A great number of professionals working full time in the UAE consider starting their secondary businesses. However, is this permissible by the UAE laws? How can the legal aspect affect your intended business in case it infringes on your current job? This is what the law implies, particularly, to the people employed in niche areas like HR, finance, or IT.
Is It Legal to Start a Business While Employed Full-Time in the UAE?
Indeed, the law in UAE does not prohibit a full-time employee to start his/her business or become a partner/shareholder in some existing company, although he/she does have to have a No Objection Certificate (NOC) with the current employer.
Key Point: The NOC can be used as official acknowledgment that your employer does not mind that you have a business activity, and you are still an employee of this firm.
What If My Business Is Similar to My Current Job?
When the proposed business is related directly to your line of employment such as in the case that you are in the HR, and propose to open a business as HR consultancy, then you might be in violation of the non-compete clauses within the employee contract.
What Is a Non-Competition Clause?
As stated in Article 10(1) of the Federal Decree Law No. 33 of 2021, an employer may add an element that prohibits employees to be involved in enemy or launching a business having some similarities with it. In this provision, it should determine:
- Geographical scope
- Period (not longer than 2 years at maximum after the end of the contract)
- Work in nature
This provision applies most particularly when your occupation is:
- Availability of secret corporate data
- Availability of clients
- Strategy planning or day to day decision making
Can Non-Compete Clauses Be Waived?
Yes. In accordance with Article No12(4) of Cabinet resolution No. 1 of 2022, you and your employer are getting a chance to waive non-compete part in a written agreement upon the termination of your contract.
- You might also not be subject to the clause provided:
- You and or your new employer pays up to three months pay to your previous employer as compensation – with written consent.
- You have been dismissed in the probation.
You are categorized into a certain number of professional classes that the Ministry of Human Resources and Emiratisation (MOHRE) absolves because of the requirements of the market.
Summary: What You Must Do
- In case you are a full-time worker and would like to open your own business in UAE:
- Get written NOC with a current employer.
- Look through your work contract to ensure there are non-compete specifications.
- In case your business interests intersect with what you are doing in the same job, seek legal advice.
- Refer to MOHRE, when necessary.
You should remember that being open to your employer and adhering to labor laws is the best way to evade legal difficulties.
