‘Facet hustles’ in Dubai: The do’s and don’ts of proudly owning a enterprise whereas working as a full-time worker 

A latest report by the Dubai Framework for Cultural Statistics revealed that Dubai is house to 40 per cent of start-ups that secured over $1 million in funding within the area, with 306 primarily based within the metropolis.

“Having lived and labored in London, Munich, and Moscow, I can say that Dubai stands out as essentially the most business-friendly metropolis,” stated Vadim Kouznetsov, Founding father of JobX.

Based on IFZA, over 55 per cent of entrepreneurs globally began their companies whereas nonetheless employed.

Is it legally permissible for an worker to personal a enterprise?

In Dubai, anybody seeking to interact in financial exercise, whether or not as a full-time worker or in any other case, should get hold of the mandatory licenses from the related authorities. This contains acquiring a license from Dubai Financial system and Tourism (DET) for onshore actions, or the related free zone authority for companies working inside particular free zones.

“Finishing up any enterprise exercise with out the suitable license is illegal. Relying on the free zone and the character of the exercise, a No Objection Certificates (NOC) signed by the employer could also be required earlier than a commerce license might be issued,” Robbins defined.

An NOC is commonly required to make sure that the enterprise doesn’t battle with the pursuits of the employer, highlighting the significance of acquiring formal approval earlier than transferring ahead with a enterprise enterprise.

“Relying on the free zone and chosen exercise, authorities could require an NOC signed by the applicant’s employer earlier than issuing a commerce license,” he stated.

Employment contracts and restrictions

One of many greatest elements to contemplate when pursuing a ‘facet hustle’ whereas employed is the employment contract. Based on Robbins, most employment contracts in Dubai have clauses that will prohibit staff from partaking in enterprise actions outdoors of their job tasks.

“If an individual needs to hold out any type of financial exercise outdoors of their employment the particular person ought to be certain that they aren’t competing immediately or not directly with their employer and may rigorously assessment their employment contract in addition to any employment insurance policies to find out what restrictions are contractually relevant,” he defined.

“Non-compete clauses are significantly vital,” he asserted.

Below Federal Decree Regulation No 33 of 2021, staff are prohibited from competing immediately or not directly with their employer. These restrictions can lengthen as much as two years after employment termination and sometimes embody limitations on approaching purchasers and fellow staff.

Frequent contract restrictions embody:

• Non-compete clauses: Staff are prohibited from immediately or not directly competing with their employer throughout and sometimes for a interval of as much as two years after the termination of their employment.
• Prohibition on outdoors enterprise actions: Many contracts specify that staff can not interact in enterprise ventures with out acquiring prior written consent from the employer.
• Time and assets: Staff are usually anticipated to dedicate their working hours solely to their employment. A facet hustle that interferes with the worker’s time or makes use of firm assets may result in a breach of contract.

“The important thing right here is to rigorously assessment the employment contract and any related insurance policies to establish restrictions,” Robbins suggested. “We suggest authorized session to grasp potential dangers, particularly if the employment contract or UAE labour legal guidelines are breached.”

Acquiring written approval from the employer

In lots of instances, staff should search written approval from their employer earlier than beginning or proudly owning a enterprise. That is significantly essential if an NOC is required for acquiring a commerce license. Robbins defined.

“It’s important to evaluate the particular phrases of your contract and perceive whether or not your employer’s consent is required. Not acquiring approval may result in critical penalties, together with the termination of employment and the revocation of your employment visa,” he added.

The requirement for written consent extends past simply the employer’s consent to commerce. It may additionally have an effect on the kind of enterprise the worker is allowed to run, relying on the character of the employer’s enterprise and any potential conflicts of curiosity.

The Ministry of Human Sources and Emiratisation (MOHRE) regulates employee-employer relationships within the UAE. Robbins highlighted that ought to an worker register an organization with out the consent of their employer, there are a number of dangers. “Staff could face termination of their employment contract, and their employment visa is also canceled. In sure circumstances, MOHRE might also bar an worker from being registered as an worker with future employers.”

Jurisdictional issues: Mainland vs. Freezone vs. offshore

The kind of enterprise jurisdiction whether or not mainland, free zone, or offshore additionally performs a job within the strategy of acquiring approval for a facet hustle. Sure free zones could also be much less stringent in imposing the NOC requirement in comparison with mainland companies.

Nonetheless, Robbins suggested that this shouldn’t be seen as a loophole: “Whatever the jurisdiction, the worker should at all times be certain that their enterprise doesn’t battle with their present employment or violate any clauses inside their contract.”

Navigating conflicts of curiosity

A battle of curiosity happens when an worker’s private enterprise pursuits immediately or not directly intrude with the employer’s pursuits. Robbins defined that such conflicts are a critical authorized concern, as they may result in breaches of contract and even authorized penalties. “For instance, if an worker’s enterprise makes an attempt to contract with their employer’s purchasers, or if the worker arranges for his or her enterprise to function a vendor to the employer, these actions would doubtless violate employment phrases and UAE labour legal guidelines,” he stated.

Avoiding these conflicts is important to sustaining each the enterprise enterprise and the employment relationship.

Earlier than diving right into a facet hustle, Robbins really helpful staff take a number of precautionary steps:

• Open a dialogue along with your employer: It’s helpful to have a casual dialog along with your employer to gauge their response to the thought of you pursuing a enterprise enterprise. “Many employers are delicate about staff dedicating their time to ventures outdoors their function,” he stated.
• Evaluation the employment contract totally: Perceive the restrictions imposed on outdoors actions, together with non-compete clauses and useful resource utilization insurance policies.
• Search authorized recommendation: Acquiring authorized counsel ensures that staff are totally conscious of the potential dangers related to breaching employment agreements or labour legal guidelines. Robbins means that authorized recommendation is essential earlier than making any enterprise choices.

The will to steadiness full-time employment with entrepreneurship is turning into more and more widespread in Dubai. Nonetheless, as Derek Robbins identified, there are a number of authorized issues that people should navigate rigorously earlier than embarking on such a enterprise.

By understanding the restrictions of their employment contracts, looking for the mandatory approvals, and making certain compliance with UAE legal guidelines, staff can cut back the chance of authorized repercussions whereas pursuing their enterprise aspirations.

“Search authorized recommendation early, and at all times guarantee your facet hustle aligns with each your employment contract and the related UAE laws. It’s higher to take precautionary steps now than face the results later,” Robbins concluded.