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The employment relationship

Country specific laws

What laws and regulations govern the employment relationship?

The DIFC has its own legal jurisdiction and common-law based court systems, where employment issues are regulated by the DIFC Employment Law.

Who do these cover, including categories of worker?

The DIFC Employment Law applies to employees who are based within or ordinarily work within or from the DIFC. The law does not differentiate between categories of workers. All employees are entitled to the same leave and benefits as regular full-time employees.

Misclassification

Are there specific rules regarding employee/contractor classification?

There are no specific or express rules in the DIFC Employment Law regarding employee or contractor classification. Currently, the concept of ‘contractor’ or ‘self-employed’ (as commonly understood in Western jurisdictions) is not expressly recognised under the DIFC Employment Law. It is possible for an individual to set up his or her own consultancy company (akin to a contractor) and render services within the confines and terms of his or her trade licence, but such arrangements are limited.

Contracts

Must an employment contract be in writing?

Yes, employment contracts must be in writing. The DIFC Employment Law requires provision of written contracts containing key terms and conditions of service (including vacation leave entitlements, public holidays and hours of work), but no prescribed template is mandated (in contrast to the position outside the DIFC). Moreover, as a mandatory pre-condition to the issuance of a DIFC work permit and residency visa, employers must submit a signed employment contract with the employee to the DIFC’s Government Services Office. English is the prevailing language in the DIFC and there is no requirement for an Arabic-drafted employment contract.

Are any terms implied into employment contracts?

For those companies based within the DIFC free zone (which is a common law jurisdiction), certain implied terms feature as part of the overall employment contractual documentation by default. However, uniquely, the DIFC courts have made clear that the implied term of mutual trust and confidence does not exist in the context of any claims regarding the manner or circumstances under which the employment is terminated – thereby denying the right of DIFC employees to pursue constructive unfair dismissal claims.

Are mandatory arbitration/dispute resolution agreements enforceable?

Employment disputes for DIFC licensed companies are subject to the forum of the DIFC courts. It is not possible to arbitrate employment disputes, as the DIFC Employment Law has mandatory application to employment matters and employee disputes are subject to determination or resolution through the applicable courts – not through arbitration or dispute resolution mechanisms.

How can employers make changes to existing employment agreements?

Employee consent is generally required before effecting any change to key terms and conditions of employment. Changes to core contractual terms (eg, remuneration package details) will likely necessitate formal amendments to the employment agreements registered with the Government Services Office. 

However, employers and employees cannot opt out of the minimum requirements as stated by the DIFC Employment Law.

Foreign workers

Is a distinction drawn between local and foreign workers?

UAE and other GCC nationals (ie, citizens of Bahrain, Kuwait, Oman, Qatar and Saudi Arabia) are not required to obtain UAE residence visas. However, they must still obtain a DIFC access card for employment.

UAE and GCC nationals are also required to be registered with the applicable state pension scheme, whereas foreign workers are required to be paid an end-of-service gratuity lump sum payment at the end of employment (subject to certain qualifying conditions). There are provisions in the DIFC Employment Law permitting employees to elect to opt in to receiving contributions into an employer-maintained scheme (thereby extinguishing the requirement for a gratuity payment), but employer pension schemes are rare in practice.

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