensuring that expectations between the employer and the executive are well-aligned.
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Free zones generally offer a standard employment contract when recruiting employees in the UAE.
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Standard agreements frequently do not cover the specific terms and conditions agreed upon by both the employer and employee, particularly when it comes to senior management positions.
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To fill these gaps, it’s essential to draft supplementary agreements, which are particularly crucial for senior management.
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These additional agreements usually include:
- Extra responsibilities specific to the role,
- Customized compensation structures,
- Restrictive clauses to protect the company’s interests and ensure compliance with UAE legal standards.
Key Considerations
Duration & Termination
- The agreement should specify the start and end dates, along with any automatic renewal provisions if applicable.
- Termination clauses should comply with UAE Labor Law and local commercial practices, including stipulated notice periods.
Liabilities & Indemnities
- Risk allocation and indemnities should be consistent with UAE legal requirements.
- Consideration should be given to the UAE's Civil Transactions Law when addressing potential disputes or liabilities.
Restrictive Covenants
Executive contracts often contain protective terms like non-compete, non-solicitation, and confidentiality clauses to protect the business’s interests and maintain the confidentiality of sensitive information.
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Non-Compete Clauses
- These clauses prevent executives from participating in competing businesses for a period of up to 2 years within a specified geographical region
- A non-compete clause shall be clearly outlined in the employment agreement and consented to by both parties involved.
- An employer is required to demonstrate a legitimate business interest that needs safeguarding, such as proprietary information, confidential data or client relationships.
- The designated restriction period must be limited to a maximum of two years following the end of the contract.
- The clause must outline the specific geographic areas where the employee is prohibited from competing, restricted to locations where the employer conducts business or has substantial business interests.
- Activities that are not permitted should be explicitly detailed and directly linked to the employee's duties, ensuring that the restrictions imposed are essential for protecting the legitimate interests of the employer.
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Non-Solicitation Clauses
- Prevent solicitation of employees, clients, or customers to protect business relationships.
- Specify the length of the restriction clearly to guarantee that it is reasonable and enforceable.
- Clarify the range of prohibited activities to remove any ambiguity and ensure alignment with the employer's business interests.
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Confidentiality Obligations
- These clauses protect sensitive business information beyond the term of employment with legal consequences for breaches.
- Shall be explicitly outlined in the employment contract or a separate NDA.
- Confidentiality requirements may persist indefinitely, particularly for trade secrets or sensitive data and should continue even after employment has ended.
- Disclosure is permitted only in certain situations, such as legal obligations or public records.
- Breaches may result in consequences such as termination, damages, or legal repercussions.
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