Can employees start their own business while employed?
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A reader is curious about the steps necessary to establish a new business while still working for an employer.
Ask: I work for a company in Dubai that operates on the mainland. I want to start my own textile business, which is unrelated to my current job as an accountant. Would this violate any labor laws and what steps should I take?
Answer: Based on your situation, it is assumed that you are considering setting up your own mainland business in Dubai while still working for your employer. It is also assumed that the business of his employer is different from his planned textile company. Since you work for a mainland company in Dubai, the laws governing labor relations apply to you, specifically Federal Decree Law No. 33 of 2021 on the Regulation of Labor Relations and Cabinet Resolution No. 1 of 2022 on its Implementation .
In the UAE, an employee can create a new business entity if his or her employer grants him a No Objection Certificate (NOC). Generally, Dubai economy and tourism require this certificate. However, if the new business could compete with the employer’s business, the employer may not give you the NOC.
Article 10(1) of the Employment Law states related to a non-compete clause in an employment contract. It reads like,
“When the employee performs work that gives him access to the employer’s clients or trade secrets, the employer may establish in the employment contract that the employee will not compete or engage in any company that competes with him in the same sector after “The expiration of the contract. Such clause shall specify the place, time and type of work to the extent necessary to protect legitimate business interests, and the non-compete period shall not exceed two years after the expiration of the contract.”
However, a non-compete clause may not apply to an employee if he or she agrees in writing with an employer that the non-compete clause in an employment contract does not apply to the termination of an employment contract. This is in accordance with Article 12 (4) of Cabinet Resolution No. 1 of 2022What states,
“The non-application of the non-competition clause may be agreed in writing after the termination of the employment contract.”
In addition, non-compete provisions may be exempt as mentioned in the Article 12 (5) of Cabinet Resolution No. 1 of 2022 What states,
“An employee will be exempt from the non-compete clause provided for in article (10) of the Employment Law under the following conditions:
to. If the employee or the new employer pays compensation not exceeding three months of the employee’s salary agreed in the last contract to the previous employer, and the written consent of the previous employer is required for this.
b. If the contract is terminated during the trial period.
C. Any professional category in accordance with the needs of the labor market in the UAE, as determined by the decision of the Ministry under the job classification approved by the Cabinet.”
Based on the above legal provisions, as you intend to form your own entity while you are employed, you can ask your employer to provide you with an NOC stating that your employer has no objection to you being a shareholder, partner or sole owner. from an entity in Dubai. However, it is at the discretion of your employer to grant you such NOC.
Alternatively, you may consider resigning from your current employer by serving the stipulated notice period as mentioned in your employment contract. Subsequently, after the cancellation of your work permit and your residence in the UAE, you can begin the procedures to establish your own entity in Dubai.
News Source: Khaleej Times
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