The Dubai International Financial Centre (DIFC) has employment laws separate from the UAE Federal Labor Law to regulate work relationships within its jurisdiction.
This legal framework, enshrined in DIFC Employment Law No. 2 of 2019, is designed to protect employees and employers while ensuring a fair and transparent working environment.
The law has undergone several amendments, with the most recent changes introduced in 2024.
This article overviews the most critical aspects of the law in 2025, including employment contracts, remuneration, working hours, leave policies, and termination.
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Table of Contents
DIFC Employment Law Purpose and Scope
DIFC Employment regulation serves several essential functions in regulating labor relations within the DIFC.
This legal framework is designed to protect employees’ rights while also defining employers’ responsibilities.
It helps ensure that both parties act transparently and fairly, maintaining a structured and equitable working environment.
The law provides a comprehensive structure for work contracts, compensation, termination processes, and other key areas that ensure the workplace runs smoothly.
It applies to all employees working within the DIFC jurisdiction, and the scope of its protection is vital for both expatriate and local workers.
It is crucial to understand the law as it ensures workers are not exploited, and their rights are safeguarded while also providing employers the legal clarity needed to manage workforce relations effectively.
DIFC Employment Contract
Under DIFC Employment Law, employers must provide employees with a written employment contract within 7 days of starting employment.
The agreement must be written in English, ensuring both parties fully know their rights and obligations. The law outlines that the written contract must contain essential details to avoid misunderstandings.
These terms are crucial for protecting the employee and employer. They set clear expectations and prevent disputes.
The employment contract must include the following details:
- Employer and Employee Information: The full names of the employer and employee.
- Commencement Date: The date when the employee’s employment begins.
- Wage: The amount of the employee’s wage and any other forms of compensation.
- Pay Period: How frequently the employee will be paid (e.g., weekly, monthly).
- Working Hours and Days: The employee’s expected hours and work days.
- Vacation Leave: The employee’s entitlement, including how and when it can be taken.
- Notice Period: The notice period required for termination of the employment contract for both the employee and the employer.
- Job Title: The official job title of the employee.
- Contract Duration: Whether the employment contract is for an indefinite or fixed-term period. The termination date must be clearly stated if it’s a fixed-term contract.
- Place of Work: The primary location where employees will perform their work.
- Disciplinary and Grievance Procedures: A reference to the applicable disciplinary rules and grievance procedures that will govern the employee’s behavior and the handling of complaints.
- Probation Period: If applicable, the contract should specify a probationary period of up to 6 months. For fixed-term contracts of 6 months or less, the probation period should not exceed half of the contract term.
- Policies and Procedures: A reference to relevant company policies, including codes of conduct, and where they can be accessed.
- Additional Regulations: Any other matters prescribed under the Regulations or related legal guidelines.
Both parties must write the amendment if the employment contract changes after signing.
However, if the amendment is administrative (e.g., a shift in work hours), the employer only needs to record it in writing and notify the employee before it takes effect.
Employment Law Notice Period in DIFC
The DIFC Labor Law specifies clear guidelines regarding the notice period required when terminating an employment contract, whether by the employer or employee.
The DIFC Employment Law Notice Period is structured according to the length of service the employee provides.
Notice Period Duration
The notice period depends on the length of the employee’s continuous service with the employer:
- Less than 3 months of service: The notice period is 7 days.
- Between 3 months and 5 years of service: The notice period is 30 days.
- More than 5 years of service: The notice period is 90 days.
Vacation Leave Notice
Employees intending to take vacation leave must give their employer at least seven days written notice unless otherwise agreed.
Employers may require employees to take vacation leave on specified days, provided they give at least 7 days prior written notice.
Exceptions to Notice Periods
Certain situations allow exceptions to the standard notice period requirements, including:
Probation Periods: The notice requirements are waived or shortened during probation, allowing either party to terminate the agreement more quickly.
Fixed-Term Contracts: When the employment contract specifies that the employee’s employment will terminate at the end of a fixed term, the notice period requirements do not apply.
Excessive Sick Leave: If the employee takes excessive sick leave, the employer may terminate without providing the usual notice.
DIFC Employment Regulation Pay and Remuneration
One of the most critical aspects of the DIFC Employment Law is the provision for fair remuneration.
