Free Zone EOSB in the UAE — DIFC, ADGM & Other Free Zones Explained

Before exploring free zone rules, it helps to understand the baseline. Mainland UAE end of service benefit (EOSB) — also called gratuity — is governed by Federal Decree Law No. 33 of 2021 (the UAE Labour Law), specifically Article 51.

The key rules for mainland UAE are:

• Minimum service: 1 year of continuous employment to qualify
• Calculation basis: Basic salary only (excludes housing, transport, and other allowances)
• Rate: 21 days of basic salary per year for the first 5 years, then 30 days per year for each additional year
• Daily rate: Monthly basic salary ÷ 30
• Cap: Total EOSB cannot exceed 2 years of total basic salary
• Resignation penalty: None — since the 2021 law reform, employees who resign receive the same EOSB as those who are terminated
• Partial years: Calculated pro-rata (days worked ÷ 365 × annual rate)

This law applies to all private-sector employees in the UAE mainland. However, the UAE has over 40 free zones, and two of them — DIFC and ADGM — have their own employment legislation. The rest follow mainland law. Understanding which regime applies to you is critical to calculating your correct EOSB.

The Dubai International Financial Centre (DIFC) is a financial free zone in Dubai with its own legal system, courts, and employment law. EOSB for DIFC employees is governed by DIFC Law No. 2 of 2019 (the DIFC Employment Law), not by Federal Decree Law No. 33 of 2021.

DIFC Gratuity Calculation:

At first glance, the DIFC formula looks identical to the mainland formula — and for the core calculation, it is. The daily rate is also calculated as monthly basic salary ÷ 30, and partial years are pro-rated.

Key features of DIFC EOSB:

• Minimum qualifying service: 1 year of continuous employment
• Salary basis: Basic salary only (same as mainland)
• No resignation penalty: Employees who resign are entitled to the same gratuity as those who are terminated
• Payment deadline: The employer must pay EOSB within 14 days of the employment end date
• Contractual enhancement: Employers can offer more generous terms in the employment contract, but cannot offer less than the statutory minimum

Where DIFC differs from mainland:

• Governing law: DIFC Law No. 2 of 2019, not Federal Decree Law No. 33 of 2021
• Dispute resolution: All employment disputes are handled by the DIFC Courts (including the Small Claims Tribunal for claims up to USD 500,000), not mainland MOHRE or UAE labour courts
• Procedural rules: Different filing procedures, limitation periods, and court fees compared to mainland labour courts
• Language: DIFC Courts operate primarily in English, which can be advantageous for expat employees
• DIFC Employee Workplace Savings (DEWS): Since 2020, DIFC employers can opt into the DEWS scheme — an employer-funded savings plan that replaces the traditional gratuity. If your employer participates in DEWS, contributions are made to an investment fund instead of a lump-sum gratuity at end of service

If your employer participates in DEWS, your end of service entitlement is the accumulated fund value (contributions + investment returns), not the statutory gratuity calculation. Check your employment contract and with your HR department to confirm which scheme applies to you.

The Abu Dhabi Global Market (ADGM) is a financial free zone on Al Maryah Island in Abu Dhabi, with its own legal framework based on English common law. Employment in ADGM is governed by the ADGM Employment Regulations 2019.

ADGM's approach to EOSB is different from DIFC:

ADGM Employment Regulations 2019 do not prescribe a separate gratuity formula. Instead, ADGM generally follows the Abu Dhabi mainland law (which is the UAE Federal Labour Law) for end of service benefit calculations, unless the employment contract specifies otherwise.

In practice, this means:

• Default calculation: Same as UAE mainland — 21 days per year for the first 5 years, 30 days per year thereafter, based on basic salary
• Contractual override: ADGM employers have more flexibility to specify alternative end of service arrangements in the employment contract, provided they meet the statutory minimum
• Minimum service: 1 year, consistent with mainland law
• Salary basis: Basic salary only

Key features specific to ADGM:

• Governing law: ADGM Employment Regulations 2019 (made under the ADGM Founding Law)
• Dispute resolution: Employment disputes are handled by ADGM Courts, not Abu Dhabi mainland courts or MOHRE
• Court language: English (same as DIFC)
• Contractual flexibility: ADGM regulations give more weight to the terms of the individual employment contract, so it is especially important for ADGM employees to read their contracts carefully
• Employer obligations: Employers must provide a written employment contract that clearly states the end of service benefit entitlement

If you work in ADGM and your contract is silent on gratuity, the default position is that UAE Federal Labour Law applies — meaning the standard 21/30-day formula. However, if your contract contains a specific EOSB clause (e.g., a defined contribution pension or enhanced gratuity), that clause will typically govern.

The table below summarises the key differences between the three employment law regimes that affect EOSB in the UAE:

The practical takeaway: While the gratuity calculation formula is similar across all three regimes, the critical differences lie in which court handles your dispute, what procedural rules apply, and whether your employer has opted into an alternative savings scheme (like DEWS in DIFC).

The UAE has over 40 free zones, but only DIFC and ADGM have their own employment legislation. All other free zones follow the UAE Federal Labour Law (Federal Decree Law No. 33 of 2021) for EOSB purposes.

