diff --git a/api/cmd/portainer/main.go b/api/cmd/portainer/main.go
index 23c2f1274..6ad878db6 100644
--- a/api/cmd/portainer/main.go
+++ b/api/cmd/portainer/main.go
@@ -307,8 +307,19 @@ func initKeyPair(fileService portainer.FileService, signatureService portainer.D
 	return generateAndStoreKeyPair(fileService, signatureService)
 }
 
+// dbSecretPath build the path to the file that contains the db encryption
+// secret. Normally in Docker this is built from the static path inside
+// /run/portainer for example: /run/portainer/<keyFilenameFlag> but for ease of
+// use outside Docker it also accepts an absolute path
+func dbSecretPath(keyFilenameFlag string) string {
+	if path.IsAbs(keyFilenameFlag) {
+		return keyFilenameFlag
+	}
+	return path.Join("/run/portainer", keyFilenameFlag)
+}
+
 func loadEncryptionSecretKey(keyfilename string) []byte {
-	content, err := os.ReadFile(path.Join("/run/secrets", keyfilename))
+	content, err := os.ReadFile(keyfilename)
 	if err != nil {
 		if os.IsNotExist(err) {
 			log.Info().Str("filename", keyfilename).Msg("encryption key file not present")
@@ -320,6 +331,7 @@ func loadEncryptionSecretKey(keyfilename string) []byte {
 	}
 
 	// return a 32 byte hash of the secret (required for AES)
+	// fips compliant version of this is not implemented in -ce
 	hash := sha256.Sum256(content)
 
 	return hash[:]
@@ -348,7 +360,7 @@ func buildServer(flags *portainer.CLIFlags) portainer.Server {
 	fips.InitFIPS(false)
 
 	fileService := initFileService(*flags.Data)
-	encryptionKey := loadEncryptionSecretKey(*flags.SecretKeyName)
+	encryptionKey := loadEncryptionSecretKey(dbSecretPath(*flags.SecretKeyName))
 	if encryptionKey == nil {
 		log.Info().Msg("proceeding without encryption key")
 	}
diff --git a/api/cmd/portainer/main_test.go b/api/cmd/portainer/main_test.go
new file mode 100644
index 000000000..da271949f
--- /dev/null
+++ b/api/cmd/portainer/main_test.go
@@ -0,0 +1,57 @@
+package main
+
+import (
+	"os"
+	"path"
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+const secretFileName = "secret.txt"
+
+func createPasswordFile(t *testing.T, secretPath, password string) string {
+	err := os.WriteFile(secretPath, []byte(password), 0600)
+	require.NoError(t, err)
+	return secretPath
+}
+
+func TestLoadEncryptionSecretKey(t *testing.T) {
+	tempDir := t.TempDir()
+	secretPath := path.Join(tempDir, secretFileName)
+
+	// first pointing to file that does not exist, gives nil hash (no encryption)
+	encryptionKey := loadEncryptionSecretKey(secretPath)
+	require.Nil(t, encryptionKey)
+
+	// point to a directory instead of a file
+	encryptionKey = loadEncryptionSecretKey(tempDir)
+	require.Nil(t, encryptionKey)
+
+	password := "portainer@1234"
+	createPasswordFile(t, secretPath, password)
+
+	encryptionKey = loadEncryptionSecretKey(secretPath)
+	require.NotNil(t, encryptionKey)
+	// should be 32 bytes for aes256 encryption
+	require.Len(t, encryptionKey, 32)
+}
+
+func TestDBSecretPath(t *testing.T) {
+	tests := []struct {
+		keyFilenameFlag string
+		expected        string
+	}{
+		{keyFilenameFlag: "secret.txt", expected: "/run/portainer/secret.txt"},
+		{keyFilenameFlag: "/tmp/secret.txt", expected: "/tmp/secret.txt"},
+		{keyFilenameFlag: "/run/portainer/secret.txt", expected: "/run/portainer/secret.txt"},
+		{keyFilenameFlag: "./secret.txt", expected: "/run/portainer/secret.txt"},
+		{keyFilenameFlag: "../secret.txt", expected: "/run/secret.txt"},
+		{keyFilenameFlag: "foo/bar/secret.txt", expected: "/run/portainer/foo/bar/secret.txt"},
+	}
+
+	for _, test := range tests {
+		assert.Equal(t, test.expected, dbSecretPath(test.keyFilenameFlag))
+	}
+}