The law mandates that employees be paid for all work performed under the terms of their contract, and payments must be made within agreed-upon timeframes.
Wages must be paid at least once a month. Employers must provide itemized pay statements outlining the amount paid, deductions, and other relevant details.
Deductions from Employee’s Salary
Employers are prohibited from making unauthorized deductions from an employee’s salary unless:
- It is required by law (e.g., taxes or court orders).
- The deduction is for a company benefit that the employee has agreed to.
- Employees are entitled to dispute any illegal or unjustified deductions.
Working Hours and Leave Policies in DIFC
DIFC labor Law entails regulations to ensure fair working conditions and protect employees’ rights regarding working hours, rest periods, and leave entitlements.
Employers and employees must adhere to these standards, though additional benefits or more favorable terms may be agreed upon within the employment contract.
Below are the key provisions regarding working hours, days off, and leave entitlements.
Working Hours and Days Off
The DIFC Employment regulation defines maximum weekly working hours. Employees should not work more than 48 hours per week, with a maximum of 8 hours per day.
Employees are entitled to at least one full day off each week, ideally Friday.
Annual and Sick Leave Entitlements
Annual Leave
After completing one year, employees are entitled to 30 calendar days of annual leave, which is accrued pro rata over the year.
Sick Leave
Employees are entitled to sick leave under the following terms:
- First 10 Work Days: Employees are entitled to 100% of their daily wage for the first 10 workdays of sick leave taken in 12 months.
- Next 20 Work Days: Employees are entitled to 50% of their daily wage for the next 20 workdays of sick leave taken in the same 12-month period.
- Additional Sick Leave: Employees are not entitled to wages for any sick leave taken beyond the first 30 workdays in 12 months.
Employers and employees can agree to more favorable sick leave terms than the law stipulates, but the law sets a minimum standard.
Public Holidays
Employees are entitled to paid leave on public holidays recognized by the DIFC.
Termination of Employment in DIFC Law
Employment Law in DIFC provides clear guidelines for terminating employment, detailing termination with cause and termination without cause.
The DIFC employment law termination provisions ensure a fair process for employers and employees when ending the employment relationship.
Termination Without Cause
Termination without cause allows the employer or the employee to end the employment relationship for reasons unrelated to misconduct or breach of contract.
In such cases, the notice period outlined earlier in the article must be followed based on the employee’s length of continuous service.
Employer’s Rights
An employer must provide the required notice to terminate an employee’s employment without cause.
Suppose the employer wishes to release the employee immediately or shorten the notice period.
In that case, the employer must pay the employee an amount equal to the notice period instead of notice, as specified in the employment contract or by DIFC law.
Employee’s Rights
Similarly, an employee wishing to terminate the contract without cause must provide the specified notice.
Failure to give the required notice may result in the employee being liable for payment in lieu of notice unless otherwise agreed in the contract.
Termination for Cause
Termination for cause refers to situations where one party’s actions or behavior justify an immediate end to the employment. In these circumstances, the usual notice periods do not apply.
Employee’s Right to Terminate for Cause: If an employee terminates the employment for cause, they are entitled to:
- Payment of wages for the notice period.
- Gratuity payment, including the notice period they would have been entitled to.
- Compensation for any unused vacation leave.
If an employer terminates the employee for cause, the employee is not entitled to any payment in lieu of the notice period.
However, until the termination date, the employee is still entitled to a gratuity payment and any accrued vacation leave.
Payments Following Termination
Under the DIFC Employment Law, the employer is required to settle all outstanding payments to an employee within 14 days after the termination date. These payments include:
- Remuneration: Any wages owed, excluding deferred additional payments.
- Gratuity Payment: If applicable, any gratuity that accrued before the commencement of the Qualifying Scheme and was not transferred to the scheme.
- Accrued Vacation Leave: Payment for unused vacation days, calculated based on the employee’s daily wage.
- Outstanding Amounts: Any other amounts due to the employee, particularly concerning pension contributions under the applicable provisions.
If an employer fails to make these payments within the specified time frame, a penalty equal to the employee’s daily wage will be incurred for each day the payment is delayed. However, the penalty may be waived if there is an ongoing dispute or if the employee’s unreasonable behavior is the cause of the delay.
