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The Dubai International Financial Centre (DIFC) Employment Law No. 2 of 2019 ("DIFC Employment Law" or "the Law"), as consolidated and amended up to July 2025, serves as the principal legal framework governing employment relationships within the DIFC. The Law replaced the Employment Law of 2005 and has undergone several amendments through DIFC Laws No. 4 of 2020, No. 4 of 2021, No. 2 of 2022, No. 1 of 2024, and No. 1 of 2025. Each amendment has refined the provisions to meet evolving employment standards, ensure greater compliance with international practices, and strengthen the protection of employee rights while supporting business growth. This Legislative Insight provides an in-depth analysis of the Law's structure, its key provisions, and its implications for both employers and employees operating in the DIFC.
LEGISLATIVE AUTHORITY, PURPOSE, AND SCOPE
The DIFC Employment Law is enacted under the authority of the Ruler of Dubai, as expressly stated in Article 2. This underscores the Law's status as primary legislation within the DIFC legal framework. The stated purpose of the Law under Article 3 is threefold. (i) It establishes minimum employment standards for employees, (ii) promotes their fair treatment by employers, and (iii) fosters employment practices that contribute to the prosperity of the DIFC. These objectives form the foundation for the Law's provisions, balancing employee protection with the flexibility required for an international business hub.
The scope of application is defined under Article 4. The Law applies to any person with a place of business in the DIFC who employs one or more individuals and to employees engaged under contracts that are expressly subject to DIFC law. It also extends to individuals working in the DIFC pursuant to secondment arrangements or under contracts with certain exempted entities, with limited provisions applying in these cases as detailed in Article 4(3). The Law makes clear that its minimum requirements cannot be waived except where expressly permitted, ensuring that statutory protections override less favourable contractual terms.
KEY DEFINITIONS AND EMPLOYMENT RELATIONSHIPS
The interpretation of terms under Schedule 1 is central to understanding the DIFC Employment Law, as the rights and obligations within the statute are determined by these definitions. An Employee is defined as an individual who is employed by an employer under an employment contract, while an Employer refers to a person or entity that employs one or more individuals within the DIFC. Terms such as Annual Wage, Daily Wage, and Termination Date carry specific statutory meanings that directly influence entitlements, including calculations for leave, gratuity, and qualifying scheme benefits. The Law also defines Qualifying Scheme, which is the mechanism through which end-of-service benefits are now delivered for most employees.
Employment relationships are governed by strict formal requirements. Article 14 mandates that employers must provide employees with a written employment contract in English within seven days of commencement. This contract must include essential information such as wages, job title, hours of work, vacation entitlements, notice periods, and reference to disciplinary and grievance procedures. Any amendment to an employment contract must also be in writing, except for administrative changes where prior written notice to the employee is required.
The Law prohibits false representations during the hiring process under Article 12 and forbids the employment of individuals under sixteen years of age under Article 13. It further clarifies that while employers may provide terms more favourable than the statutory minimum, no agreement can waive the minimum standards established by the Law except in the narrow circumstances permitted by Article 11. These provisions ensure that employment relationships in the DIFC are built upon transparency, legality, and fairness from their inception.
RIGHTS AND OBLIGATIONS UNDER THE LAW
The DIFC Employment Law consolidates employee entitlements and employer obligations into a coherent framework that safeguards workplace fairness. Employees are entitled to protection of their remuneration, clear working time limits, and a comprehensive leave regime. Under Article 18, employers must pay all earned remuneration within seven days after the end of each pay period, and under Article 19, all outstanding wages and benefits must be paid within fourteen days of termination. Unlawful deductions are strictly prohibited under Article 20 unless specifically allowed by the Law, supported by the employee's written consent, or ordered by the Court. The Law also restricts employers from charging recruitment costs to employees except in limited cases under Article 21(3).
Working time and rest periods are regulated to prevent exploitation. Article 22 limits working hours to an average of forty-eight hours over seven days unless the employee consents in writing. Employees are entitled to eleven consecutive hours of rest in every twenty-four-hour period under Article 24 and an uninterrupted weekly rest period of at least twenty-four hours under Article 25. Additional rest breaks are provided for prayer and nursing as stated in Article 26. The leave regime grants employees at least twenty workdays of paid vacation leave per year under Article 27, along with public holidays under Article 32, sick leave of up to sixty workdays per year under Article 34, maternity leave of sixty-five workdays under Article 37, and paternity leave of five workdays under Article 39. These leave entitlements cannot be replaced with payment in lieu except on termination of employment, preserving their purpose as time off from work.
