You're ready to hire in the UAE, but choosing between a mainland or free zone setup isn't just about office location and tax breaks. 

Where you establish your company determines which employment laws you follow, how fast you can sponsor visas, whether you need WPS compliance, and how much flexibility you have moving employees around.

RemotePass is based in the UAE with in-house employment law experts who help companies navigate these jurisdictions daily. This guide breaks down the hiring rules that actually differ between mainland and free zone setups, so you can choose the right structure for your business.

Mainland vs Free Zone Hiring Rules At a Glance

Federal Decree-Law No. 33 of 2021 sets the foundation for employment for mainland and most free zone employers. Both follow the same rules on limited-term contracts, end-of-service benefits, and flexible work arrangements. 

The differences show up in how each jurisdiction administers the law. Think different regulatory portals, slightly different contract templates, and in some cases (DIFC and ADGM), completely separate employment laws that replace the federal framework within their borders.

Here's how the jurisdictions compare when hiring in the UAE:

8 Key Differences and What They Mean for your Business

The table shows where mainland and free zones differ. Here's what each of those differences means for your compliance requirements, hiring timeline, and employee management.

1. Who Governs What

Mainland companies register employees through MOHRE's digital platform and submit visa applications via the General Directorate of Residency and Foreigners Affairs (GDRFA). If you have a labor dispute, you go through MOHRE conciliation first, then federal labor courts if needed.

Free zone companies register with their specific Free Zone Authority (Jafza, DMCC, DIFC, ADGM, or one of more than 40 other zones). Each FZA operates its own portal for contracts and visas. Labour disputes stay within the free zone system: FZA tribunals for most zones, or dedicated courts in DIFC and ADGM.

What This Means for You

Mainland gives you one regulatory relationship to manage. Free zones mean learning your specific FZA's processes, and those vary. DMCC's portal works differently from Jafza's, which works differently from DIFC's.

2. Contract and Legal Variations

Mainland employers use standardized limited-term contracts through MOHRE. The system is digital, the templates are fixed, and approval is usually straightforward as long as salary meets MOHRE minimums and job titles match MOHRE's classifications.

Most free zones also use limited-term contracts based on Federal Labour Law; they just administer them through their own portals with slight template variations. But DIFC and ADGM are different. 

They have completely separate employment statutes that replace Federal Labour Law within their jurisdictions. DIFC Employment Law No. 2 and ADGM Employment Regulations give these financial free zones their own rules on contracts, termination, and dispute resolution.

What This Means for You

If you're in DIFC or ADGM, you're not just following Federal Labour Law with minor tweaks. You're following a different legal framework entirely. Make sure your contracts match the right jurisdiction.

3. Visa Sponsorship and Mobility

Visa processing is generally faster in free zones. Five to 10 days is typical once documents are submitted, compared to seven to 15 days for mainland. Free zones handle the entire process in-house through their portals, while mainland applications route through GDRFA.

But here's where it gets complicated: an employee sponsored by a free zone company can't just work at your mainland client's office whenever they want. 

They need a temporary work permit to operate outside their sponsoring zone. Same goes the other way. Mainland-sponsored employees need permits to work in free zones.

What This Means for You

If your team regularly works at client sites, events, or projects across Dubai and Abu Dhabi, mobility matters. You'll need to factor in temporary permit costs (typically AED 500–1,000 per employee per permit) and processing time (three to five business days). 

RemotePass handles this through our UAE EOR service, managing both the permits and compliance tracking.

4. Payroll and WPS Compliance

Mainland companies must use the Wage Protection System (WPS) to pay employees. It's non-negotiable. MOHRE monitors compliance and penalizes late or incomplete salary transfers. Delays trigger fines starting at AED 1,000 per affected employee, and repeated violations can freeze your ability to hire.

Free zones vary. Some (like DMCC and Jafza) require WPS through their own systems. Others don't mandate it but strongly recommend it. DIFC and ADGM have more flexibility. Employers can use approved payroll providers or in-house systems as long as they meet the zone's standards.

What This Means for You

Mainland = WPS mandatory, with monthly reporting deadlines and strict penalties. Free zones = check your specific FZA requirements. If your zone doesn't require WPS, you still need a reliable payroll system and clear salary transfer records. 

RemotePass's UAE payroll software integrates WPS compliance automatically for mainland entities and offers local payroll solutions for free zone employers.

5. Emiratisation Quotas

Mainland companies must meet Emiratisation quotas (currently 2% of skilled roles filled by UAE nationals by 2026, rising in the coming years). MOHRE tracks compliance and penalizes companies that fall short.

Free zone companies are exempt from Emiratisation requirements. There's no quota to meet, no reporting to MOHRE, and no penalties for hiring entirely non-UAE talent.

What This Means for You

If you're planning to hire 50+ people in the UAE and want to avoid quota pressure in your early growth phase, a free zone setup buys you time. Just know that exemption could change—the government has discussed extending Emiratisation to free zones, though no timeline has been announced.

6. Market Access Rules

Mainland companies have full access to the UAE domestic market. You can sell directly to UAE consumers, sign contracts with local businesses, and operate retail locations without restrictions.

Free zone companies can't directly serve the UAE domestic market. To sell to local customers or businesses, you need either a local service agent (who acts as intermediary) or a separate mainland branch. Your free zone entity can only serve international clients or conduct business within the free zone itself.

What This Means for You

If your customers are UAE-based businesses or consumers, mainland makes sense. You avoid the service agent fees and operational complexity.

If you're serving international clients or operating as a regional hub for MENA markets, free zones offer tax benefits and simpler setup with fewer domestic restrictions.

7. Visa Quotas and Office Space

Both mainland and free zones tie visa allocations to your office space and company size, but the formulas differ.