Gratuity Payment Calculation
The DIFC employment law gratuity is calculated based on the employee’s years of service and basic wage. Below is the structure for how gratuity is calculated:
| Years of Service | Gratuity Payment |
|---|---|
| First 5 years | 21 days of basic wage per year of service |
| Beyond 5 years | 30 days of basic wage per year of service |
| Maximum Gratuity | Cannot exceed 2 times the annual wage |
The gratuity payment is determined by multiplying the employee’s basic wage by the appropriate factor based on years of service. However, the total gratuity cannot exceed two times the employee’s annual salary.
Pension Contributions to a Qualifying Scheme
For UAE or GCC nationals, the employer must ensure that the employee is registered with the GPSSA and make pension contributions as per Federal Law.
These employees are not entitled to a gratuity payment upon termination.
Still, they may receive top-up contributions if the pension contribution made by the employer is less than the core benefits required by the Qualifying Scheme.
The monthly employer pension contributions to a Qualifying Scheme are as follows:
- First 5 years of service: 5.83% of the employee’s monthly basic wage
- Beyond 5 years of service: 8.33% of the employee’s monthly basic wage
Additionally, suppose the employee is a UAE or GCC national, and the employer’s pension contribution is insufficient compared to the core benefits.
In that case, the employer must contribute the difference to the Qualifying Scheme.
Key points about Gratuity Payments and Pension Contributions are:
- The employer can transfer the gratuity payment to a Qualifying Scheme after the commencement date of the scheme, provided the employee consents in writing.
- Core benefits are calculated monthly and based on the employee’s basic wage.
- Employers must ensure all benefits are correctly handled. Non-payment of core benefits on time may result in a fine.
Employment Dispute Resolution and Enforcement in DIFC
The DIFC offers a specialized employment court to handle labor disputes. Employees or employers who feel their rights violated can file a claim with the DIFC Courts.
DIFC Law No. 2 of 2022 outlines the process for enforcing orders and handling disputes, providing a transparent system for compliance and registration.
Enforcement of Orders
If someone fails to comply with an order within the given time frame, any interested party can ask the Registrar for a new order.
This would allow them to take the necessary action themselves and require the person in default to cover the costs.
Enforcement cannot happen if the time to appeal the original order has not expired or an appeal is in process. The Court may also issue interim orders while an appeal is ongoing.
Recording of Orders
When an order affects property rights, like in Strata Schemes or for property owners, the Registrar must record it in the property folio. This ensures transparency for all interested parties.
Suppose an order no longer affects the property or rights. In that case, the Registrar can cancel the record, either on their initiative or at the request of an interested party, with a prescribed fee.
DIFC Employment Regulation Services
Our law firm provides expert legal services related to DIFC Employment Law. Our experienced lawyers offer the following services:
- DIFC Employment Contract Drafting and Review
We assist in drafting and reviewing employment contracts to ensure full compliance with Employment Law in DIFC, protecting both employer and employee interests. - DIFC Employee Rights and Employer Obligations
We provide legal advice on employee rights, including wage entitlements, vacation, leave policies, and employers’ obligations under DIFC Labor Law. - DIFC Employment Dispute Resolution and Litigation
Our team represents clients in resolving employment disputes through mediation or litigation at DIFC Courts, covering cases such as unfair dismissal, breach of contract, and more. - DIFC Termination and Severance Guidance
We guide employers and employees on lawful termination processes, including notice periods, severance pay, and gratuity calculations, ensuring compliance with the DIFC Employment Regulation. - DIFC Pension and Gratuity Payments
We assist with pension contributions, gratuity payments, and other employee benefits under the DIFC Labor Law, ensuring employers and employees meet legal requirements. - Employment Law DIFC Compliance and Audits
We help businesses maintain compliance with DIFC Employment Regulation by reviewing contracts, policies, and internal practices, minimizing legal risks.
For expert legal advice on DIFC Employment Law, contact us today. Our team is here to provide the support you need to navigate complex legal matters.
Find more services from expert DIFC employment lawyers.
FAQs about Employment Law in DIFC
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A legal consultant specializing in UAE labor law. He regularly publishes articles on the website and writes on various areas of UAE law, with a specific focus on labor law.
