The DIFC and ADGM are the UAE’s two financial free zones, and each runs its own standalone employment law that operates independently of the federal Labour Law. DIFC applies Employment Law No. 2 of 2019, while ADGM applies the Employment Regulations 2019, both interpreted by common-law courts rather than the onshore system.
For any company hiring inside Dubai International Financial Centre or Abu Dhabi Global Market, the mainland Federal Decree-Law 33/2021 does not apply. Payroll, end-of-service benefits, leave, and dispute resolution all follow the free zone’s own rulebook. This guide sets out how the two regimes work and where they diverge.
What are the DIFC and ADGM employment laws?
The DIFC and ADGM employment laws are self-contained statutes that govern the employer-employee relationship inside each financial free zone. DIFC applies Employment Law No. 2 of 2019 (as amended), and ADGM applies the Employment Regulations 2019 (as amended), each enforced by its own English-language, common-law court.
The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) are “financial free zones” created under Federal Law No. 8 of 2004, which lets them legislate their own civil and commercial matters. Because of this, an employee inside these zones cannot rely on MOHRE or the onshore Labour Law. Disputes go to the DIFC Courts or ADGM Courts, which apply common-law principles similar to English employment litigation.
How does end-of-service pay work in the DIFC?
In the DIFC, end-of-service pay for non-UAE nationals is delivered through DEWS, the DIFC Employee Workplace Savings scheme, which replaced the traditional lump-sum gratuity in February 2020. Employers pay monthly contributions into a funded, invested account rather than paying a single sum on exit.
DEWS is mandatory for expatriate employees. Employers contribute 5.83% of monthly basic salary for employees with under five years of service and 8.33% for those with five years or more. A 2024 amendment to the DIFC Employment Law clarified how core benefits interact with qualifying alternative schemes, allowing employers to use approved plans in place of the default DEWS fund while preserving the employee’s accrued entitlement.
How does ADGM handle end-of-service benefits?
ADGM retains the traditional end-of-service gratuity as its default, calculated as 21 days of basic pay per year for the first five years and 30 days per year thereafter. Employers may opt into a workplace savings scheme, but unlike the DIFC there is no single mandatory fund.
This is the sharpest structural difference between the two zones. An ADGM employer that does nothing simply pays the accrued gratuity on termination, while a DIFC employer must be enrolled in DEWS or an approved qualifying scheme from the start of employment. ADGM’s approach mirrors the mainland gratuity formula more closely, whereas DIFC has fully shifted to a funded, portable savings model for its expatriate workforce.
What core entitlements do both zones share?
Both zones guarantee a broadly similar package of minimum entitlements that tracks international standards. Annual leave, working hours, sick leave, and maternity provisions are set out in each statute and generally exceed or match the protections available onshore.
The table below compares the headline entitlements across the two financial free zones.
| Entitlement | DIFC (Law No. 2 of 2019) | ADGM (Regulations 2019) |
|---|---|---|
| Minimum annual leave | 20 working days | 20 working days |
| Standard working week | 48 hours | 48 hours |
| End-of-service model | DEWS mandatory (funded) | Gratuity default; scheme optional |
| Governing court | DIFC Courts (common law) | ADGM Courts (common law) |
| Maternity leave | 65 working days | 65 working days |
| Applies federal Labour Law | No | No |
Which employment protections apply to whom?
Both regimes protect all employees whose contracts are based inside the respective free zone, regardless of nationality, though DEWS and gratuity rules distinguish between UAE nationals and expatriates. UAE and GCC nationals are typically enrolled in the federal pension system rather than DEWS or gratuity.
An employee is covered by the DIFC or ADGM law if their employer holds a licence in that zone and the work is performed there. Nationals of the UAE and other GCC states have social-security pension contributions made on their behalf under the federal General Pension and Social Security Authority framework, so their end-of-service treatment differs from the expatriate model. Employers running staff across both a free zone and the mainland must therefore operate parallel payroll rules for the two populations.
What should employers do before hiring in these zones?
Before hiring, employers should confirm which zone their licence sits in, register for DEWS if they are in the DIFC, and issue contracts drafted to the correct free zone standard rather than a mainland template. Getting the framework right from day one avoids retroactive contribution liabilities.
The most common mistake is applying a mainland MOHRE contract to a DIFC or ADGM hire, which leaves gaps in leave, notice, and end-of-service terms. Companies should also build the DEWS contribution into their cost model early, since it is a recurring monthly outflow rather than a deferred liability. Legal review against the current amended text of each statute is worthwhile, because both zones have refreshed their employment rules in recent years.
Sources: DIFC Employment Law Amendments: Changes to DEWS and End of Service Gratuity, DLA Piper; DIFC and ADGM vs Mainland Employment Law in the UAE, Kayrouz & Associates.