Dubai International Financial Centre (DIFC) is the leading global financial centre in the Middle East, Africa and South Asia (MEASA) region. It was established in 2004 to connect these fast-growth markets with the economies of Asia, Europe, and the Americas, and to attract international businesses and investors.
Two decades later, the DIFC now hosts 6,920 active companies, up from 5,523 companies in 2023, and attracted 1,823 new registrations in 2024, a 25% increase and the highest number recorded in a single year.
DIFC is home to the region’s largest cluster of financial services companies. At the end of 2024, this included more than 260 banking and capital markets companies; 410 wealth and asset management firms, including 75 hedge funds; and 125 insurance and reinsurance related companies. Over 70 brokerage companies are also part of the ecosystem.
DIFC’s clients now include 27 of the world’s 29 global systemically important banks (G-SIBs), eight of the 10 pre-eminent global money managers, five of the highest ranked insurance brokers, and five of the top 10 interdealer brokers by volume.
At the end of 2024, the Dubai Financial Services Authority (DFSA), the independent regulator for business undertaken from or within the DIFC, regulated or supervised more than 900 entities.
Supported by the launch of the Dubai AI Campus, technology and innovation remains the fastest growing sector in DIFC with a 38% increase year-on-year to 1,245 companies in 2024. Job creation from new and existing companies contributed to the workforce expanding to 46,078, up 10%.
DIFC’s core Employment Regulations
The DIFC was designed as a financial free zone offering a unique, independent legal and regulatory framework to create an environment for growth, progress and economic development. It operates as an independent jurisdiction founded on English Common Law practices and principles to ensure the highest international standards of legal procedure and dispute resolution.
As an autonomous jurisdiction within Dubai, the primary law regulating all employment matters within the DIFC is the DIFC Employment Law No. 2 of 2019 (DIFC Employment Law). This sets out provisions on salary payments, working hours, leave entitlements, terminations, anti-discrimination, end of service benefits and more. The most notable was DIFC replacing the traditional end of service gratuity scheme in the UAE with a funded contribution scheme in 2020 called DEWS.
The DEWS Scheme
In 2020, the DIFC launched the DIFC Employee Workplace Savings (DEWS) Plan to support its vision to drive the future of finance in the region by reforming the end-of-service gratuity (EOSG) arrangement to align with global retirement savings standards.
The DEWS Plan is a progressive end-of-service benefits initiative introduced within the DIFC to restructure the current employee benefit plan into a funded and professionally managed, defined contribution plan. The plan also offers a voluntary savings option, enabling employees working in DIFC to secure their financial future with ease.
Under the scheme, DIFC employers must either enrol their employees into the DEWS Scheme itself, or another savings scheme that meets certain criteria, including being granted a certificate of compliance by the DIFC Authority and contribute monthly to each employees’ fund.
The minimum contribution is 5.83% of basic salary for employees with less than five years of employment service. This increases to 8.33% for employees with at least five years of service. These percentages effectively mirror the same accrual rates under the previous EOSG regime.
The invested funds are accessible to the employee to view, but they cannot withdraw them unless they have resigned or been terminated. Upon termination of contract, the accumulated amount plus any capital gain is paid out to the employee.
DIFC is very strict with regulating DEWS compliance. Employers must ensure contributions are paid monthly, and failure to enrol employees or pay contributions can lead to fines of up to USD2,000 per employee, per violation. Employers who wrongfully withhold contributions can have claims bought up against them by the employee.
Qualifying Scheme contributions for UAE/GCC national employees
Until 2024, DIFC employers were not required to make monthly payments into a Qualifying Scheme (DEWS) on behalf of any UAE or GCC national employee who was registered with the UAE General Pension and Social Security Authority (GPSSA).
In practice, this frequently created an imbalance for certain GCC national employees, who received less in pension contributions than they would have received if they had they been enrolled in DEWS because of statutory pension caps.
Under DIFC Law No. 1 of 2024, which was enacted on 1 March 2024, in addition to making the standard GPSSA contributions DIFC employers are now required to make ‘top-up’ payments for eligible UAE/GCC national employees where there is a shortfall between their monthly pension contributions and what they would have received by way of monthly contributions into DEWS if they had been a UAE or GCC national employee, provided that the contribution is no less than AED1,000.
For example, an Emirati employee who earns AED80,000 per month would exceed the maximum GPSSA salary cap, which is currently set at AED70,000 per month. The remaining AED10,000 would therefore be used for calculating the DEWS top-up.
Fines of up to USD2,000 per employee can be levied for non-compliance, so it is essential for all DIFC employers to ascertain whether any UAE/GCC national employees are eligible to receive a top-up payment.
Sovereign PPG in the DIFC
Employers need to be aware of the differences between the DIFC differs and Mainland Dubai. Strict compliance is required in the DIFC in respect of drafting contracts to DIFC standards, DEWS registration and portal administration, registering UAE/GCC nationals in GPSSA, adhering to notice and leave rules, performance management and terminations, and keeping all policies up to date with the latest regulations.
Sovereign PPG’s outsourced HR Services are designed to assist DIFC employers with a wide range of complex functions, including recruitment, employment law and documentation compliance, payroll and benefits.
Compliance with employment legislation, regulations and caselaw is crucial for DIFC businesses. By outsourcing to Sovereign PPG, DIFC employers can stay up to date with the latest legal requirements and ensure compliance. We will assist with the proper management of employee relations, policy development, and record keeping, reducing the risk of legal disputes and penalties associated with non-compliance.
