ADGM Employment Law

In short — The ADGM Employment Regulations 2024 came into force on 1 April 2025, replacing the 2019 Regulations and modernising the rules for ADGM employers and employees within ADGM’s English-law framework. They recognise remote and part-time working, remove the two-year cap on end-of-service gratuity, introduce a late-payment penalty (final pay within 21 days, with up to six months’ wages for delay), expand discrimination and victimisation protection (compensation up to three years’ wages) and broaden family leave. ADGM keeps a gratuity model rather than a DEWS-style fund. Senior-executive exits — bonus and clawback, restrictive covenants, the courts-or-arbitration choice — are a distinct, high-value strand, and the ADGM Courts confirmed in 2025 that an employment claim can be referred to arbitration. Verify specifics at the time of use.

The 2024 Regulations for employers and employees, and how high-value executive disputes are run.

At a glance

• Governing rules: ADGM Employment Regulations 2024 (in force 1 April 2025; English-law framework)
• End of service: gratuity from one year’s service; two-year cap removed; optional savings scheme (no mandatory fund)
• Notice: 7 days (<3 months) / 30 days (3 months+); no unilateral payment in lieu
• Late pay: final pay (incl. gratuity) within 21 days; penalty up to six months’ wages
• Discrimination: declaration + compensation up to three years’ wages
• Forum: the ADGM Courts; arbitration in defined circumstances (Modus Operations, 2025)

1. The Employment Regulations 2024

Employment in the ADGM is governed by the Employment Regulations 2024, which came into force on 1 April 2025 and replaced the 2019 Regulations. Because the ADGM applies English common law directly, the framework reads against English employment principles, administered by the ADGM Courts. The Regulations do not apply to dual-licensed employers (ADGM plus mainland Abu Dhabi) whose staff are subject to UAE federal labour law — a distinction to settle at the outset.

2. What changed in 2024

• a wider definition of “employee” and a new remote-employee concept (a remote employee not based in the UAE does not need a UAE residence visa or ADGM work permit);
• clearer entitlements for part-time employees;
• clarified work-permit and visa requirements, with a duty to cancel promptly post-termination;
• expanded discrimination and victimisation protections;
• the removal of the two-year cap on end-of-service gratuity; and
• new express employee duties (lawful and reasonable instructions, confidentiality, anti-bribery, faithful service).

3. End-of-service gratuity

Employees with one year or more of continuous service are entitled to end-of-service gratuity, calculated on basic wage (which must be at least 50% of total wages) and length of service, and payable regardless of the reason for termination. The headline 2024 change is the removal of the previous two-year cap, which increases the exposure for long-serving senior staff. ADGM has not adopted a mandatory DEWS-style fund: instead, from 1 April 2025 an employer may offer an optional savings/pension scheme as an alternative to gratuity, which the employee may choose to join. Eligible UAE/GCC nationals must separately be enrolled in the applicable federal/Abu Dhabi pension scheme.

4. Notice, probation and termination

Statutory notice is at least 7 days for under three months’ service and 30 days for three months or more (longer by contract), and an employer cannot unilaterally substitute payment in lieu without the employee’s agreement; a statutory garden-leave right applies. Probation is capped at six months (or half the term for shorter fixed-term contracts), with a one-week minimum notice during probation. A written contract must be provided within one month of commencement, and non-administrative changes need both parties’ written agreement.

5. The late-payment penalty

A point employers miss at their cost: all wages and other amounts owing — including end-of-service gratuity — must be paid within 21 calendar days of termination, and a failure to do so exposes the employer to a financial penalty of up to six months’ wages. It operates in a similar way to the DIFC’s penalty, and it makes prompt, correctly-calculated final payment a priority on every exit.

6. Leave and family rights

The 2024 Regulations broadened family and other leave. Alongside annual leave (with a limited roll-over of up to five days), sick leave and public holidays, they provide five working days’ paid bereavement leave; extend maternity protection to adoption (of a child under five) and to stillbirth or miscarriage after the 24th week; give a daily nursing break for up to nine months and paid antenatal time off (for both parents); and protect the right to return to the same or a suitable role after maternity. Working time is an average of 48 hours over seven days unless the employee agrees otherwise, with a 25% Ramadan reduction for Muslim employees and no pay cut. On death in service, the estate may receive up to 24 months’ wages.

7. Discrimination and victimisation

The 2024 Regulations expanded protection, with pregnancy and maternity now an express protected characteristic alongside the established grounds. An employer must not subject an employee to a detriment (including dismissal) for doing a “protected act” — such as bringing a discrimination claim. An employee who is discriminated against, harassed or victimised can seek a court declaration and compensation of up to three years’ wages, a markedly higher ceiling than before.

8. Restrictive covenants and whistleblowing

Two points matter especially for senior hires. Restrictive covenants: because the ADGM applies English law, post-termination restraints (non-compete, non-solicit, confidentiality) are enforceable only so far as they are reasonable to protect a legitimate business interest, with no statutory maximum (unlike onshore UAE) — so they must be drafted no wider than necessary, judged at the date of the contract, and reviewed at the point of exit. Whistleblowing: the ADGM’s Whistleblower Protection Regulations 2024 require ADGM entities to maintain arrangements for protected disclosures, and non-retaliation protection is built into the Employment Regulations 2024.

9. Senior-executive exits: bonus, incentives and clawback

For senior staff the largest numbers are often not salary but variable pay — discretionary bonus, deferred awards, long-term incentives and equity — so executive exits are a distinct, high-value strand. Disputes turn on whether a bonus was truly discretionary and whether the discretion was exercised rationally and in good faith; on good-leaver / bad-leaver treatment of unvested awards; and on the enforceability of clawback and malus provisions (clawback recovering amounts already paid; malus reducing or cancelling unvested awards). These are heavily contract-driven, so the wording of the incentive plan and the offer letter usually decides the outcome — which is why they are best reviewed before, not after, a dispute crystallises. Alongside the variable-pay questions, senior exits commonly involve the characterisation of the termination (cause or no cause), the calculation of end-of-service entitlements (now larger with the cap gone), garden leave and the interaction between a garden-leave period and the length of any post-termination covenant, and a whistleblowing or discrimination dimension that can convert an ordinary exit into a protected one.

10. Resolving disputes: the ADGM Courts or arbitration

ADGM employment disputes are heard by the ADGM Courts. In defined circumstances an arbitration clause in the employment contract may govern instead: in Mathonnet v Modus Operations LLC and Ayotte v Modus Operations LLC [2025] ADGMCFI 0005, the ADGM Court of First Instance held that an arbitration clause in an employment contract was valid and enforceable and did not contravene the Employment Regulations or public policy — so an ADGM employment claim can be referred to arbitration where the parties have agreed to it. The choice between court and arbitration affects confidentiality, speed, cost and the route of appeal, and is best made deliberately in the contract rather than in the heat of a dispute. In practice, most senior disputes settle through a negotiated exit: a binding settlement must meet the Regulations’ requirements to be effective, and the real value is often in the surrounding terms — the reference, the treatment of unvested awards, the announcement, mutual confidentiality and non-disparagement, and a clean release.

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