Dubai: Can employees start their own business while employed? Law explained – News
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Ask: I work in a continental company in Dubai. I’m thinking about starting a business that has nothing to do with my job. I am an accountant and the business I am considering is related to textiles. Will I be breaking any labor laws if I do this? What is the procedure I should follow?
Answer: As per your queries, it is assumed that you intend to incorporate your own mainland entity in Dubai while working with your employer. It is also assumed that the activity of your current employer is not the same as the activity of your proposed entity (textile industry). As an employee of a mainland company in the emirate of Dubai, the provisions of Federal Decree Law No. 33 of 2021 on the Regulation of Labor Relations and Cabinet Resolution No. 1 of 2022 on the Implementation of Federal Decree Law No. apply. ° 33 of 2021 Regarding the Labor Relations Regulations, they are applicable.
In the UAE, an employee can incorporate an entity, provided that the employee’s employer issues a NOC (No Objection Certificate/Letter). Normally, Dubai Economy and Tourism requires an NOC.
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Additionally, an employer may refuse to provide NOC (no objection certificate/letter) to an employee if he or she intends to be a shareholder, partner or sole proprietor of a proposed new entity in Dubai if such new entity of an employee is a competitor.
Article 10, section 1, of the Labor Law establishes matters relating to a non-compete clause in an employment contract. It read as follows: “When the employee performs work that gives him access to the employer’s clients or trade secrets, the employer may stipulate in the employment contract that the employee will not compete or engage in any business 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. 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 2022, which states: “It may be agreed in writing not to apply the non-competition clause after the termination of the employment contract.”
Additionally, non-compete provisions may be exempt as mentioned in Article 12(5) of Cabinet Resolution No. 1 of 2022 which states: “An employee shall be exempt from the non-compete clause provided for in Article (10). ) of the Labor 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.
Ashish Mehta is the Founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practice law in Dubai, the United Kingdom and India. Full details of his firm at: www.amalawyers.com. Readers can email their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.
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