UAE labor law: can I start a business while employed full time? – News

An employee can create an entity or be a partner or shareholder in an existing entity, provided the employer issues a certificate of no objection.



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Published: Sun 27 March 2022, 11:46

Last update: Sun 27 Mar 2022, 10:34 PM

Question: I work in a private company in the United Arab Emirates. Will it be a legal issue if the business I’m starting and my current job are of the same nature? I work in the HR department of my company and the company I plan to start is an HR consulting company.

Answer: In accordance with your questions, the provisions of Federal Executive Order No. 33 of 2021 on the Regulation of Labor Relations (the “Employment Law”) and those of Cabinet Resolution No. 1 of 2022 regarding the Implementing Regulations of Federal Decree-Law No. 33 of 2021 on the Regulation of Labor Relations (the “Cabinet Resolution No. 1 of 2022 on Labor Relations”) are applicable.

An employee can set up an entity or be a partner or shareholder of an existing entity in the UAE, provided the employer issues a No Objection Certificate (NOC). Therefore, you should obtain an NOC from your employer before starting your business.

Additionally, if your entity’s activities are similar to your current role, then your employer may consider it a competitor of your employer, if your employment contract includes the non-competition clause.

This is in line with Section 10(1) of the Employment Act, which states: “Where an employee performs work which gives him access to customers or business secrets of the employer, the employer may include in the contract of employment a provision that the employee not compete with or be engaged in a company that competes with him in the same sector after the expiration of the contract. This clause must specify the place, time and the type of work to the extent necessary to protect legitimate business interests, and the non-competition period may not exceed (2) two years after the expiration of the contract.

However, the non-competition clause may not apply if you and your employer have agreed in writing that it does not apply to the termination of your current employment contract. This is in line with Section 12(4) of Cabinet Resolution No 1 of 2022.

In addition, non-competition provisions may be exempted as mentioned in Section 12(5) of Cabinet Resolution No 1 of 2022 on Labor Relations, which states: “An employee shall be exempt from the non-competition provided for in Article (10) of the Employment Act under the following conditions:

a. If the employee or the new employer pays the former employer compensation not exceeding three (3) months of the employee’s salary agreed in the last contract, and the written agreement of the former employer is required .

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

vs. All occupational categories based on the needs of the employment market in the United Arab Emirates, as determined by decision of the Ministry under the classification of jobs approved by the Cabinet. »

Ashish Mehta is the founder and managing partner of Ashish Mehta & Associates. He is qualified to practice law in Dubai, UK and India. All the contact details of his office on: www.amalawyers.com. Readers can email their questions to: [email protected] or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

About Tammy N. McFarlane

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