'How old do you have to be to set up a business in the UAE?'

As per the Commercial Transactions Law, a person cannot set up a business until they are 18 years of age

In order to earn money in the UAE, it is mandatory for residents to have a suitable licence or work permit. Getty Images

Question: My son wants to set up his own business. He is currently studying for his A-levels but does not want to go to college or university. Instead, he is determined to turn his hobby into a business venture. Is there a way he can do this without paying a lot of money? EM, Dubai

Answer: It turns out that EM’s son is just 16 years old. That means he is too young to set up a business under UAE law.

The minimum age to establish a business in the UAE is 18. Until quite recently, people had to be 21, but following the implementation of the Commercial Transactions Law (Federal Decree Law No. 50) of 2022, this was reduced to 18 years for many activities and occupations.

Even then, there are still restrictions as the age of majority is 21, so a minor is not permitted to sign most legal documents.

In this situation, EM’s son will not be able to set up a business until he turns 18.

At that time, the best value option for a small business may be an eTrader licence from the Dubai Department of Economic Development (DED), which currently costs around Dh1,370 ($373). Not all business activities are eligible, so it will depend on the specific hobby and business activity. If he is not eligible for this licence, the cost increases significantly.

In order to earn money in the UAE, it is mandatory for residents to have a suitable licence or work permit. It is illegal to work without these and the fines can be substantial.

It is possible under UAE labour law to take on paid employment from the age of 15, albeit with significant limitations and only on a part-time basis.

Q: Last month I started a new job. It is a good package that includes school fees and a housing allowance.

I am still on probation and a new person who has taken over this division since I was interviewed is telling me that I have to sign a new offer letter that has lower benefits. He said that if I don’t sign it, they will not process my visa. Basically, he said I will be terminated. That means I cannot sponsor my children and they need visas to continue going to school.

Can I be terminated for this? Can the company change my contract like this? Do I have any rights? GH, Abu Dhabi

A: According to UAE labour law, a person who is on probation can be terminated at any time and without reason. Article 9.1 states: “The employer may appoint the worker under a probationary period not exceeding (6) six months from the date of commencement of work. The employer may terminate the service of the worker during this period after notifying the latter of the same in writing fourteen (14) days at least before the date specified for the termination of service.”

The complication here is that GH does not have a work permit, or a residency visa provided by this company. That means she is not legally employed. It is illegal to work without the right visa and work permit and an employer should submit an application to the Ministry of Human Resources and Emiratisation (MoHRE) by the date an employee starts work at the latest.

This application is accompanied by the standard labour contract that sets out the terms of employment, including salary and benefits. That is always the official version.

No employer can change the terms of employment without the agreement of the employee and a contract should then be updated with MoHRE, especially if there is a substantial reduction in the amounts.

This case shows that the employer has not applied for a visa and work permit, which means that not only are they employing GH illegally, she is also working illegally. She has no protection in law without a proper contract and work permit. Therefore, she has no legal grounds to make any complaint against the company.

The company's behaviour is unprofessional. Far too many businesses fail to employ people legally from the outset to defer costs. The individual is usually the one who loses out.

If a company is reported for breaking the law, they can be fined, with the amounts increasing with each offence. They can also be prevented from taking on any more employees.

It is important that people are made aware of the law in this regard and that they are putting themselves at risk by working without the proper visa and work permit.

An application status can be checked with the Ministry.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with more than 30 years' experience. Contact her at [e-mail] at www.financialuae.com

The advice provided in our columns does not constitute legal advice and is provided for information only