An employee in a commercial role left a company where he had direct contact with clients and access to important information about pricing and business operations. He then moved to a competing business. When his employment contract was reviewed, it contained a clause preventing him from competing with the company after his employment ended. In this situation, simply having the clause in the contract is not enough. The key question is whether it was drafted in a way that complies with the law.
This is the main issue governed by Article 73 of the Bahrain Labour Law. It does not regulate annual leave, as some older content may suggest. Instead, it deals with non-compete clauses that apply after an employment contract ends, making it particularly important for business owners, HR managers, and legal departments.
Was your employment contract terminated suddenly, and are you worried about losing your entitlements under Article 73? Do not let years of hard work go to waste.
Table of Content
What Does Article 73 of the Bahrain Labour Law Regulate?
Article 73 of the Bahrain Labour Law allows an employer and an employee to agree that the employee will not compete with the employer after the employment contract ends. However, this restriction cannot be applied to every job or drafted without limits.
The starting point under the law is the nature of the employee’s role. If the job gives the employee access to the company’s clients or allows them to learn its business secrets, the parties may agree on a non-compete obligation that applies after the employment relationship ends.
However, the law places clear limits on such an agreement so that it does not become a general restriction preventing the employee from earning a living.
In simple terms, the following conditions should be considered:
- The employee must have reached the age of 18 when the agreement was made.
- The non-compete period must not exceed one year after the employment contract ends.
- The geographical scope must be limited to what the company genuinely needs to protect its interests.
- The type of work or activity covered by the restriction must be defined only to the extent necessary.
- The restriction must protect a legitimate interest of the employer, such as clients or business secrets.
These rules are set out in Article 73 of the Labour Law for the Private Sector, issued under Law No. 36 of 2012. The law was issued on 26 July 2012, published in Official Gazette No. 3063 on 2 August 2012, and came into force one month after its publication. The text referred to here is based on the official consolidated version of the legislation.
The records of Bahrain’s Legislation and Legal Opinion Commission list four amendments to the law. The most recent amendment listed is Decree-Law No. 16 of 2021, dated 5 August 2021. The official consolidated version was reviewed when this article was updated in August 2026.
For a broader understanding of employment relationships, contracts, termination, and employee entitlements, you can also read our Bahrain Labour Law guide.
When Does a Company Need a Non-Compete Clause?
A company does not need to use the same non-compete clause in every employee’s contract. Article 73 of the Bahrain Labour Law links the restriction to the nature of the employee’s work and the extent of their access to clients or confidential business information.
For example, such a clause may be more justified for a sales manager who has access to a client database, a commercial manager who knows the company’s pricing and expansion plans, or an employee in a sensitive role who has access to important internal information.
The situation is different for an employee whose position does not give them access to clients or sensitive information.
Professional view: Companies should avoid using one standard non-compete clause in every employment contract. The restriction should reflect the employee’s actual role and the legitimate interest the company needs to protect.
Before adding such a clause, management should consider the following questions:
- Does the employee know the company’s clients because of their role?
- Can the employee access important information or business secrets?
- What type of activity would actually compete with the company?
- Where does the company actually conduct its business?
- How long does the company reasonably need protection without exceeding the legal limit?
This approach makes the clause more specific and easier to understand, instead of relying on a broad statement that prevents the employee from working across an entire sector without clear limits.
How Can a Company Draft a Clear Non-Compete Clause?
The fact that a non-compete clause is written into a contract does not automatically make it enforceable. The wording matters because the law itself places limits on the duration, geographical area, and type of restricted activity.
To reduce the risk of future disputes, the clause should clearly address the following points:
| Element | What Should Be Clarified? |
|---|---|
| Reason for the restriction | The type of information or clients the employee can access |
| Duration | A specific period not exceeding one year after the contract ends |
| Geographical area | The area where the company genuinely needs protection |
| Activity | The specific type of competing work or business activity |
| Starting date | The date on which the employment contract ends |
| Employee concerned | An employee whose role provides access to clients or business secrets |
Professional view: Broad wording such as preventing an employee from “working for any competitor anywhere” without clear limits may create a problem instead of solving one.
