In short — Employment in the DIFC is governed by the codified DIFC Employment Law (DIFC Law No. 2 of 2019), in force since 28 August 2019 and amended several times since — separate from onshore UAE federal labour law and from the ADGM. End-of-service gratuity was replaced by DEWS, a funded defined-contribution scheme, for service from 1 February 2020; a 2024 amendment added a GPSSA top-up for UAE/GCC nationals. The Law sets quantified leave, notice and a narrowed Article 19 late-payment penalty, prohibits discrimination, and is enforced in the DIFC Employment Division. This page covers the legal substance for employers and employees.
DIFC employment at a glance
- Governing law — DIFC Employment Law No. 2 of 2019, consolidated version No. 5 (July 2025), as amended
- End of service — DEWS (or a qualifying alternative scheme) from 1 February 2020; legacy gratuity for earlier service
- 2024 change — GPSSA top-up for eligible UAE/GCC nationals
- Late pay — Article 19 penalty — a day’s wage per day of delay (subject to a threshold and the court’s discretion)
- Probation — Capped at six months
- Forum — DIFC Employment Division (DIFC Courts); Small Claims Tribunal for lower-value claims
1. The DIFC’s own Employment Law
Employment in the DIFC is governed by the codified DIFC Employment Law No. 2 of 2019, which applies principally to DIFC employers and to employees based within, ordinarily working in or from, or contractually subject to the DIFC — separate from onshore UAE federal labour law and from the ADGM Employment Regulations, with specific partial rules for secondees and exempt categories. It replaced the prior Law No. 4 of 2005 and is now published as consolidated version No. 5 (July 2025), as amended by DIFC Laws No. 4 of 2020, No. 4 of 2021, No. 2 of 2022, No. 1 of 2024 and No. 1 of 2025. DIFC employment compliance is therefore a moving target, and application should be checked for secondees, government-entity employees and contractual opt-in cases against the current consolidated text.
Beyond the headline entitlements, a DIFC employer also carries day-to-day obligations that frequently generate client questions: providing health insurance that meets the applicable Dubai/DIFC requirements, sponsoring and maintaining employees’ DIFC visas and work permits, keeping accurate payroll and employment records, and confining deductions from wages to those the Law permits. Retaining an employee’s passport is not permitted. These practical duties sit alongside the substantive rights below.
2. DEWS and end of service
For service from 1 February 2020, end-of-service gratuity was replaced by DEWS (the DIFC Employee Workplace Savings plan), a funded defined-contribution scheme. Employers make monthly contributions for eligible expatriate employees — broadly 5.83% of monthly basic wage for the first five years of service and 8.33% thereafter — into DEWS or an approved qualifying alternative scheme, by the 21st day of the next calendar month, subject to the Law and Regulations. Contributions are calculated on monthly basic wage, which for these purposes must be at least 50% of the employee’s total monthly wage. The shift moved end-of-service from an unfunded promise to a funded, portable entitlement.
Legacy gratuity for pre-2020 service
For service accrued before the DEWS commencement date, the older end-of-service calculation still applies — broadly 21 days’ basic wage per year for the first five years and 30 days per year thereafter — so legacy entitlements remain relevant for long-serving employees and should be calculated alongside DEWS contributions.
3. The 2024 amendment: a top-up for UAE/GCC nationals
DIFC Law No. 1 of 2024 addressed an imbalance: UAE and GCC nationals are enrolled in the GPSSA pension system rather than DEWS. Employers must now top up for eligible national employees where the employer’s GPSSA pension contribution for the employee is less than the Core Benefits that would otherwise have been payable — broadly where the shortfall is at least AED 1,000 per month — with penalties of up to USD 2,000 per employee for non-compliance. It is an easy obligation to overlook in a workforce that mixes nationals and expatriates.