This includes major free zones such as:

• JAFZA (Jebel Ali Free Zone) — Dubai's largest free zone by number of companies
• DMCC (Dubai Multi Commodities Centre) — one of the world's largest free zones
• DAFZA (Dubai Airport Free Zone)
• Dubai Internet City (DIC) and Dubai Media City (DMC)
• Dubai Silicon Oasis (DSO)
• Sharjah free zones (SAIF Zone, Hamriyah Free Zone)
• Ras Al Khaimah free zones (RAKEZ, RAK ICC)
• Fujairah Free Zone
• Abu Dhabi free zones (Masdar City, twofour54, KIZAD) — except ADGM
• Ajman Free Zone

If you work in any of these free zones, your EOSB is calculated using the standard mainland formula:

• 21 days of basic salary per year for the first 5 years
• 30 days of basic salary per year for each year beyond 5
• 1 year minimum service to qualify
• 2-year salary cap applies
• No resignation penalty

Employment disputes for employees in these free zones are handled through the standard process: file a complaint with MOHRE (Ministry of Human Resources and Emiratisation) for conciliation, and if unresolved, the case proceeds to the UAE Labour Courts in the relevant emirate.

Important: Some free zones have their own internal HR or compliance departments that may assist with employment disputes before they reach MOHRE, but they do not have legal authority to override the UAE Labour Law. Your statutory rights under Federal Decree Law No. 33 of 2021 remain fully protected.

Determining which employment law governs your EOSB depends on one key factor: which entity holds your employment contract and where that entity is registered.

How to check:

1. Look at your employment contract. The header or first page should identify the employing entity. Look for phrases like "registered in the DIFC" or "licensed by JAFZA".
2. Check your work visa. Your UAE residence visa will typically show the free zone name if you are employed by a free zone entity.
3. Look at your MOHRE contract. If you have a MOHRE-registered employment contract, you are on the mainland system. DIFC and ADGM employees do not have MOHRE contracts.
4. Ask your HR department which jurisdiction the company is registered in.

Common scenarios:

• Your employer is a DIFC-registered entity → DIFC Law No. 2 of 2019 applies. Disputes go to DIFC Courts.
• Your employer is an ADGM-registered entity → ADGM Employment Regulations 2019 apply. Disputes go to ADGM Courts.
• Your employer is registered in JAFZA, DMCC, DAFZA, or any other free zone → UAE Federal Labour Law applies. Disputes go to MOHRE / UAE Labour Courts.
• Your employer is a mainland UAE company → UAE Federal Labour Law applies.

Watch out for these edge cases:

• Group companies: A large company might have entities in both DIFC and mainland Dubai. Your EOSB is governed by the entity you are directly employed by, not the parent company.
• Secondments: If you were seconded from a mainland entity to a DIFC entity (or vice versa), the employing entity (the one that pays your salary and holds your visa) determines which law applies.
• Transfers between entities: If your employer transferred you from one entity to another (e.g., from a mainland company to a DIFC subsidiary), your EOSB for the mainland period should be settled under mainland law, and a new EOSB clock starts under DIFC law — unless your contract contains a continuity of service clause.

If you are unsure which jurisdiction applies to you, use our Settlement Checker tool or consult a UAE employment lawyer.

If your employer refuses to pay your EOSB, underpays, or delays payment, where you file your dispute depends entirely on your employing entity's jurisdiction.

Mainland UAE Disputes

For employees under the UAE Federal Labour Law (mainland and non-DIFC/ADGM free zones):

1. File a complaint with MOHRE (Ministry of Human Resources and Emiratisation) — this can be done online via the MOHRE app or website, or in person at a MOHRE service centre
2. Conciliation: MOHRE will attempt to mediate between you and your employer. This stage typically takes 2–4 weeks.
3. Referral to Labour Court: If conciliation fails, MOHRE refers the case to the UAE Labour Court in the relevant emirate. Labour Court cases can take 3–12 months depending on complexity.
4. Filing fee: Free at MOHRE stage. Labour Court fees apply but are typically refundable if the employee wins.

DIFC Disputes

For employees of DIFC-registered entities:

1. File a claim with the DIFC Courts. You do not go through MOHRE at all — the DIFC has exclusive jurisdiction over employment disputes involving DIFC entities.
2. Small Claims Tribunal (SCT): For claims up to USD 500,000 (approximately AED 1.84 million), the SCT provides a faster, simplified process. Most EOSB claims fall within this threshold.
3. Court of First Instance (CFI): For claims above USD 500,000.
4. Language: Proceedings are in English, which removes the need for Arabic translation.
5. Filing fees: The SCT charges a filing fee of approximately AED 2,000 for claims up to USD 50,000, with higher fees for larger claims. Fees are typically recoverable if you win.
6. Timeline: SCT cases are generally resolved faster than mainland labour courts — often within 2–4 months.

ADGM Disputes

For employees of ADGM-registered entities:

1. File a claim with ADGM Courts. Like DIFC, ADGM has exclusive jurisdiction over disputes involving ADGM entities.
2. Small Claims Division: Handles lower-value claims with simplified procedures.
3. Language: Proceedings are in English.
4. Filing fees: Similar fee structure to DIFC Courts.

Practical Tips for Any Jurisdiction

• Document everything: Keep copies of your employment contract, salary certificates, pay slips, and any correspondence about your EOSB.
• Calculate your entitlement first: Use our UAE EOSB Calculator to confirm what you are owed before filing a complaint.
• Act promptly: Each jurisdiction has limitation periods. In mainland UAE, you generally have 1 year from the end of employment to file a labour claim. DIFC and ADGM have their own limitation periods — check the relevant court rules.
• Legal representation: While not mandatory for small claims in any jurisdiction, complex cases benefit from legal advice. DIFC and ADGM lawyers are typically English-speaking and familiar with common law procedures.