Confidentiality and non-compete obligations should also be treated separately. Protecting a company’s confidential information does not automatically mean that every move to another company breaches a non-compete clause. Each issue has its own legal scope and depends on the specific circumstances.
If the company is also reviewing its contracts and internal policies more broadly, it may be useful to read our article on Drafting Commercial Contracts under Bahraini Law to understand the importance of clearly defining obligations rather than relying on broad wording.
How Can HR Policies Comply with Article 73 of the Bahrain Labour Law?
Compliance should begin inside the company before any dispute arises. HR departments should therefore avoid treating Article 73 of the Bahrain Labour Law as simply another paragraph to insert into an employment contract template.
A better approach is to establish a clear policy identifying who can access client data, who has access to pricing, plans, and internal information, and how that information should be handled when an employee changes roles or leaves the company.
A company can organise this in practice through the following steps:
- Identify roles that genuinely involve access to sensitive information.
- Define access permissions for client databases.
- Avoid giving employees broader access than they need to perform their work.
- Clearly identify what information the company considers confidential.
- Review employment contracts when an employee is promoted to a more sensitive position.
- Document the return of company devices and files when employment ends.
- Review the reason for termination before relying on a non-compete clause.
The final point is particularly important. A company’s ability to rely on the clause does not depend only on the wording of the contract. It may also be affected by the way the employment relationship ended.
Can a Company Rely on the Clause After Dismissing an Employee?
The answer is not always yes. Article 73 of the Bahrain Labour Law identifies two situations in which an employer cannot rely on a non-compete agreement.
These situations are:
- The employer terminates the contract or refuses to renew it without the employee having committed anything that justifies such action.
- The employer commits an act that gives the employee a valid reason to terminate the contract.
This means that a company should review the reason the employment contract ended before sending a demand requiring the former employee to comply with a non-compete clause.
For example, it is not enough for a company to say, “The clause is in the contract.” It should first determine who ended the employment relationship, why it ended, and whether documents exist to support that reason.
For a better understanding of how the way an employment relationship ends can affect the parties’ rights, see our guide to Termination of Employment Contract in Bahrain.
How Does Article 73 Affect a Company’s Risks and Costs?
Article 73 of the Bahrain Labour Law does not create an annual financial entitlement such as annual leave, nor does it require a company to record a fixed financial provision simply because a non-compete clause exists.
However, it may indirectly affect the cost of managing legal and business risks within the company.
Professional view: These costs may arise in several areas, including:
- Reviewing employment contracts for employees in sensitive roles.
- Preparing confidentiality and information-access policies.
- Managing the departure of a key employee.
- Reviewing evidence and correspondence where competition is suspected.
- Settlement or litigation costs where the parties disagree over the validity or application of the clause.
Preventive work is usually simpler than waiting for a dispute to arise. A clear contract, properly organised access permissions, and good documentation of important information can help management assess its legal position quickly when a key employee leaves.
Quick Review for Companies
Before relying on a non-compete clause, management should review the following points:
- Does the employee’s role justify having the restriction in the first place?
- Was the employee over 18 when the agreement was made?
- Is the duration one year or less?
- Is the geographical area sufficiently defined?
- Is the competing activity clearly specified?
- Did the contract end in a way that allows the company to rely on the clause?
- Are there documents showing the type of information the employee could access?
If any of these points are unclear, it is better to review them before taking action against the employee.
What Should a Company Do When a Dispute Arises Over a Non-Compete Clause?
If a former employee moves to a competitor or starts a similar business, the company should not begin with a general accusation or an unclear demand.
Start by collecting the documents needed to understand the situation. These usually include:
- The employment contract and any amendments.
- The job description.
- The wording of the non-compete clause.
- The reason and date the employment contract ended.
- Correspondence relating to termination.
- Evidence showing the employee’s level of interaction with clients or access to sensitive information.
- Any specific conduct the company believes amounts to competition in breach of the agreement.
The scope of the clause can then be assessed against the actual facts. The disagreement may relate to the duration of the restriction, its geographical scope, the nature of the employee’s new activity, or even whether the employer has the right to rely on the clause at all.
If the dispute develops into a court claim, reviewing the general framework governing employment disputes can help clarify the next steps.