Employers bear significant responsibilities under Part 7. They must ensure workplace health, safety, and welfare, maintain adequate ventilation, lighting, cleanliness, and provide drinking water as required under Articles 43 to 52. Employers are also required to secure health insurance for their employees under Article 56 and to obtain necessary visas and permits at their own cost under Article 57. The Law imposes strict liability on employers for acts of employees done in the course of employment when sufficiently connected to their duties, unless the employer can show it took all reasonable steps to prevent such acts, as provided in Article 54.
Employees have their own duties under Article 58. They must serve their employers faithfully, comply with lawful instructions, exercise reasonable skill and care, protect confidential information, and avoid disrupting the employer's business. These reciprocal obligations reflect the Law's balanced approach, ensuring that both parties uphold standards of conduct that sustain a fair and productive workplace.
TERMINATION AND END-OF-SERVICE BENEFITS
The DIFC Employment Law sets out detailed provisions governing termination of employment and the benefits payable upon termination. Under Article 62, either party may terminate employment without cause by giving written notice. The minimum statutory notice period is seven days where continuous employment is less than three months, thirty days where it exceeds three months but is under five years, and ninety days where it exceeds five years. Longer notice periods may be agreed in the contract. Employers may place employees on garden leave during the notice period or make payment in lieu of notice where the employee consents or where the Law allows.
Immediate termination for cause is permitted under Article 63 where the conduct of either party warrants termination and where a reasonable employer or employee would consider termination justified. If an employee terminates for cause, they are entitled to payment in lieu of notice, accrued gratuity, and accrued vacation leave including the notice period that would have applied. Conversely, if an employer terminates for cause, the employee is not entitled to payment in lieu of notice and gratuity is calculated only up to the termination date. Article 64 provides that employees may request a written statement of reasons for termination for cause within thirty days, and the employer must supply this within fourteen days of the request.
The Law modernises end-of-service entitlements by introducing a mandatory defined contribution scheme, replacing the traditional gratuity system for periods of service after the Qualifying Scheme Commencement Date. Article 66 requires employers to make monthly contributions to a Qualifying Scheme equal to at least 5.83 percent of an employee's monthly basic wage during the first five years of service and 8.33 percent thereafter. For service prior to the Qualifying Scheme Commencement Date, employees remain entitled to a gratuity payment calculated at twenty-one days of basic wage per year for the first five years and thirty days per year thereafter, capped at two years' annual wage. The Law prohibits any arrangement that reduces the statutory minimum contributions or circumvents the requirement to pay core benefits into a Qualifying Scheme.
Employers who fail to meet their obligations under Article 66, including timely contributions, registration of employees, and maintenance of a compliant scheme, are subject to fines under Schedule 2. These provisions ensure that employees' financial entitlements upon termination are protected and enforceable, while providing employers with a clear framework for compliance.
NON-DISCRIMINATION AND DISPUTE RESOLUTION
The DIFC Employment Law contains robust protections against discrimination and victimisation, establishing a workplace environment that values equality and dignity. Under Article 59, employers must not discriminate against an employee in relation to employment terms, conditions, or any aspect of the employment relationship on prohibited grounds, which include sex, marital status, race, nationality, age, pregnancy and maternity, religion, and mental or physical disability. Discrimination arises where an employee is treated less favourably, subjected to a disadvantage, or placed in a hostile or humiliating workplace environment because of these characteristics. The Law further recognises indirect discrimination where an apparently neutral practice disproportionately disadvantages employees sharing a protected characteristic unless justified as a proportionate means of achieving a legitimate aim.
Article 59 also imposes a duty on employers to make reasonable adjustments for employees with disabilities, such as modifying workplace practices or physical features to enable them to perform their roles. Failure to make such adjustments constitutes discrimination unless the employer can demonstrate that it was unaware of the disability and could not reasonably have been expected to know about it. Article 60 prohibits victimisation, which occurs when an employer subjects an employee to detriment or dismissal because the employee has carried out a protected act, such as filing a discrimination complaint or participating in proceedings under Part 9. Allegations or evidence provided in bad faith are excluded from this protection.
