The Non-Compete Clause and Confidentiality of Information in the Saudi Labor Law

Article 83 of the Saudi Labor Law deals with two clauses usually placed at the end of the employment contract and read as though they were a single clause: non-competition and confidentiality of information.

In the text they are two distinct paragraphs: each has its own ground permitting it to be stipulated, and they share the conditions of validity. A third paragraph sets the time limit for bringing a claim where the clause is breached.

1. When a non-competition clause may be stipulated

The first paragraph of Article 83 lays down that where the work entrusted to the worker allows him to know the employer’s clients, the employer may stipulate that he shall not compete with him after the contract ends.

The clause is therefore not permissible without qualification for every contract and every employee. The text ties it to a description in the nature of the work itself: that the work be of a kind that allows knowledge of the clients.

As for characterising a particular role and whether this description applies to it, that is a matter to be referred to the statutory text and the competent authority.

2. The conditions of validity of the clause

That same paragraph lays down that for this clause to be valid it is required:

• That it be in writing
• That it be specified as to time, place and type of work
• That its duration not exceed two years from the date the relationship ends

The second condition is itself threefold: specification is required as to time, place and type of work together, not as to one of them.

This threefold specification is what distinguishes a non-competition clause from a general obligation not to cause harm: the text is not satisfied by the clause being written and reasonable, but requires that it be specified in three particular dimensions.

Note that the text makes these conditions of validity, not drafting recommendations. As for the effect of one of them being absent from a particular clause, that is a matter to be referred to the statutory text and the competent authority.

The starting point for counting the two years

The ceiling in the text is two years from the date the relationship ends, not from the date the contract was signed.

The starting point here is what determines the date the clause expires. As for determining the date the relationship ends in a particular case, that is a matter to be referred to the statutory text and the competent authority.

3. The confidentiality clause: an independent paragraph

The second paragraph of Article 83 lays down that where the work enables the worker to become acquainted with the employer’s secrets, the employer may stipulate that he shall not disclose them after the contract ends.

The permitting ground here is different from the ground of the first paragraph: the first turns on knowledge of the clients, and the second turns on acquaintance with the secrets. They may come together in a single role, but in the text they are independent.

The conditions of validity of the confidentiality clause are the same: that it be in writing, and specified as to time, place and type of work.

The question of a time ceiling on the confidentiality clause

The express ceiling of two years appears in the paragraph concerning non-competition. As to whether the same ruling extends to the confidentiality clause, that is a question this guide has not established in the text of the Article, so it is not sound to assert that it extends or that it does not, and reference on that is to the statutory text and the competent authority.

This is a point worth flagging because it is settled in many templates in one direction or the other without any apparent basis.

4. The claim period: one year from discovery

The third paragraph of Article 83 lays down that the employer may bring the claim within one year from the date he discovered the breach.

The starting point here is the date of discovery, not the date the breach occurred and not the date the relationship ended. The difference between the two starting points is practical: a breach may occur and not be discovered until some time later, and the period in the text is tied to discovery.

It follows that the date of discovery is a fact worth adding to the record, just like the date the relationship ended.

5. The two starting points in Article 83

Article 83 contains two express starting points, each of them for a different ruling:

• The date the relationship ends: from it the two years of the non-competition clause are counted.
• The date the breach is discovered: from it the one-year period for bringing the claim is counted.

They are two different dates and neither dispenses with the other. Hence they are two facts worth adding to the record.

An example of the two starting points

Assumed inputs (the example’s own dates, not a statutory rule): the relationship ended in January 2025, and the contract included a non-competition clause of two years satisfying its conditions of validity. An alleged breach occurred in June 2025, but the establishment did not learn of it until March 2026.

What the text says: the duration of the clause does not exceed two years from the end of the relationship, and the period for bringing the claim is one year from the date the breach is discovered.

Applying it: the duration of the clause ends two years after January 2025. The alleged incident in June 2025 falls within that duration. As for the claim period, it is not counted from June 2025, the date of occurrence, but from March 2026, the date of discovery.

The two dates therefore operate in different directions: the first determines whether the incident falls within the scope of the clause, and the second determines when the claim period begins. Confusing them leads to two opposite wrong results: either treating the period as having lapsed when it has not begun, or treating the clause as applying to an incident outside its duration.

As for characterising a particular incident and determining the date it was discovered, that is a matter to be referred to the statutory text and the competent authority.

6. Confidentiality in Article 65 and in Article 83: two texts, not one

The worker’s obligation to keep secrets does not begin with the confidentiality clause in the contract. The sixth item of Article 65 requires the worker to keep the technical, commercial and industrial secrets of the materials he produces or contributes to producing, and all the professional secrets relating to the work or the establishment.

That is an obligation laid down in the Law within the worker’s obligations. The second paragraph of Article 83, by contrast, deals with stipulating on the worker that he shall not disclose after the contract ends.