Do your company’s employment contracts contain non-compete clauses? Reviewing the clause before a dispute arises can help determine
whether its duration, geographical scope, and restricted activity comply with the law and the circumstances of the employee’s role.
Common Mistakes Companies Should Avoid
Most problems arise when a company uses a broad non-compete clause without linking it to the actual nature of the employee’s job.
Common mistakes to watch for include:
- Using the same non-compete clause in every employment contract.
- Setting a restriction that lasts more than one year after employment ends.
- Extending the restriction to geographical areas where the company does not actually operate.
- Preventing the employee from taking any job across an entire sector without identifying the competing activity.
- Failing to distinguish between confidentiality and non-compete obligations.
- Ignoring the reason why the employment contract ended.
- Relying on the clause without documenting the employee’s actual duties and access permissions.
- Taking action against the employee before reviewing the contract, supporting documents, and facts.
Professional view: The purpose of good drafting is not to make a non-compete clause longer or more restrictive. It is to make it clear and proportionate to the legitimate interest the company genuinely needs to protect.
Frequently Asked Questions
The most common questions about Article 73 of the Bahrain Labour Law
Can a Company Prevent an Employee from Working for a Competitor?
The parties may agree to a non-compete restriction if the nature of the employee’s work gives them access to the employer’s clients or business secrets, provided that the restriction remains within the limits of duration, location, and type of activity permitted by law.
What Is the Maximum Duration of a Non-Compete Clause in Bahrain?
Under Article 73 of the Bahrain Labour Law, the maximum period for a non-compete restriction is one year following the termination of the employment contract.
Can an Employee Be Prevented from Competing Across All GCC Countries?
The law does not set a fixed geographical scope. Instead, it requires the restricted area to be limited to what is necessary to protect the employer’s legitimate interests. The appropriate geographical scope therefore depends on the company’s business and the specific circumstances of the case.
Does a Non-Compete Clause Apply to Every Employee?
Not necessarily. Under the law, such an agreement is generally based on whether the nature of the employee’s role gives them access to the employer’s clients or business secrets.
Can the Company Enforce the Clause If It Was the One That Terminated the Employee’s Contract?
Not in every case. The employer may not rely on the non-compete agreement if it terminates the contract or refuses to renew it without justified grounds attributable to the employee. The employer may also be prevented from enforcing the restriction if its own conduct gives the employee lawful grounds to terminate the contract.
Is Annual Leave Covered by Article 73?
No. Annual leave is primarily governed by Article 58 and the related provisions of the Bahrain Labour Law, while Article 73 deals with agreements restricting competition after the employment contract ends.
Article 73 of the Bahrain Labour Law gives companies a way to protect their legitimate interests when an employee who knows their clients or has access to business secrets leaves. However, it does not allow an employer to prevent an employee from competing without reasonable limits.
For the company’s position to be clearer, the restriction should relate directly to the employee’s role, must not exceed one year, and should define the geographical area and type of restricted activity only to the extent necessary. The company must also review the reason the employment contract ended before relying on the clause.
From an HR perspective, a non-compete clause should ideally form part of a broader system covering employment contracts, confidentiality, information-access permissions, termination procedures, and document retention.
The Labour Law for the Private Sector, Law No. 36 of 2012, was issued on 26 July 2012 and published on 2 August 2012. It came into force one month after publication. The Legislation and Legal Opinion Commission’s database lists four amendments to the law, with the latest amendment dated 5 August 2021. The official consolidated text was reviewed when this article was updated in August 2026.
If your company would like to review a non-compete clause before signing an employment contract or before taking action involving a former employee, you can request tailored legal advice from one of the lawyers in Bahrain at our firm through the WhatsApp button at the bottom of the screen.
For related information, you can also read: Employee Rights under Bahrain Labour Law.
A Bahraini lawyer and the founder of a legal consultancy firm established in February 2019. He holds a Higher Degree in Sharia and Law from Al-Azhar University. He has extensive experience in court representation and providing legal advice in criminal, personal status, civil, and commercial matters. He is known for delivering clear, practical, and effective legal advice aimed at protecting his clients’ rights and interests, and has achieved tangible results in notable cases, including commercial litigation and inheritance matters
