Is a non-compete enforceable in Saudi Arabia?

Article 83(1) of the Labor Law expressly allows an employer to stipulate that a worker will not compete with it after the contract ends, but only where the work entrusted to the worker allowed the worker to become acquainted with the employer's clients and only to protect the employer's legitimate interests. For the condition to be valid it must be written and specific as to time, place and the nature of the work.

What is the maximum length of a Saudi non-compete?

Article 83(1) of the Labor Law provides that the duration of the non-competition condition must not exceed two years from the date the relationship between the two parties terminates. Article 10 of the same Law calculates periods on the Hijri calendar unless the contract or the work regulations state otherwise.

How long does an employer have to bring a claim for breach?

Article 83(3) of the Labor Law gives the employer one year from the date it discovers the worker's violation of any of the obligations in that Article to file a lawsuit. That applies to both the non-competition and the confidentiality limbs of Article 83.

Non-Compete Agreement in Saudi Arabia

Saudi Arabia permits post-termination non-competes but frames them narrowly in a single article of the Labor Law. The clause is available only where the work gave the worker access to the employer's clients, it must be written and specific as to time, place and nature of the work, and it cannot exceed two years.

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Governing law

Article 83 of the Labor Law governs post-termination non-competition and confidentiality undertakings between an employer and a worker.

Saudi Labor Law, Part Five (Labor Relations), Art. 83 (Ministry of Human Resources and Social Development)

What a non-compete agreement has to contain in Saudi Arabia

Article 83(1) makes the covenant available only where the work allows the worker to become acquainted with the employer's clients, and only to protect the employer's legitimate interests.
Saudi Labor Law, Part Five (Labor Relations), Art. 83(1) (Ministry of Human Resources and Social Development)
Article 83(1) requires the covenant, to be valid, to be written and specific in terms of time, place and the nature of the work.
Saudi Labor Law, Part Five (Labor Relations), Art. 83(1) (Ministry of Human Resources and Social Development)
Article 83(1) caps the covenant at two years from the date the relationship between the two parties terminates.
Saudi Labor Law, Part Five (Labor Relations), Art. 83(1) (Ministry of Human Resources and Social Development)
Article 83(3) gives the employer one year from discovering the worker's violation of any obligation under that Article to file a lawsuit.
Saudi Labor Law, Part Five (Labor Relations), Art. 83(3) (Ministry of Human Resources and Social Development)
Article 8 voids any contractual condition that contravenes the Labor Law, and voids waivers of statutory worker rights made during the term of the contract unless more beneficial to the worker.
Saudi Labor Law, Part One (Definitions and General Provisions), Art. 8 (Ministry of Human Resources and Social Development)

Form, notarisation and registration

Article 9 requires the contract containing the covenant to be in Arabic, and makes the Arabic text authoritative where a foreign language is used alongside it.
Saudi Labor Law, Part One (Definitions and General Provisions), Art. 9 (Ministry of Human Resources and Social Development)

What catches drafters out

Article 83 has two limbs. The two-year cap attaches to the non-competition limb in paragraph 1; the confidentiality limb in paragraph 2 must also be written and specific but carries no stated maximum.
Saudi Labor Law, Part Five (Labor Relations), Art. 83(1) and 83(2) (Ministry of Human Resources and Social Development)
Where the restrained party is not a worker, the Civil Transactions Law applies, and Article 96 lets a court amend arbitrary conditions in an adhesion contract or exempt the adhering party, voiding any agreement to the contrary.
Civil Transactions Law, Royal Decree No. M/191 of 18 June 2023, Art. 96 (Bureau of Experts official translation, Ministry of Investment)
Article 10 calculates Labor Law periods on the Hijri calendar unless the contract or work regulations provide otherwise, so a restraint drafted in Gregorian years does not track the statutory maximum.
Saudi Labor Law, Part One (Definitions and General Provisions), Art. 10 (Ministry of Human Resources and Social Development)