4. Leave and entitlements
The Law sets the following minimum entitlements:
- Annual leave: broadly 20 working days, after qualifying service, plus public holidays;
- Sick leave: up to 60 working days a year, on a tiered-pay basis (full pay for the first 10 days, half pay for the next 20, then nil);
- Maternity leave: 65 working days (full pay for the first 33, half pay for the next 32);
- Paternity leave: 5 working days;
- Working time: an average of 48 hours over seven days unless the employee agrees otherwise in writing.
5. Probation, notice and termination
Probation is capped at six months. Statutory notice increases with length of service — broadly 7 days under three months’ service, 30 days from three months to five years, and 90 days beyond five years — with longer periods permitted by contract, and garden leave or payment in lieu available. Termination for cause is possible on the statutory grounds; on an employer termination for cause the employee is not entitled to payment in lieu of notice, but accrued DEWS contributions, any legacy gratuity and outstanding vacation are calculated up to the termination date. Terminations should follow a defensible, documented process, and redundancy carries its own requirements.
6. The Article 19 late-payment penalty
Final dues must be paid within 14 days of termination. Under Article 19, late payment can attract a penalty of a day’s wage for each day of delay. The 2019 Law deliberately narrowed the old, harsher version: there is no penalty unless the sum owed exceeds a week’s wage, and the court can discount time while a genuine dispute is before it or where delay was caused by the employee’s own unreasonable conduct. It remains a real risk, but it is no longer the open-ended trap it once was — paying final dues on time is the simplest way to avoid it.
7. Discrimination and protected characteristics
The Law prohibits discrimination and victimisation on grounds including sex, marital status, race, nationality, religion, age, mental or physical disability, and pregnancy and maternity, covering both direct and indirect discrimination, harassment, and a duty to make reasonable adjustments for disability. Remedies include declarations, recommendations and compensation (including for injured feelings, capped by reference to the annual wage, and capable of being increased where a recommendation is ignored), with a six-month limitation period. Well-documented, even-handed processes are the best protection.
8. Settlement, restrictive covenants and whistleblowing
Three points matter especially for senior hires and exits. Settlement: statutory entitlements can only be waived through a written settlement or termination agreement where the employee has had the opportunity to receive independent legal advice from a Legal Practitioner, or the parties have participated in Court mediation before settlement — a defective waiver is no waiver. Restrictive covenants: post-termination restraints are enforceable only so far as they are reasonable to protect a legitimate business interest (there is no statutory maximum, unlike onshore UAE), so they must be drafted with care. Whistleblowing: the DIFC Operating Law (DIFC Law No. 7 of 2018) protects good-faith disclosures of suspected contraventions from dismissal or detriment.
9. Disputes: the DIFC Employment Division
Employment claims — unpaid wages or end-of-service, unlawful termination, discrimination — are heard in the DIFC Employment Division within the DIFC Courts, with a Small Claims Tribunal route for lower-value claims; the Courts’ employment jurisdiction sits within the framework of Dubai Law No. 2 of 2025 concerning the DIFC Courts (the 2025 DIFC Court Law). See resolving disputes in the DIFC Courts.
10. Common pitfalls
The recurring issues to avoid: mis-calculating DEWS contributions or the basic-wage definition; missing the national top-up under the 2024 amendment; triggering the Article 19 penalty by paying final dues late; relying on a defective settlement; over-running the six-month probation; and discrimination exposure in poorly-documented terminations. ATB Legal advises employers on DIFC employment compliance — contracts, policies, DEWS and the national top-up, restrictive covenants, leave and termination, and settlement agreements — and acts for employers and employees in the DIFC Employment Division.
Frequently asked questions
Does the DIFC have its own employment law?
Yes. The DIFC Employment Law (DIFC Law No. 2 of 2019), in force since 28 August 2019 and amended several times — most significantly by DIFC Law No. 1 of 2024, and most recently No. 1 of 2025 — applies to DIFC employees, separately from onshore UAE federal labour law and from the ADGM.
Does UAE labour law apply in the DIFC?
