Wednesday, 17 July 2024

Dubai: Can full-time workers invest and operate in business?

  • In the UAE, an employee can establish a company or become a shareholder or partner in an existing one, provided an employer issues a no-objection certificate (NOC).
  • Section 10(1) of the Employment Act deals with a non-compete clause in employment contract.
  • A non-competition clause does not apply to an employee if they agree in writing with an employee that the non-competition clause in an employment contract does not apply to termination of the employment contract.

An employee may become a partner or partner in a new or existing company that is not a competitor of his current employer.

 If the activities of an employee’s proposed company are similar to those carried out by the existing employer when he is a shareholder or shareholder, an employer may consider his employee’s proposed company where he will hold shares or be a shareholder. As a competitor to an employer’s company.

Article (10) of the Employment Law

Article 10(1) of the Employment law states related to a non-opposition clause in an employment settlement. It is examined as, “in which the worker performs a work which offers him get proper of entry to corporation’s clients or enterprise secrets and techniques and strategies, the company may additionally make a provision within the employment settlement that the employee shall now not compete with or be engaged in any business corporation which competes with him in the same location after the expiry of the settlement. Such clause specifies the region, time, and sort of work to the volume necessary to protect valid enterprise hobbies, and the non-competition length ought to not exceed two years after the settlement expires.”

However, a non-competition clause does not apply to an employee if the employer agrees in writing that the non-competition clause in the employment contract does not apply to the termination of the employment contract. This is the 2022 Cabinet Resolution No. 1 is by Article 12 (4), which states that “after the termination of the employment contract it may be agreed in writing not to apply the non-competition clause.”

Also, the Cabinet Resolution of 2022 No. 1 may be exempted from non-competition clauses as mentioned in section 12 (5), which states, “An employee shall be exempted from the non-competition clause provided in section (10). Employment Act under the following conditions:

  1. If the worker or the new organization pays reimbursement now not exceeding three months of the worker’s salary agreed upon in the ultimate contract to the previous organization, and the former employer’s written agreement for that is required.
  2. If the agreement is terminated for the duration of the probationary period.
  3. Any professional categories according to the needs of the employment market in the UAE are determined by the Ministry’s decision under the employment classification approved by the Cabinet.

Primarily based on the aforementioned provisions of regulation you need to obtain a NOC out of your modern organization earlier than you invest in a new entity or a present entity.

If you intend to manage an investment company, you may consider resigning from your current job by giving a stipulated notice period.

Thereafter, once your notice period is over and your work permit/UAE residency visa is canceled, you can invest in a company in the UAE and manage its day-to-day operations. This is to avoid any legal ramifications you may have with your current employer.

Additionally, managing the day-to-day operations of your proposed new company or an existing company can be considered employment. Therefore, you may not be employed in another company when you are already employed with your current employer without the written consent of the current employer and MOHRE. This is according to Section 16(9) of the Employment Act, which states that “an employee shall not work for others in contravention of the provisions of this Ordinance and other relevant laws in force”.

However, it is at the discretion of your current employer to grant you NOC to establish a company in the Emirate of Dubai or as a partner or shareholder.

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