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Hiring in Dubai is full of promise but equally full of confusion, specifically, the freezone versus mainland employee law. Many employers believe all workers fall under one law. Others think free zones work entirely independently. Somewhere in between lies the truth.
While the UAE Labour Law serves as the federal basis for hiring throughout the country, one should realize that free zones and the mainland have different interpretations of its application. Understanding these differences is important for employers for proper hiring, payroll, contracts, and visa management.
The guide explains the extent to which systems differ, and what this means for your business’s HR operations.
Before analyzing the differences, one must know what is universal.
UAE Labour Law applies to most employees across the UAE and sets minimum regulations concerning:
However, some exceptions exist, commonly referred to as the financial free zones and some special economic areas. In some of the free zones, Labour Law is applied directly, while in others it is applied in a modified version; and in some free zones (like DIFC and ADGM), independent employment laws apply.
All mainland employees must have MoHRE-issued employment contracts. These are standardized and digitally recorded.
The GDRFA is the general authority through which companies in the mainland sponsor their staff.
It is mandated under the Wage Protection System (WPS). Non-operations are liable to fines, ineligibility to work in the UAE, and visa freezing.
A free zone has been set up for ease of doing business and attracting foreign investments. Most have separate employment laws and compliance systems, along with visa procedures. Some examples include:
Each of the free zones has its own HR or labour department, which handles contracts, disputes, and all licensing related to companies and business operations within the free zone.
Rather than following MoHRE formats, free zones develop their own employment contracts.
Some zones are aligned more with UAE Labour Laws, others, such as DIFC, apply their own unique rules around leave, termination, and dispute settlement.
Visas are given out by the free zone authority and not directly by MoHRE.
This means that while some use WPS, there are others who have their own systems for payroll reporting.
| Topic | Mainland | Free Zone |
| Governing Authority | MoHRE | Individual free zone authorities |
| Contracts | MoHRE-issued | Free zone-specific |
| Visa Sponsorship | GDRFA + MoHRE | Free zone authority |
| Dispute Resolution | Labour Courts / MoHRE | Free zone tribunals (DIFC Court, DMCC authority, etc.) |
| WPS Requirement | Mandatory | Depends on zone |
| Gratuity | UAE Labour Law | UAE Labour Law (except DIFC/ADGM variations) |
| Employment Law | Federal | Federal (modified) or independent |
Choosing between free zone and mainland hiring impacts:
Organizations that grow rapidly are often stymied by compliance bottlenecks if they do not understand which rules apply to which employees.
Typical failure areas comprise:
These normally end up with penalties, delayed onboarding, or labor disputes.
Whether hiring on the mainland or within any free zone, ArnifiHR‘s EOR and HR compliance solutions eliminate the very notion of complexity.
1. Are free zone employees covered by the UAE Labour Law?
Mostly yes, except in financial free zones like DIFC/ADGM, which have their own laws.
2. Which is stricter: free zone or mainland labour rules?
Mainland is more standardized; free zones vary in strictness.
3. Can a free zone company hire someone under a mainland visa?
Generally, no visa is required, and the employer must match unless using an EOR provider.
4. Do all free zones follow MoHRE?
No. Many operate independently, though they align with federal standards.
5. Does WPS apply to free zones?
Some require WPS, others use separate payroll systems.
Free zones and the mainland are both covered by the UAE Labour Law, but with different compliance requirements. Understanding these differences can help avoid penalties and smooth HR functions. Partner with ArnifiHR to stay compliant, ease HR processes, and hire confidently throughout the UAE.
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