Can You Legally Start a Business in the UAE While Employed Elsewhere?
In today’s dynamic UAE economy, many residents aspire to become entrepreneurs while keeping their current job. But is it legal to start a side business while you’re already employed in the UAE? This guide breaks down everything you need to know about the rules, permissions, and steps to legally establish your own company without violating employment or visa laws.
The Short Answer: Yes, but with conditions.
Starting a business while employed is possible, provided you obtain the necessary approvals and follow the country’s legal framework. Skipping this could lead to fines, visa issues, or labor disputes.
Key Legal Considerations
- Labor Contract Type:
- If you’re on a limited or unlimited contract, you are still bound by your current employer’s terms, which may include non-compete or exclusivity clauses.
- No Objection Certificate (NOC):
- Most free zones and the mainland require a No Objection Certificate (NOC) from your current employer to process your business license if you’re under their visa sponsorship.
- Visa Sponsorship:
- Your employment visa is tied to your employer. To start a business, you’ll need to apply for a business license and either change visa sponsorship or partner with someone who can.
- Mainland vs Free Zone Setup:
- Free zones are more flexible with remote operations and side ventures. Mainland setup may require more scrutiny and physical presence.
- Sector Restrictions:
- You cannot start a business that directly competes with your employer’s services or breaches labor law agreements.
Steps to Start Your Own Business Legally While Employed
- Review Your Employment Contract
- Look for exclusivity or non-compete clauses.
- Talk to Your Employer
- If they are supportive, request a NOC.
- Decide Your Business Activity
- Choose a non-conflicting activity that is legally permitted.
- Select a Jurisdiction
- Choose between free zone or mainland depending on business model, ownership rules, and NOC requirements.
- Apply for a Trade License
- Submit documents including NOC, passport copy, and business plan (if required).
- Consider a Silent Partner
- Some professionals use a partner or family member as the legal license holder while they manage operations informally (ensure legal compliance).
Costs Involved (2025 Estimates)
- Free Zone license packages: AED 5,500 – AED 15,000/year
- Mainland license: AED 12,000 – AED 18,000/year
- Optional costs: Legal consulting, business center/flexi-desk rentals
Risks of Not Following the Legal Route
- Breach of employment contract
- Fines or cancellation of employment visa
- Business license revocation
- Legal action by employer
Final Thoughts
Starting your own business while employed in the UAE is entirely possible if done with full transparency and legal compliance. Always review your employment obligations, obtain necessary approvals, and seek professional advice. With the UAE’s business-friendly reforms, side ventures are now more accessible than ever—just make sure to do it the right way.