Mainland visa quotas are calculated based on your trade license type, lease area (typically one visa per 10-15 square meters), and activities listed in your Memorandum of Association. Dubai and Abu Dhabi apply slightly different ratios.

Free zones set their own formulas. DMCC offers generous visa quotas with up to six visas for a basic flexi-desk license. Other zones are more restrictive, requiring dedicated office space for each visa. Some zones (like DIFC) charge annual fees per visa on top of the standard visa costs.

What This Means for You

Check your target zone's visa-to-employee ratios before committing to a license. If you're planning rapid hiring, a zone with flexible visa quotas (DMCC, Jafza) prevents expensive office upgrades every time you add headcount. If you're starting with a small team, even restrictive zones work fine.

8. Dispute Resolution Processes and Costs

Mainland companies go through MOHRE's conciliation process first—it's mandatory and free. If conciliation fails, cases move to federal labour courts. The process can take six to 12 months from initial complaint to court resolution, longer if appeals are filed.

Free zone disputes stay within the zone's system. Most FZAs run tribunals that handle cases faster. DIFC's Employment Dispute Resolution Tribunal typically resolves disputes in eight to 12 weeks. ADGM has similar timelines. 

However, legal representation costs are higher in financial free zones (expect AED 15,000–30,000 for straightforward cases versus AED 8,000–15,000 for mainland labour courts).

What This Means for You

Weigh speed against expense based on your risk tolerance. If you're hiring in roles with high turnover or where disputes are more common (sales, customer service), faster resolution might justify higher legal costs.

If disputes are rare and you have strong documentation, the free mainland process works fine.

Common Pitfalls for Hiring in the UAE and How to Avoid Them

Now that you know how mainland and free zones differ, here are the mistakes to avoid regardless of which jurisdiction you choose.

Contract Mismatches

Employers often sign contracts under Federal Labour Law when they should be using DIFC or ADGM templates, or vice versa. Result: contracts get rejected at registration or create legal uncertainty during disputes. 

Always verify which employment law applies to your zone and use the correct template.

WPS Non-Compliance

Assuming free zones don't require WPS can cost you. Zones like DMCC enforce their own WPS systems and will block new hires or renewals if you fall behind. 

Check your FZA's payroll requirements before onboarding your first employee.

Outdated Law Awareness

Federal Labour Law changed in 2022, moving everyone to limited-term contracts and introducing flexible work models. Employers still using unlimited-term contract templates or outdated termination practices face rejection or penalties. Keep current with MOHRE updates and your FZA's bulletins.

Visa Boundary Violations

Sending free zone employees to mainland projects without temporary work permits risks fines (AED 50,000 per violation) and visa cancellations. Don't rely on "no one checks." Inspections happen, especially in regulated industries like construction and healthcare.

How RemotePass Simplifies UAE Hiring

Whether you choose mainland or free zone, RemotePass eliminates the compliance overhead. Our Employer of Record service lets you hire under our UAE entity while we handle:

• Contract registration with MOHRE or your target FZA
• Visa sponsorship and processing (typically five to seven business days)
• WPS-compliant payroll with automated salary transfers and MOHRE/FZA reporting
• DEWS and gratuity management so end-of-service benefits are calculated and funded correctly
• Temporary work permits when your team needs to work across jurisdictions

We're based in the UAE with employment law specialists who've managed thousands of hires across mainland Dubai, DMCC, DIFC, ADGM, and Jafza. We know which zones offer the fastest approvals, which have the most flexible visa quotas, and which payroll systems each FZA requires.

If you already have a UAE entity, RemotePass's local payroll service integrates with MOHRE and major FZAs to automate compliance while you stay in control of your hiring. You get WPS compliance, gratuity tracking, and real-time reporting without hiring an in-house payroll team.

See if RemotePass is a good fit for your UAE hiring plans with a 15-minute demo.

FAQs About Free Zone vs Mainland Hiring Rules in the UAE

Does UAE labor law apply to free zones?

Yes. Federal Decree-Law No. 33/2021 is the baseline for most free zones. They administer it through their own portals but follow the core framework on contracts, leave, and termination. The exceptions are DIFC and ADGM, which operate under their own employment laws that replace Federal Labour Law within their jurisdictions.

Can an employee sponsored by a free zone company work on the mainland?

Not without a temporary work permit. Free zone visas restrict employees to their sponsoring zone. To work at mainland offices or client sites, they need a permit issued by GDRFA (typically AED 500–1,000, valid for specific projects or time periods). Violations carry fines up to AED 50,000.

Which is faster for visa processing, mainland or free zone?

Free zones are typically faster (five to 10 days after document submission) because they handle everything in-house. Mainland visas route through GDRFA and usually take seven to 15 days. Processing times vary based on nationality, medical screening backlogs, and whether documents are complete at submission.

Do I need WPS if I'm in a free zone?

It depends on your zone. DMCC, Jafza, and most commercial free zones require WPS or their own equivalent systems. DIFC and ADGM don't mandate WPS but require approved payroll providers or auditable in-house systems. Check your FZA's employment regulations—don't assume you're exempt.

Are there Emiratisation requirements for free zone companies?

Not currently. Emiratisation quotas only apply to mainland entities (2% of skilled roles by 2026). Free zones are exempt for now, though the government could extend the policy in the future. If avoiding quota pressure is a priority, free zone setup gives you more time.

Can I move employees from a free zone setup to mainland later?

Yes, but it requires visa cancellation and re-sponsorship under your mainland license. The employee will need to go through medical screening, Emirates ID renewal, and contract registration with MOHRE. Plan for two to three weeks of downtime unless you use an EOR like RemotePass to bridge the transition.