Can You Start a Business While Being Employed in Dubai?

If you are a struggler, you must know that a side hustle is all you need in this era. Whether it’s to secure your career, build a future empire or meet side expenses, the idea of doing business while employed is worth considering. 

The UAE offers a flexible approach with major changes in UAE labour law. 

So, it’s a YES. You can start a business while employed in Dubai. Still, you must fulfil certain rules and regulations, such as the NOC (no objection certificate). However, for many free zones, getting permission from the employer is not mandatory. 

Is it Legal to Start a Business While Being Employed in Dubai?

YES, starting a business while working full-time or part-time in Dubai is legal and fully permitted. You need to consider a few points before digging into it. 

1. In most cases, a no objection certificate, also known as NOC, is needed from the current employer. This document states they have no objection to you owning a separate business. However, the employer has discretion to grant or deny the NOC.
2. Ideally, the activity of your new business setup in Dubai shouldn’t compete with your employer’s field. Some employment contracts may have non-compete clauses restricting this further.
3. Setting up your business in a free zone may exempt you from the NOC requirement. However, individual free zones have rules, so check with them first.

What Do You Need to Start a Business While Being Employed in Dubai?

UAE Labor Laws:

First, if you are willing to start a business in Dubai while employed, you must know that UAE labour law allows a private company employee to start a business while working. 

You need an NOC to operate your business legally. However, it’s not mandatory because certain free zones, like the Meydan free zone, allow employees to start a business without any NOC from the employer. On the contrary, if you are willing for a business setup in Dubai mainland, you must need your employer’s NOC before starting a business. 

So, let’s dive deeper and discover the legal importance and how to obtain a No Objection Certificate in Dubai. 

Obtain NOC:

A No Objection Certificate (NOC) is a legal document issued by your employer in Dubai stating they have no objection to you doing business with your current employment. It is the most critical requirement to fulfil if you are willing to start a business while employed in Dubai. 

Obtaining NOC is also essential for several situations, including:

• If you ever wish to switch to a new employer in Dubai, you’ll likely need an NOC to avoid facing a labour ban.
• Starting a business while employed is legal, and a NOC is usually required in Dubai’s mainland.
• On the other hand, NOCs may be necessary for actions like cancelling your work visa or obtaining a bank account.

Here’s a step-by-step process to obtain an NOC in Dubai:

• Different NOCs exist for various situations (employment, business, etc.). Determine the specific type you need based on your purpose.
• Now, gather the necessary documents. This will vary depending on the NOC type, but common requirements include your passport copy, visa copy, employment contract, and a written request explaining why you need the NOC.
• For an employment NOC, submit the application and documents to your employer’s HR department. They will handle the processing with the Ministry of Human Resources and Emiratization (MOHRE).
• There might be associated fees for processing the NOC application. Confirm any fees with your HR department, but generally, it will be around AED 500.
• Processing times can vary. Once approved, collect the NOC from your employer. It should be issued in both Arabic and English.

Documents for NOC:

You need the required documents to get a no-objection certificate in Dubai. 

1. A clear photocopy of the biographical information page of your passport. If you have partners in your business, you must also provide all members with a copy of their passports.
2. A photocopy of both sides of your Emirates ID card.
3. A copy of your current employment contract with your employer.
4. A formal written request addressed to your employer explaining why you need the NOC.
5. You must also provide a guarantee worth AED 5000 as bank or cash in hand. 
6. A copy of your reserved company name is also essential to provide. 
7. You must also provide a Memorandum of Associate (MOA) or Articles of Association (AOA) of your new company.
8. Depending on the specific situation, your employer might request additional documents such as proof of no outstanding dues, a completed NOC application form (provided by them), or a letter of recommendation.

Take Action:

Once you understand the UAE labour laws and have obtained the NOC, you will have the time to take action and start your business anywhere in the UAE.

What to Do if NOC is Rejected?

Think of it as you have applied for the No Objection Certificate in UAE, but it gets rejected for many reasons, such as the company denying the permit. Then what will you do next?

Don’t worry; here are a few steps you can also take if your NOC gets rejected as an employee. 

• The first alternative you have is to choose an appropriate free zone, as certain FZs in Dubai don’t require NOC from an employee to operate a business.
• You can also appoint your spouse or any trusted relative as a managing director of your new company and can operate a business under your control freely.
• Fortunately, you can apply for the DED instant license, which doesn’t require physical documentation. 

It is always best to consult a professional before making any decision. You may also get a free consultation from expert business setup consultants in Dubai, such as the Ignite Zone. 

Precautions you Need to Take If Starting a Business While Working in UAE:

Don’t take business calls at work and perform well on the job

The first-ever precaution is to resist your urge to answer business calls or emails during work hours. This shows respect for your employer and ensures you dedicate your full attention to your job responsibilities. However, if you are caught doing so, you can even get a warning from your employer, which can result in job loss. 

Create a separate account for business transactions.

One of the best advice we can ever give you is to keep your business finances separate from your accounts. This will simplify bookkeeping, help avoid confusion, and protect your employer from concerns about potential use of company resources. Utilise this account for all business-related income and expenses.

Take care of your health.

As the saying goes, Health is Wealth. So, prioritise healthy sleep habits, balanced meals, and regular exercise. After all, a healthy lifestyle improves focus, energy, and overall well-being. As a result, you will excel in both your job and your business.

Final Note:

Wrapping up today’s discussion, note that starting a business while employed in Dubai is possible, but some beginners might find the process challenging. 

If you are one of those, that’s where the Ignite Zone helps. Our legal experts and business setup consultants in UAE are always there to help you. Call us at +971 4 575 211 0 or at [email protected].