The DIFC Employment Law is the principal legislative framework governing employment relationships for companies and individuals operating within the Dubai International Financial Centre (DIFC) — an independent financial free zone established under Federal Decree-Law No. 35 of 2004. Unlike the UAE’s federal labour law, the DIFC operates its own distinct civil and commercial legal system, founded on English common law principles.
This law replaced the original DIFC Employment Law of 2005 and applies to all employees working for DIFC-registered entities, regardless of nationality. It does not apply automatically to employees seconded into the DIFC from a non-DIFC UAE entity, who generally remain governed by the terms of their original employment agreement for matters such as annual leave, termination, and end-of-service entitlements.
Key Provisions Relating to Individuals (Employees)
1. Working Hours and Rest Periods
The law caps average working hours at 48 hours per week (unless the employee has given prior written consent to extended hours). Employees are entitled to at least 11 consecutive hours of rest in each 24-hour period, and an uninterrupted rest period of at least 24 hours in each 7-day period. Where a workday exceeds 6 hours, employees are entitled to at least 1 hour of combined rest and prayer breaks.
2. Annual (Vacation) Leave
Employees who have completed at least 90 days of service are entitled to 20 working days of paid vacation leave per Vacation Leave Year. Employees may now carry forward only up to 5 unused days into the following year, to be taken within 12 months — a stricter rule than under the previous version of the law, which required the full 20 days to be used within the 12 months following accrual.
3. Public Holidays
Under Article 32, employees are entitled to their full daily wage for every public holiday.
4. Parental Leave
The law provides for paid maternity and paternity leave. Fathers are also entitled to paid time off to attend antenatal appointments — a provision that was ahead of its time when introduced in 2019, and one the UAE’s federal law has only more recently moved toward.
5. Termination and Notice (Article 62)
Either party may terminate employment without cause by giving written notice. The minimum statutory notice periods, based on length of continuous employment, are:
- 7 days — where continuous employment is less than 3 months
- 30 days — where continuous employment exceeds 3 months but is under 5 years
- 90 days — where continuous employment exceeds 5 years
Longer notice periods may be agreed in the employment contract. Employers may place an employee on garden leave during the notice period, or make payment in lieu of notice where the employee consents or the law allows. These minimum notice requirements do not apply during an agreed probationary period.
6. Termination for Cause (Article 63)
Immediate termination without notice is permitted where the conduct of either party is serious enough that a reasonable employer or employee would consider termination justified. An employee who terminates for cause remains entitled to payment in lieu of notice, accrued gratuity, and accrued vacation leave.
7. Final Payments (Article 19)
Regardless of the applicable notice period, all final payments — salary, accrued leave, and any gratuity — must be paid within 14 days of the termination date. Courts can penalise employers who pay late.
8. End-of-Service Benefits — the DEWS Scheme
Since 1 February 2020, the traditional end-of-service gratuity has largely been replaced by the DIFC Employee Workplace Savings (DEWS) plan, a defined-contribution workplace savings scheme. Employers must make monthly contributions to DEWS (or a compliant Qualifying Alternative Scheme) on behalf of eligible expatriate employees from day one of employment, calculated on the correct basic salary:
- 5.83% of monthly basic wage for each of the first 5 years of service
- 8.33% of monthly basic wage for each additional year thereafter
For employees who remain under a legacy gratuity arrangement, the calculation mirrors the traditional formula: 21 days’ basic wage for each of the first 5 years of service, and 30 days’ basic wage for each additional year, capped at twice the employee’s annual salary.
Important distinction for GCC nationals: GCC national employees are not entitled to the standard end-of-service gratuity or DEWS. Instead, employers must ensure enrolment in the relevant GCC state pension scheme, with appropriate employer contributions. Since the 2025 amendment, DIFC employers must also make top-up payments where an eligible UAE/GCC national employee’s monthly GPSSA pension contribution falls short of the equivalent DEWS-based rate by AED 1,000 or more per month — with fines of up to USD 2,000 per employee for non-compliance.