Disputes arising under the DIFC Employment Law are adjudicated by the DIFC Courts, with the Small Claims Tribunal handling claims of limited monetary value. Proceedings under Part 9 are subject to a six-month limitation period from the date of the discriminatory act or failure, although the Court may extend this period where justified under Article 61(2)(b). The burden of proof lies with the complainant, but the Court may draw adverse inferences where the employer fails to demonstrate that its conduct was not discriminatory. Remedies under Article 61(5) include declarations of rights, recommendations to remedy adverse effects, and compensation, including for injured feelings, capped at the employee's annual wage. Where an employer fails to comply with a Court recommendation, the Court may increase compensation to twice the employee's annual wage under Article 61(8).
Through these provisions, the DIFC Employment Law not only prohibits discrimination and victimisation but also provides effective remedies to enforce employee rights, ensuring that workplace equality is not merely aspirational but legally guaranteed.
CONTRAVENTIONS, ENFORCEMENT, AND RECENT AMENDMENTS
The DIFC Employment Law incorporates a structured enforcement mechanism to ensure compliance with its provisions. Under Part 11, any act that contravenes the Law, including failing to meet statutory obligations or engaging in prohibited conduct, attracts liability for fines as set out in Schedule 2. Article 67 defines general contraventions as actions or omissions by an employer that breach the requirements of the Law, while Article 68 provides for the administration of fines and penalties by the DIFC Authority (DIFCA). Inspectors have the power to access records and enforce compliance under Article 69. The Law also preserves the rights of employees to pursue remedies in the DIFC Courts notwithstanding the imposition of fines.
The DIFC Authority, under Article 9, holds regulatory powers to issue regulations and guidance facilitating the administration of the Law, and to impose fines and limits on compensation where prescribed. This ensures that the Law remains adaptable to practical and regulatory needs while safeguarding its fundamental principles. The limitation period under Article 10 restricts the filing of claims to within an employee's employment or six months after the termination date, subject to exceptions for certain claims under Article 20(2) and Article 61(2).
Significant amendments have shaped the Law since its enactment in 2019. The 2020 amendment introduced early refinements to leave entitlements and clarified aspects of end-of-service benefits. The 2021 and 2022 amendments further aligned the Law with international best practices, particularly in areas such as discrimination protections and health and safety obligations. The 2024 amendment strengthened the Qualifying Scheme framework, expanding the obligations of employers to ensure timely and compliant contributions. The most recent 2025 amendment consolidated prior changes, clarified calculation methods for contributions and gratuity, and reinforced penalties for non-compliance. These amendments demonstrate a continuous effort to maintain the DIFC as a jurisdiction that supports business while upholding high standards of employee welfare.
Through this combination of clear enforcement provisions, regulatory oversight, and periodic amendments, the DIFC Employment Law remains a dynamic and effective statute, capable of addressing the realities of modern employment in an international financial centre.
CONCLUSION
The DIFC Employment Law stands as a comprehensive and progressive statute that effectively balances the rights of employees with the operational needs of employers. It provides minimum standards that cannot be waived, ensuring that all employment relationships in the DIFC are underpinned by fairness, transparency, and legal certainty. The Law establishes clear rules for hiring, working hours, remuneration, and leave entitlements, while imposing strict obligations on employers to maintain safe and non-discriminatory workplaces. Employees are also held to duties of loyalty and care, reflecting the mutual responsibilities that sustain a healthy working environment.
Termination provisions are structured to protect employees from arbitrary dismissal while granting employers the flexibility required to manage their workforce. The introduction of the Qualifying Scheme under Article 66 marks a significant modernisation of end-of-service benefits, aligning the DIFC with international standards on retirement savings and employee protection. The anti-discrimination provisions in Part 9 and the robust dispute resolution framework ensure that workplace equality is enforceable through the DIFC Courts, with effective remedies available to victims of discrimination or victimisation.
The enforcement mechanisms and the DIFC Authority's regulatory powers underpin the effectiveness of the Law. Regular amendments between 2020 and 2025 have refined its operation, reflecting the DIFC's commitment to remain at the forefront of global employment practices. By embedding statutory protections within a flexible framework, the Law supports the DIFC's position as an attractive jurisdiction for both employers and employees.
Overall, the DIFC Employment Law delivers a well-calibrated legislative regime that not only protects employee rights but also enhances the business environment, contributing to the sustained growth and prosperity of the DIFC.
This article is first published with LexisNexis
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