DIFC Employment Law | What Employers and Employees Should Know

The Dubai International Financial Centre (DIFC) works under its legal framework and laws separate from the UAE Federal Labour Law. This often confuses businesses creating teams in the financial hub since employment rules, contract structures, and dispute procedures differ widely from mainland regulations. With companies increasingly hiring hybrid, remote, and international talent, the ignorance of the DIFC employment law can have serious implications for compliance, and penalties arise from simple misunderstandings.

Why DIFC Employment Law Matters

The DIFC is set up by an independent employment system, which is English common law-based for the global organization. Transparency, predictability, and strong protection are available both to employers and employees. The clarity is beneficial to employers regarding disputes and the international hiring process. 

The clarity afforded benefits employers by reducing the chances of disputes and facilitating the international hiring process. Employees are afforded defined rights with respect to contracts, leave entitlements, termination, and discrimination protections within the DIFC employment laws. Such factors have therefore made the DIFC one of the most appealing business jurisdictions in the region.

Key Features of DIFC Employment Law

1. Employment Contracts

There must be a written employment contract under DIFC employment law for every employee. The contract must clearly state the area of responsibility, pay, working hours, leaves, termination procedures, and any restrictive covenants. There are no implied terms that could be said to be working. Everything must be expressly documented to have a chance of being enforceable.

2. Working Hours and Overtime

A standard 40-hour workweek is observed in the DIFC, generally distributed over five days. Overtime is applicable, but on overtime pay or time off in lieu. Senior executives may be exempt from working overtime if it is specifically stated in their contracts. Employers, at times, confuse this distinction and end up either underpaying or being perceived as underpaying.

3. Leave Entitlements

Leave entitlements in the DIFC include:

• Annual leave: Minimum 20 working days
• Sick leave: Up to 60 calendar days (first 10 days at full pay and the remainder are at reduced pay)
• Maternity leave: 65 working days (first 33 days paid in accordance with the law)
• Paternity leave: 5 working days paid in accordance with the law
• Special leaves: Compassionate and study leave depending on your own contract terms

These considerations tend to be stricter and more inclined toward employee rights than many jurisdictions, the burden therefore lying on companies to ensure they manage this leave tracking properly.

4. End-of-Service Gratuity (DEWS)

Unlike under UAE labour law, DIFC has replaced gratuity with a savings scheme called DEWS (DIFC Employee Workplace Saving Scheme), where employers make monthly contributions based on the basic salary of the employee. This system is modern, portable, and offers security to employees since the payments are made during employment rather than at the end.

5. Termination Rules and Notice

Termination requires:

• A proper notice period is being given (varying from 7 days to 90 days, depending on the tenure or contract).
• Settlement of the final salary.
• Payment for unused annual leave.
• Continued DEWS contributions up to the last working day.

Claims for wrongful dismissal often arise if there has been any mismanagement of, in respect of, notice periods, or failure to withhold salary.

6. Anti-Discrimination and Equal Pay

Protection against any kind of discrimination at DIFC is based on sex, race, religion, disability, and other characteristics under protection. It also entitles equal pay for work of equal value, with severe penalties inflicted in cases of deviation.

Employer Obligations Under DIFC Rules

Employers operating in the DIFC must ensure:

• Employment contracts comply with DIFC Employment Regulations
• Accurate payroll processing, which includes DEWS contributions and overtime calculations
• Proper record keeping in respect of attendance, leave, and employment documents
• Visa process and onboarding compliance, including the validity of work permits
• Equity and transparency in handling disputes, by resorting to DIFC Courts or mediation frameworks if and when needed

Non-compliance frequently arises from outdated templates or misinterpretations of DIFC rules as being applicable in the same way as the UAE Federal Labour Law, which they do not qualify to do.

Employee Rights Employers Should Not Miss

Employees in DIFC are entitled to:

• Well-formed contracts and transparent salary structures
• Accurate tracking of working hours and overtime payment
• Full entitlement to annual and sick leave
• Statutory maternity and paternity leave
• Protection from discrimination and unfair dismissal

Most mistakes occur on the employee’s end when calculating leave, DEWS payout at termination, or under ambiguous contract clauses.

How Non-Compliance Impacts Your Business

Non-compliance with DIFC employment regulations would mean:

• Fines for the employer from the DIFC Authority
• Labour conflicts that drain finances and time
• Hindrances to timely visa processing and onboarding
• Erasure of an employer’s credibility, especially in the DIFC’s global spotlight

DIFC vs UAE Labour Law: Quick Comparison

This comparison is essential for companies hiring staff across both jurisdictions.

How ArnifiHR Helps Companies Stay Compliant in the DIFC

ArnifiHR simplifies DIFC compliance by providing:

• Fully managed EOR solutions for teams based out of the DIFC
• Contracts compliant with DIFC Employment Law
• Accurate payroll processing with DEWS-compliant contributions
• Automated leave tracking, onboarding, and visa processing
• HR support, including documentation, dispute handling, and regulatory compliance

Stay compliant and stress-free, let ArnifiHR competently and reliably manage your DIFC workforce.