Understanding some employment laws of DIFC (Dubai International Financial Centre)

The Dubai International Financial Centre (DIFC) is a special economic zone in Dubai, established in 2004 as a financial hub for companies operating throughout the Middle East, Africa and South Asia (MEASA) markets. DIFC is regulated by the Dubai Financial Services Authority, an independent regulator exclusive to the freezone and its own court system; DIFC Courts, separate from the Emirate of Dubai’s legal system and that of the federal government of the UAE. DIFC follows the common law framework and operates in English. The freezone houses financial institutions, wealth funds in addition to retail and hotel space dedicated to the freezone.

DIFC is one of Dubai’s independent free-zones; it offers companies 100% ownership without the need for a local partner. DIFC offers clients a 50-year guarantee of zero taxes on corporate income and profits, complemented by the UAE’s network of double taxation treaties.

Let’s take a look at some of the employment regulations for companies operating in DIFC.

– Annual Leave / Vacation Leave:

Subject to Article 30, an Employee who has been employed for at least ninety (90) days is entitled to paid Vacation Leave of twenty (20) Workdays in each Vacation Leave Year. An Employee is entitled to be paid their Daily Wage during Vacation Leave.

• An Employee is entitled to carry forward up to five (5) Workdays of accrued but untaken Vacation Leave into the next Vacation Leave Year for a maximum period of twelve (12) months after which any unused Vacation Leave shall expire.
• Vacation Leave is exclusive of Public Holidays to which an Employee is entitled.
• Unless otherwise agreed in writing by an Employee, and subject to Article 28(1), an Employee cannot receive payment in lieu of Vacation Leave.
• Unless otherwise agreed by an Employer, Vacation Leave cannot be converted to Sick Leave if an Employee is sick during any period of Vacation Leave
• Unless otherwise agreed by the Employer and the Employee, and subject to any requirement imposed by the Employer under Article 29(2), an Employee electing to take Vacation Leave shall do so by giving at least seven (7) days prior written notice to the Employer, specifying the days on which Vacation Leave is to be taken.
• The Employer may require an Employee to take Vacation Leave on specified days in the current Vacation Leave Year by giving at least seven (7) days prior written notice to the Employee.
• Definitions
  • Workdays mean excluding public holidays and week-offs.  (Business days)
  • Daily Wage an Employee’s Annual Wage divided by two hundred and sixty (260)

– Compensation in lieu of Vacation Leave

• Where an Employee’s employment is terminated, the Employer shall pay the Employee an amount in lieu of Vacation Leave accrued but not taken up to and including the Termination Date calculated in accordance with employee Daily wage calculation.
• In the event that the Employee has taken more Vacation Leave than has accrued at the Termination Date, the Employer shall be entitled to deduct an amount calculated in accordance with employee Daily wage calculation from any payments due to the Employee on the Termination Date.

– Special Leave

A Muslim Employee, who has completed at least one (1) year of continuous employment with an Employer, shall be entitled to special unpaid leave not exceeding twenty-one (21) days to perform the Hajj pilgrimage once during the period of their employment with the Employer. 

– Sick Leave

An Employee is entitled to Sick Leave of sixty (60) consecutive or intermittent Work Days in aggregate in a twelve (12) month period.

Sick Leave Policy Details:

• one hundred percent (100%) of the Employee’s Daily Wage for the first ten (10) Workdays of Sick Leave taken in a twelve (12) month period; and
• fifty percent (50%) of the Employee’s Daily Wage for the next twenty (20) Workdays of Sick Leave taken in the same twelve (12) month period.
• The Employee shall not be entitled to receive any Wage for any additional Sick Leave taken in the same 12 (twelve) month period

– Maternity Leave

A female Employee may take Maternity Leave of up to sixty-five (65) Workdays.

A female Employee shall be entitled to Maternity Pay in accordance with Article 38 during Maternity Leave if she:

• will have been continuously employed by her Employer for at least twelve (12) months, including any period of Secondment, immediately preceding the expected or actual week of childbirth.
• notifies her Employer in writing that she is pregnant at least eight (8) weeks before the expected week of childbirth.
• provides a certificate from a medical practitioner registered with a Competent Authority confirming the expected or actual birth date; and
• notifies her Employer in writing at least twenty-one (21) days before the day on which the Employee proposes to begin her Maternity Leave.

Maternity Leave Policy:

An Employer shall pay Maternity Pay to an Employee pursuant to Article 37(2) at:

• one hundred percent (100%) of the Employee’s Daily Wage for the first thirty-three (33) Workdays of Maternity Leave; and
• fifty percent (50%) of the Employee’s Daily Wage for the next thirty-two (32) Workdays of Maternity Leave.

– Paternity Leave and pay

A male Employee may take Paternity Leave of up to five (5) Workdays if he:

• will have been continuously employed by his Employer for at least twelve (12) months, including any period of Secondment, immediately preceding the expected or actual week of his wife giving birth; and
• notifies his Employer in writing that his wife is pregnant at least eight (8) weeks before the expected week of childbirth.

– Resignation / Termination – Minimum notice period(s)

• An Employer or an Employee may terminate an employee’s employment without cause in accordance with this Article.
• seven (7) days, if the period of continuous employment of the Employee is less than three (3) months, including any period of Secondment.
• thirty (30) days, if the period of continuous employment of the Employee is in excess of three (3) months but less than five (5) years, including any period of Secondment; or
• ninety (90) days, if the period of continuous employment of the Employee is in excess of five (5) years, including any period of Secondment.

– Gratuity Payment

An Employee’s Gratuity Payment shall be calculated as follows:

• an amount equal to twenty-one (21) days of the Employee’s Basic Wage for each year of the first five (5) years of service; and
• an amount equal to thirty (30) days of the Employee’s Basic Wage for each additional year of service,

provided that the total Gratuity Payment shall not exceed an amount equal to two (2) times the Annual Wage of the Employee.

The daily rate of an Employee’s Basic Wage shall be calculated by dividing the Employee’s Basic Wage by three hundred and sixty-five (365).  

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Reference: https://www.difc.ae/files/6815/6083/9238/Employment_Law_DIFC_Law_No._2_of_2019.pdf