Free Zone vs Mainland UAE: Which Gratuity Rules Apply to You?
If you work in a UAE free zone, the first question you need to answer is: which law governs your employment? The answer determines your gratuity formula, your rights on resignation, and even whether a salary cap applies to your payout.
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This guide covers the rules for the most common free zones — DMCC, JAFZA, DIFC, ADGM — with worked examples so you can calculate your exact entitlement.
The Three Legal Frameworks
Unlike mainland UAE where all private sector employees fall under Federal Decree-Law No. 33 of 2021, free zones can operate under one of three frameworks:
- UAE Federal Labour Law (most free zones) — same as mainland
- DIFC Employment Law (DIFC only) — its own regime
- ADGM Employment Regulations (ADGM only) — its own regime
DMCC Gratuity (Dubai Multi Commodities Centre)
DMCC follows UAE Federal Labour Law. The gratuity formula is identical to mainland:
- First 5 years: 21 days of basic salary per year
- After 5 years: 30 days of basic salary per year
- Maximum: 2 years’ basic salary
- On a limited contract, you get full gratuity even if you resign
DMCC is one of the world’s largest free zones by registered companies, and the vast majority of its employees are covered by the standard federal formula.
JAFZA Gratuity (Jebel Ali Free Zone)
JAFZA also follows UAE Federal Labour Law. Same formula as DMCC and mainland. If your employer is registered in JAFZA, your gratuity calculation is straightforward — use our UAE Gratuity Calculator directly.
DIFC Gratuity (Dubai International Financial Centre)
DIFC operates under its own Employment Law (DIFC Law No. 2 of 2019) and has a different gratuity formula:
- All years of service: 21 days of basic salary per year (the rate does not increase after 5 years)
- No maximum cap (the 2-year salary cap does not apply)
- Contract type does not matter: You always receive full gratuity on resignation, regardless of years served
- Minimum service: 1 year
Note: DIFC also operates the DEWS scheme (Difc Employee Workplace Savings) — a mandatory pension-style savings plan that some employers use instead of traditional gratuity. Check your contract to see which applies to you.
ADGM Gratuity (Abu Dhabi Global Market)
ADGM has its own Employment Regulations (2019) which broadly follow federal law principles but with some differences in calculation and dispute procedures. Most ADGM employees receive gratuity based on:
- 21 days of basic salary per year for first 5 years
- 30 days per year thereafter
If you are employed in ADGM and have a dispute, cases go to the ADGM Employment Dispute Resolution Authority, not MOHRE.
Side-by-Side Comparison: 7 Years, AED 15,000 Basic Salary
| Free Zone | Law | Gratuity (7 years) |
|---|---|---|
| DMCC | Federal | AED 87,500 |
| JAFZA | Federal | AED 87,500 |
| DIFC | DIFC Employment Law | AED 73,500 |
| Mainland UAE | Federal | AED 87,500 |
DMCC/JAFZA/Mainland calculation: (15,000 ÷ 30) × 21 × 5 + (15,000 ÷ 30) × 30 × 2 = AED 52,500 + AED 30,000 = AED 82,500
DIFC calculation: (15,000 ÷ 30) × 21 × 7 = AED 73,500
Free Zones That Follow Federal Law
The following free zones use the same calculation as mainland UAE:
- DMCC — Dubai Multi Commodities Centre
- JAFZA — Jebel Ali Free Zone
- DAFZA — Dubai Airport Free Zone
- SAIF Zone — Sharjah Airport International Free Zone
- RAK Free Zone
- Fujairah Free Zone
- KIZAD — Khalifa Industrial Zone Abu Dhabi
- Twofour54 — Abu Dhabi Media Free Zone
- Dubai Healthcare City (DHCC)
If your employer is registered in any of these, use our standard UAE Gratuity Calculator.
How to Confirm Which Law Applies to You
- Read your employment contract — it must state the governing law: “UAE Federal Labour Law”, “DIFC Employment Law”, or “ADGM Employment Regulations”
- Check your company’s trade licence — the issuing authority (e.g. DMCC Authority, DIFC Authority) tells you the jurisdiction
- Ask HR — they should confirm which authority your employment falls under and provide a copy of your registered contract
What If Your Employer Operates in Multiple Jurisdictions?
Some companies have entities in both mainland UAE and a free zone. What matters is which entity you are employed by — check the employer name on your visa and employment contract. The entity that issued your work permit determines your legal framework.
Frequently Asked Questions
I work in a DMCC free zone office but my visa was issued by a mainland company. Which law applies?
The law follows your employer entity, not your physical work location. Check the employer name on your employment contract — if it’s a mainland-registered company, federal law applies even if you sit in a free zone building.
Does DIFC gratuity have a maximum cap?
No — unlike federal law which caps gratuity at 2 years’ basic salary, DIFC has no cap. Long-serving employees at DIFC firms may receive a higher total payout as a result.
Can I file a MOHRE complaint if I work in DIFC or ADGM?
No. MOHRE only covers mainland and most free zone employees under federal law. For DIFC disputes, contact the DIFC Courts or DIFC Authority. For ADGM disputes, contact the ADGM Employment Dispute Resolution Authority.
This guide is based on UAE Federal Decree-Law No. 33 of 2021, DIFC Employment Law No. 2 of 2019, and ADGM Employment Regulations 2019. For official advice, consult a UAE employment lawyer or contact the relevant authority directly.