The two texts therefore differ in their location and in what they address, and reading one in place of the other leads to two opposite errors: either supposing that there is no confidentiality obligation where the contract contains no clause, or supposing that the Article 83 clause is redundant and without effect.

As for the precise relationship between the two texts and the scope of each of them in a particular case, that is a matter to be referred to the statutory text and the competent authority.

7. What the text does not address

• Whether the two-year ceiling extends to the confidentiality clause. Reference on that is to the statutory text and the competent authority.
• The effect of one of the conditions of validity being absent from the clause. The particular case is to be referred to the statutory text and the competent authority.
• What counts as competition within the meaning of the first paragraph, and what counts as a secret within the meaning of the second. The particular case is to be referred to the statutory text and the competent authority.
• The amount of compensation where the clause is breached. No figure may be stated, and reference on that is to the statutory text and the competent authority.

8. What your system should record

• Which contracts include a non-competition clause and which include a confidentiality clause, because they are two clauses and not one.
• The scope of each clause: its duration, its place and the type of work prohibited, because the threefold specification is a condition of validity.
• The date the relationship ended for each employee, because it is the starting point for counting the two years.
• The date the clause ceases to apply, calculated, not its duration alone.
• A signed copy of the contract containing the clause, because writing is a condition of validity.
• The date any breach was discovered and what establishes it, because it is the starting point for counting the claim period.

9. A checklist for the non-competition clause

• Is the nature of the work such that it allows knowledge of the clients, which is the ground of the first paragraph?
• Is the clause written in the contract?
• Is it specified as to time, place and type of work, not merely one of them?
• Is the duration not exceeding two years, counted from the end of the relationship?
• If the contract contains a confidentiality clause: was it written as an independent clause with its own permitting ground?
• Does the person responsible know that the claim period is one year from discovery and not from occurrence?

10. Why this turns into a problem

The non-competition clause is among the clauses that tend towards general drafting: a single sentence prohibiting competition and disclosure of secrets together, with no specification of place or type of work, and with a duration sometimes stated and sometimes omitted. This wording goes years without being tested, because it is read only when a dispute arises.

When it is read, the questions are all about facts and dates: where is the signed copy of the contract? When exactly did the relationship end? When did the duration of the clause end on that basis? And when was the breach discovered? These are questions the text of the clause does not answer; the establishment’s record does.

This is where it pays to have an employee’s facts in a single file. That is what Qoyod HR provides: a single employee file holding the contract, the documents and their expiry dates with an alert before them, an attendance record for each employee, and their leave, salary and end-of-service entitlements. End-of-service, overtime and leave-balance calculations are built into the system. It is a standalone HR system with its own subscription, and the link with Qoyod accounting is available now.

For the worker’s six obligations in Article 65 with their constraints, see the obligations of both parties in the employment contract.

For more guides and templates, browse the HR Resource Centre.

Frequently asked questions

When may a non-competition clause be stipulated on an employee?

The first paragraph of Article 83 lays down that where the work entrusted to the worker allows him to know the employer’s clients, the employer may stipulate that he shall not compete with him after the contract ends. Permissibility is therefore tied to this description in the nature of the work.

What are the conditions of validity of a non-competition clause?

For it to be valid it is required that it be in writing, that it be specified as to time, place and type of work, and that its duration not exceed two years from the date the relationship ends.

What is the maximum duration of a non-competition clause?

Two years, counted from the date the relationship ends and not from the date the contract was signed.

Is the confidentiality clause the same as the non-competition clause?

No. They are two independent paragraphs in Article 83, and each has its own permitting ground: the first turns on knowledge of the employer’s clients, and the second turns on acquaintance with his secrets. The conditions of validity are shared: writing, and specification as to time, place and type of work.

Does the two-year ceiling apply to the confidentiality clause?

The express ceiling of two years appears in the paragraph concerning non-competition. As for its extension to the confidentiality clause, that is a question this guide has not established, so it is not sound to assert that it extends or that it does not, and reference on that is to the statutory text and the competent authority.

What period is available for bringing a claim for breach of the clause?

The third paragraph of Article 83 lays down that the employer may bring the claim within one year from the date he discovered the breach. The starting point is the date of discovery, not the date the breach occurred.

Statutory references

This guide is based on the Saudi Labor Law: Article 83 (the non-competition clause, the non-disclosure clause and the claim period), and Article 65 (the worker’s obligations, among them keeping secrets).

As to the effect of the amendments made by Royal Decree M/44 of 1446 AH, in force since 19 February 2025: for Articles 83 and 65 this guide has not established an explicit amendment, so it is not sound to assert that they were amended or were not, and reference on that point is to the updated statutory text.

This guide is a regulatory explanation, not legal advice. In an existing dispute or a particular case, the statutory text and the competent authority remain the reference.