Can UAE Employees Start A Business While Keeping Their Jobs? What The Law Says

(MENAFN- Khaleej Times) Question: I work for a mainland company in Dubai. If I want to start my own business while continuing in my current role, what rules must I follow? I'm particularly concerned about conflict‐of‐interest risks from a legal standpoint.

Answer: Pursuant to your queries, it is assumed that you are employed by a Dubai mainland company, which means the provisions of the UAE employment law and the subsequent cabinet resolution are applicable.

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An employee may establish a new entity or become a partner or shareholder in an existing entity in the UAE, provided that the employer issues a No Objection Certificate (NOC) permitting the employee to do so.

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Further, if the business you intend to start and if the nature of work in your current role with your current employer is similar, then the business you intend to start shall be in competition with the business of your employer. This may restrict you from being in business activity which is similar to your employer if your signed employment contract includes the non-competition clause.

This is in accordance with Article 10(1) of the Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations (the 'Employment Law') , which states, "Where the employee performs a work which gives him access to employer's customers or business secrets, the Employer may make a provision in the employment contract that the employee shall not compete with or be engaged in any business which competes with him in the same sector after the expiry of the contract. Such clause shall specify the place, time, and type of work to the extent necessary to protect the legitimate business interests, and the non-competition period shall not exceed (2) two years after the expiration of the contract .”

However, the non-competition clause in your employment may not be applicable once you leave the employment, provided you and your employer has agreed in writing that non-competition between you and your employer does not apply upon the end of your current employment contract. This is in accordance with Article 12 (4) of the Cabinet Resolution No. 1 of 2022 Concerning the Executive Regulations of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations (the 'Cabinet Resolution No. 1 of 2022 on Employment Relations') , which states, “It shall be permissible to agree in writing on the non-performance of the non-competition clause after the end of the employment contract.”

Further, the provisions of non-competition may be exempted as mentioned in Article 12 (5) of the Cabinet Resolution No. 1 of 2022 on Employment Relations , which states, “A employee shall be exempted from the non-compete clause provided for in Article (10) of the Employment Law under the following conditions:

a. If the employee or the new employer pays compensation not exceeding (3) three months of the employee's wage agreed upon in the last contract to the former employer, and the former employer's written consent thereto is required.

b. If the contract is terminated during the probationary period.

c. Any professional categories according to the needs of the employment market in the UAE, as determined by decision of the Ministry under the employment classification approved by the Cabinet.”

You may obtain further advice from a legal counsel in the UAE.

Applicable law:

Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations

Cabinet Resolution No. 1 of 2022 Concerning the Executive Regulations of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: Readers may e-mail their questions to:... or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.

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