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You Can Start a Business in UAE While Employed, but Avoid Conflict of Interest

Obtaining an NOC from employer might be necessary, but the decision to grant it rests with your employer

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Pavitra Shetty

Published on April 24, 2024, 09:17:31

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start a business in uae, full time employees, business in uae, noc from employer

Is it possible for employees to start their own business while still being employed?

Yes, you can start a business in the UAE while working full-time; however, it's important to ensure that your business activities do not conflict with your employer's.

Obtaining a No Objection Certificate (NOC) from your employer might be necessary, but the decision to grant it rests with your employer.

Whether you need an NOC depends on the licensing agency and its specific requirements. If your business activities overlap with those of your employer, they may include a non-compete clause in your employment contract, prohibiting you from starting a similar business without their permission.

There are various factors to consider regarding whether your employer can prevent you from starting a business. If you choose to establish your venture in certain free zones where an NOC is not required, you won't need your employer's permission.

However, they may decline your request due to concerns about competition, protecting trade secrets, or compliance with regulations.

Thanks to changes in UAE law, many free zones no longer require employed individuals to obtain permission from their current employer. When you approach a free zone to obtain a licence, they will inform you whether you need an NOC from your current employer.

The regulations outlined in Federal Decree-Law No. 33 of 2021 on the Regulation of Employment Relations, along with those in Cabinet Resolution No. 1 of 2022 concerning the Executive Regulations of Federal Decree-Law No. 33 of 2021, apply in this context.

If an employee wishes to establish or join an entity in the UAE, whether as a partner or shareholder, they must obtain an NOC from their employer.

This requirement ensures compliance with employment regulations and should be fulfilled before commencing any business activities.

Furthermore, if the employee's proposed business activities overlap with their current role, their employer may perceive it as competition.

In such cases, the employment contract may include a non-competition clause, as stipulated in Article 10(1) of the Employment Law.

This clause outlines restrictions on the employee's ability to engage in similar business activities after their employment contract expires, typically for a period of up to two years.

However, the applicability of the non-competition clause can be waived if both parties agree in writing or under specific circumstances outlined in Article 12(4) of Cabinet Resolution No. 1 of 2022.

Moreover, Article 12(5) of the same resolution provides exemptions from the non-compete clause under certain conditions.

These include scenarios where compensation is provided to the former employer, termination occurs during the probationary period, or specific professional categories are determined by the ministry to be exempt from such restrictions.

Under Article 10 of the new UAE Labour Law, if your job gives you access to your employer's clients or trade secrets, they can include a non-compete clause in your contract.

This clause specifies the duration, location, and type of work you're restricted from engaging in after your contract ends, typically for up to two years.

The UAE has enacted new legislation concerning part-time and flexible work arrangements. Part-time employees now have explicit rights, including pro-rated vacation leave.

The legislation also recognises the possibility of remote work or starting a business with the employer's approval.

Additionally, under the new laws, resigning employees are entitled to a full end-of-service gratuity after completing at least one year of service.

Previously, this benefit was only available after five years of service. When you leave your job, your previous employer cannot prevent you from pursuing your business interests.

However, it's crucial to consider the potential impact on your current visa status before taking any action.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

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