Can UAE Employees Start Their Own Business?

Starting a Business While Employed Full Time in the UAE

Many working in the United Arab Emirates eventually consider starting their own business—either as a supplementary income or for future independence. But what does the law say about a full-time employee starting their own business in the UAE? What are the limitations, and what rules must be followed?

Can I have my own business as an employee?

UAE laws allow a full-time employee to start a new company or join an existing business as a partner. However, the first and most crucial step is for the current employer to issue a No Objection Certificate (NOC), officially permitting the employee to start a business or join one.

This means that as long as someone is working for another employer, they can only start a business with the employer’s written consent, regardless of whether the new activity is related to their current job.

What happens if the new business has a similar profile?

If the new company’s activity matches or resembles the employee’s current job—such as a human resources staff member founding an HR consultancy firm—it could be considered a competitor to the current employer. In such cases, it is crucial to check whether the employment contract contains a non-compete clause.

According to Article 10 of the Federal Decree-Law No. 33 of 2021, the employer may require the employee not to compete in the same sector during or up to two years after employment. The non-compete clause is only valid if the duration, geographical scope, and prohibited activities are precisely defined in the employment contract.

When is the non-compete clause not valid?

The employee can agree in writing with the employer that the non-compete clause does not apply after employment ends. This is allowed by Article 12, Section 4 of the Cabinet Resolution No. 1 of 2022, which states, "It is permissible to agree in writing that the non-compete clause does not take effect post-employment."

Exceptional cases where the non-compete clause does not apply

The law recognizes three cases in which the non-compete clause automatically becomes null:

1. If the employee or the new employer pays compensation to the former employer, up to three months' salary, requiring the former employer’s written consent.

2. If the employment contract is terminated during the probation period.

3. If the employee belongs to a special field that the UAE labor market critically needs—this is determined by the competent ministry based on a cabinet-approved classification.

Further steps and advice

If someone is considering starting a business as an employee, it’s worthwhile first to thoroughly review their employment contract, particularly the non-compete clauses. Subsequently, they should contact their employer regarding the NOC and seek legal advice if necessary. The Ministry of Human Resources and Emiratisation (MoHRE) can also assist in clarifying legal interpretations and options.

Summary

Legally, it is possible to start a business as a full-time employee in the UAE, but only with employer approval, and in some cases, non-compete regulations must also be considered. Having the right documents and complying with the requirements is essential to avoid legal issues now and in the future.

(Based on source Article 10(1) of the Federal Decree-Law No. 33 of 2021.)