Alsuwaidi & Company

Is it legal to start a business while working in the UAE?

REDA HEGAZY’s recent contribution to the Gulf News focuses on what does the UAE Labor Law say about employees starting a business on the side? Find out

AS PUBLISHED IN GULF NEW     

Dubai: If you are a full-time employee in the UAE and have business aspirations, you may be wondering about the legality of creating your own company and whether it is considered a breach of the employment contract.

Gulf News spoke with legal experts in the UAE to find out what an employee should keep in mind when starting his or her own business venture. Here is all you need to know.

Can I start a business while working full time?

Firstly, yes, you can start a business in the UAE even if you are a full-time employee at a company. However, you would need to ensure that the business activity of your venture is not the same as your employer. Business activity refers to the field in which a business operates.

“You can open a business in the UAE while being fully employed provided that your business activity is not the same as the business activity of the current employer and you may be required to obtain a No Objection Certificate (NOC) from the employer. Also, it is discretionary upon the employer to accept or reject the request for NOC,” Reda Hegazy, a Senior Associate and Arbitrator from Alsuwaidi and Company LLC, said.

“You can open a business in the UAE while being fully employed provided that your business activity is not the same as the business activity of the current employer and you may be required to obtain a No Objection Certificate (NOC) from the employer. Also, it is discretionary upon the employer to accept or reject the request for NOC.”

 

But do you always need an NOC before you start your own business?

According to Hegazy, you may or may not need one as each licensing agency (mainland, different free zones) has its own requirements.

“Additionally, in case the employee has a similar business activity with that of the employer, the employer may include a non-compete clause in the employment contract. With a non-compete clause in the contract, the employee cannot open a business activity which is the same as the employer, unless the employer issues the NOC,” Hegazy said.

Clarifying further on the non-compete clause, Hegazy said: “It is mentioned under Article 10 paragraph (1) of the Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations [the new UAE Labor Law] that where the employee’s work allows him to have access to the employer’s clients or trade secrets, the employer may include a non-compete clause and stipulate in the contract that the employee shall abstain from engaging or joining in any business which competes with his business sector after the expiry of the contract.

“The clause shall be specific in terms of the time, place and type of work to the extent necessary to protect the lawful interests of the employer. The terms of such clause may not exceed two years from the expiry date of the contract.”

To speak with the author, please contact Reda Hegazy on reda.hegazy@alsuwaidi.ae