9. Discrimination Protections
Discrimination protections have been significantly expanded over successive amendments. In addition to the original grounds (sex, marital status, race, nationality, religion, mental or physical health), the law now also prohibits discrimination on the grounds of age, pregnancy, and maternity. Employers may not victimise employees for bringing claims, making allegations, or providing evidence against the organisation.
Key Provisions Relating to Employers and Businesses
- Minimum Standards Cannot Be Waived: If an employment contract offers less than what the law requires, the law prevails, regardless of what the employee agreed to or signed.
- DEWS Compliance Is Mandatory: Non-payment or late payment of DEWS contributions is treated as a serious legal breach, with escalating penalties under the 2025 amendment.
- Recordkeeping Obligations: Under Article 62 and the DIFC Employment Regulations 2020, employers must maintain comprehensive employment records — salary, benefits, leave, disciplinary actions, end-of-service entitlements, and proof of payment — for at least 6 years from the end of each employment relationship.
- Secondment Arrangements: Employees seconded into a DIFC entity from elsewhere in the UAE continue to be governed by their original (non-DIFC) employment agreement for matters such as annual leave, termination, and end-of-service entitlement, and are not automatically covered by DIFC Employment Law provisions in these areas.
- Independent from Federal Labour Law: DIFC entities are not governed by UAE Federal Decree-Law No. 33 of 2021 (the federal labour law) for their DIFC-based employees, though businesses with both onshore and DIFC operations should remain aware of both frameworks, particularly around cross-border workforce mobility and end-of-service entitlements.
Frequently Asked Questions
Is DIFC Employment Law the same as UAE Federal Labour Law? No. The DIFC operates its own independent civil and commercial legal system based on English common law principles, separate from the UAE’s federal labour law (Federal Decree-Law No. 33 of 2021). A DIFC-registered entity’s employees are generally governed by the DIFC Employment Law, not the federal law.
What replaced the traditional end-of-service gratuity in the DIFC? Since February 2020, most expatriate employees are enrolled in the DEWS workplace savings scheme, funded through mandatory monthly employer contributions, rather than a lump-sum gratuity paid at the end of service.
How much notice am I entitled to if I’m dismissed? Under Article 62, this depends on your length of continuous service: 7 days under 3 months’ service, 30 days between 3 months and 5 years, and 90 days beyond 5 years — unless your contract specifies a longer period.
Can my employer dismiss me immediately without notice? Yes, under Article 63, but only where the conduct in question is serious enough that a reasonable employer would consider immediate termination justified. Even in these cases, you remain entitled to payment in lieu of notice, accrued gratuity or DEWS entitlements, and accrued vacation leave.
When must I receive my final payment after termination? Within 14 days of the termination date, regardless of the notice period that applied.
Are GCC nationals entitled to DEWS or gratuity? No. GCC nationals are instead entitled to enrolment in their relevant state pension scheme, with employer contributions, and — since 2025 — a top-up payment where the pension contribution falls short of the equivalent DEWS-based rate by AED 1,000 or more per month.
When Do You Need a Specialist DIFC Employment Lawyer?
- If you have been dismissed and believe the correct notice period or final payment timeline was not followed.
- When your employer disputes your DEWS or legacy gratuity entitlement, or has failed to make the required contributions.
- When drafting or reviewing DIFC employment contracts to ensure compliance with the law’s non-waivable minimum standards.
- When dealing with a discrimination, victimisation, or workplace harassment claim within a DIFC entity.
- When structuring secondment arrangements between a non-DIFC UAE entity and a DIFC-registered company.
- During DIFC company restructuring involving redundancies or collective terminations.
Related Services from Our Firm
🔗 Employment Law – Our Employment Law Services
Related Laws
- UAE Federal Employment Law (Federal Decree-Law No. 33 of 2021) — the equivalent framework for mainland UAE employees