No. The DIFC is a separate jurisdiction with its own codified DIFC Employment Law (DIFC Law No. 2 of 2019, as amended), and onshore UAE federal labour law does not apply to employees employed within the DIFC — the DIFC Law and the DIFC Courts govern instead. Employees who work outside the DIFC, or who are seconded across the boundary, can raise a genuine question of which regime applies, so the position should be checked against the facts.
What replaced end-of-service gratuity in the DIFC?
DEWS — the DIFC Employee Workplace Savings plan, a funded defined-contribution scheme — replaced gratuity for eligible expatriate employees for service from 1 February 2020. Employers contribute monthly (broadly 5.83% of basic wage for the first five years and 8.33% thereafter) into DEWS or a qualifying alternative scheme.
How is gratuity for service before February 2020 calculated?
Legacy end-of-service for pre-DEWS service accrues at broadly 21 days’ basic wage per year for the first five years and 30 days per year thereafter, and remains relevant for that earlier service.
What did the 2024 amendment change?
DIFC Law No. 1 of 2024 requires employers to top up GPSSA contributions for eligible UAE/GCC nationals where these fall short of the DEWS-equivalent by at least AED 1,000 per month, with penalties of up to USD 2,000 per employee for non-compliance.
What leave are DIFC employees entitled to?
Broadly 20 working days’ annual leave (after qualifying service), sick leave of up to 60 working days on a tiered-pay basis, maternity leave of 65 working days (full pay for the first 33, half pay for the next 32) and paternity leave of 5 working days.
What is the penalty for paying final dues late?
Under Article 19, an employer that fails to pay final dues within 14 days can face a penalty of a day’s wage for each day of delay — but only where the sum owed exceeds a week’s wage, and the court can discount time while a genuine dispute is pending or where the employee’s own conduct caused the delay.
What must be paid within 14 days after termination?
All of the employee’s outstanding entitlements must be paid within 14 days of the termination date: unpaid wages, accrued but untaken annual leave, any contractual or legacy end-of-service gratuity for pre-DEWS service, and any other sums due under the contract. Late payment can trigger the Article 19 penalty of a day’s wage for each day of delay where the amount owed exceeds a week’s wage.
When does the Article 19 penalty not apply?
The Article 19 daily-wage penalty does not arise where the unpaid amount is less than a week’s wage. The DIFC Courts can also discount the penalty for the period a genuine dispute over the sum is before the Court, or where the delay was caused by the employee’s own unreasonable conduct. Paying all final dues within 14 days of termination avoids it entirely.
What is the maximum probation period in the DIFC?
Probation is capped at six months. Statutory notice is set by length of service (broadly 7, 30 or 90 days), and payment in lieu of notice and garden leave are permitted.
Where are DIFC employment disputes heard?
In the DIFC Employment Division, part of the DIFC Courts, with a Small Claims Tribunal route for lower-value claims (the Tribunal’s financial limit is set by the Rules of the DIFC Courts); the Courts’ employment jurisdiction sits within Dubai Law No. 2 of 2025 concerning the DIFC Courts.
Are restrictive covenants enforceable in the DIFC?
Yes, but only so far as they are reasonable to protect a legitimate business interest — the common-law restraint-of-trade approach. There is no statutory maximum duration (unlike onshore UAE), so covenants must be drafted to be no wider than necessary.
Can a DIFC employee waive employment claims?
Statutory entitlements can be waived only through a written settlement or termination agreement where the employee has had the opportunity to take independent legal advice from a Legal Practitioner, or the parties participated in Court mediation before settlement. A waiver that does not meet these requirements will not be effective.
What should a senior executive consider on exit from a DIFC employer?
Senior exits often turn on more than salary: the treatment of unvested bonus, equity or long-term incentive awards; the enforceability of post-termination restrictive covenants (reasonable to protect a legitimate interest, with no statutory maximum); whether any termination ‘for cause’ is properly grounded and documented; the right to written reasons; and the 14-day final-payment obligation with its Article 19 exposure. A settlement or termination agreement is effective only if the statutory waiver conditions are met.