How a salaried employee in the UAE can open their own business
Many expatriates employed in the UAE consider starting their own business, attracted by the country's comfortable business environment and favourable tax system. UAE legislation allows employed individuals to start their own business without resigning from their current company. We have developed a step-by-step guide on how to do this and what to pay attention to.
Steps to creating your own business as an employed individual in the UAE
The first step an employed professional must take to open their own business is to obtain approval from their employer and receive a No Objection Certificate (NOC).
Only after obtaining the NOC, can you proceed with establishing your own company.
Obtaining a No Objection Certificate from your employer
Issues regarding employees starting their own businesses in the UAE are regulated by both Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations (Labour Law) and Cabinet Resolution No. 1 of 2022.
An employed individual can start their own company provided that their employer issues a No Objection Certificate. This usually requires involving the HR department of the organisation.
Sometimes, employers have legitimate reasons to oppose their employee starting a business, especially if it is in a similar field, thus potentially creating more competition. According to Article No. 10 of the Labour Law, if an employee has access to the company’s client base or commercial secrets, the employer can include a non-compete clause in the employment contract prohibiting that employee from entering into a competing business for up to two years after the contract is terminated.
If you sign a contract with a non-compete clause and then open a business in the same field anyway, your employer has the right to take legal action against you.
The non-compete clause specified in the employment contract can be nullified upon signing an agreement with the employer. Furthermore, according to Article 12 of the Cabinet Resolution, this clause does not apply under the following conditions:
- If the (former) employee pays the company compensation (not exceeding three months' salary) and obtains written consent from them;
- If the employment contract is terminated during the trial period;
- If the employee’s profession meets employment market needs in the UAE, as determined by the Ministry of Human Resources and Emiratisation.
Establishing a company
After receiving the NOC, you can proceed to start your own business. Firstly, you need to choose the jurisdiction of your company — this could be the mainland, a free zone or offshore. Then, you must decide on the legal form of the organisation, select and register the name of the organisation, obtain the necessary licence, open a bank account and, if necessary, hire staff.
Conclusion
In the UAE, you have the right to be employed by a company while also running your own business. In order to start your own company, the first thing you must do is obtain a No Objection Certificate from your employer.
Experts at METROPOLITAN CONSULTING will assist you throughout the entire process of opening your own business. We will help ensure that everything is done legally, based on the rules and regulations set forth by the government so that you face no issues with either your employer or the authorities. We will provide expert advice on how to choose the best jurisdiction and legal form for your company, obtain the necessary licences and prepare all the required documents.