Emirates: Question: I work in a private firm in the UAE. What does the law say about starting a business while being employed full-time? Will it be a legal problem if the business I started and my current job are similar? I work in the HR department in my firm, and the company I plan to start is an HR consultancy.

Answer: An employee may establish a new entity or become a partner or shareholder in an existing entity in the UAE, provided that the employer issues a No Objection Certificate (NOC) permitting the employee to do so. Accordingly, if you intend to establish a new human resource consultancy firm while still being employed with your current employer, it is advisable first to obtain an NOC from your current employer.

Furthermore, if you establish a human resource consultancy and the nature of the work is similar to your role in your current employment, then this may be considered as joining a competitor of your employer only if your signed employment contract includes a non-competition clause. This is by Article 10(1) of the Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations, which states, “Where the employee performs a work which gives him access to employer's customers or business secrets, the employer may make a provision in the employment contract that the employee shall not compete with or be engaged in any business which competes with him in the same sector after the expiry of the contract.

Such a clause shall specify the place, time, and type of work to the extent necessary to protect the legitimate business interests, and the non-competition period shall not exceed two (2) years after the expiration of the contract."

However, the non-competition clause in your employment may not be applicable once you leave the employment, provided you and your employer have agreed in writing that non-competition between you and your employer does not apply upon the end of your current employment contract. This is under Article 12 (4) of the Cabinet Resolution No. 1 of 2022 Concerning the Executive Regulations of Federal Decree Law No. 33 of 2021 on the Regulation of Employment Relations, which states, “It shall be permissible to agree in writing on the non-performance of the non-competition clause after the end of the employment contract."

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

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

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