Want to expand into the UAE without tripping payroll compliance wires?

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This guide breaks down the systems, steps, and zone-specific rules that make compliant hiring in the UAE possible. We cover everything: country-wide payroll regulations, free zone exceptions (like DIFC and ADGM), and practical insights from HR and Finance leaders who’ve done it at scale. 

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You'll learn how to run accurate payroll, meet legal obligations, and maintain employee trust without wasting time deciphering fragmented laws.

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But first, let’s set the stage: what are Free Zones, and why do they matter so much for payroll and compliance?

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Understanding UAE Free Zones and Payroll Differences

The UAE Free Zones are special economic areas offering tax incentives, simplified licensing, and foreign ownership rights. While the UAE mainland is governed by the UAE Federal Labour Law, the free zones have localized laws that derive from or are exempt from the federal laws across multiple zones.

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Here’s a quick overview of key Free Zones and what sets them apart:

• DIFC (Dubai International Financial Centre): One of the world’s leading financial hubs, popular for its employment laws, foreign ownership and the DIFC Employee Workplace Savings (DEWS) benefits.
  
  
• ADGM (Abu Dhabi Global Market): ADGM is Abu Dhabi’s international financial center with an employment framework based on the ADGM Employment Regulations 2019.

Others include:

• DMCC (Dubai Multi Commodities Centre): Home to 25,000+ companies, DMCC is the UAE’s largest Free Zone, known for ease of doing business across sectors like trade, commodities, and tech.
  
  
• JAFZA (Jebel Ali Free Zone): A logistics and industrial hub near Jebel Ali Port with zero corporate tax within limits and foreign ownership.
  
  
• TECOM Group: Oversees business parks like Dubai Internet City, Media City, and Knowledge Park (TECOM Group Business Districts).

🧠 Pro Tip: Free Zones aren’t automatically exempt from federal systems like WPS (Wage Protection System). Always confirm whether your specific zone enforces WPS uploads, and whether unique laws (like DEWS or ADGM schemes) override federal end-of-service requirements.

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General UAE Payroll Compliance Checklist

Before you dive into zone-specific obligations, here’s what payroll compliance looks like across the UAE mainland. Whether you're onboarding your first employee or managing a multi-country payroll, these components are foundational.

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1. Entity & Employer Registration

Start with registering your company and workforce with the Ministry of Human Resources and Emiratization (MOHRE). This unlocks visa processing, work permits, licensing, and compliance frameworks.

Pro Tip: Free Zones may have their own portals or licensing authorities, but federal registration is often still required for WPS or Emiratization tracking.

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2. Wages Protection System (WPS)

The WPS is the UAE’s mandatory payroll monitoring system that ensures employees are paid accurately and on time via approved banks or financial service providers.

• You must upload a compliant SIF file every month.
• Payments must match contractual terms and be processed within 15 days of the due date.
• Late or non-payment can trigger fines, visa freezes, or MOHRE inspection.

👉 Refer to RemotePass’s Guide to WPS Compliance for a step-by-step walkthrough.

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3. Salary Structure

The UAE doesn't set a statutory minimum wage, but offers must reflect fair market value based on job role, qualifications, and location.

• Basic Salary
• Allowances: Housing, transportation, schooling, medical, travel, etc.
• Deductions: Emirati pension, GCC social security (if applicable), insurance, loan repayment

Watch Out: Incomplete or improperly split salary components can skew end-of-service benefit calculations and cause payroll disputes.

4. Working Hours & Overtime

• Standard workweek: 48 hours (8 hours/day, 6 days/week)
• Overtime rates:
  
  • 125% for extra hours on ordinary days
  • 150% for night shifts
  • 200% on public holidays (unless Free Zone-specific rules apply)

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5. Leave Entitlements

Federal Labour Law entitles employees to:

• Annual Leave: 30 calendar days (after 1 year)
• Sick Leave: 90 days (with salary reduction tiers)
• Maternity/Paternity Leave: 60/5 days respectively
• Study or Bereavement Leave: Subject to eligibility
• Some Free Zones may enhance these offerings.

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6. End-of-Service Benefits (EOSB)

For employees with at least one year of service, EOS is mandatory:

• 21 days’ basic wage per year (first 5 years)
• 30 days’ basic wage per year (after 5 years)
• Capped at 2 years’ total wage
• Note: DIFC and ADGM follow different contribution-based schemes (DEWS and ADGM EOS, respectively).

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7. Permissible Deductions

Only pre-agreed or legally mandated deductions are allowed:

• Loan repayments
• Social security/pension contributions (for GCC nationals)
• Insurance premiums
• Damage/loss costs (if proven and contractually permitted)

All deductions must be clearly shown on the payslip and WPS file.

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8. Payment Timelines

• Pay must be made by the agreed date, or within 15 calendar days after it.
• If no date is stated in the contract, you must pay at least once per month.

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9. Benefits, Tax & National Programs

• Emiratization:
  Mandatory for companies with 20–49 employees. Quotas are increasing yearly (2% minimum). Non-compliance results in fines.
• Corporate Tax:
  Introduced at 9% in June 2023, this applies to business profits, not salaries. Still, it may influence benefit structuring and workforce planning.
• Social Security:
  Applies only to GCC nationals. Contribution rates vary by nationality and jurisdiction. Expatriates are exempt.

If you're in HR, Finance, or Legal, and preparing to scale your team in the UAE, this checklist is your baseline. Next, let’s break down how compliance shifts in each Free Zone, starting with DIFC.

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DIFC/ADGM Payroll Compliance Checklist

While DIFC and ADGM are both Free Zones, they operate with a distinct legal and payroll framework separate from UAE federal law. If your business is hiring in either of these zones, here's what you need to get right.

1. Employment Contracts

Before onboarding, you must submit employment contracts via:

• DIFC Client Portal
• AccessADGM Platform

Contracts must meet the standards of:

• DIFC Employment Law
• ADGM Employment Regulations 2019

At a minimum, every written agreement should cover:

• Job title and description
• Salary and benefits
• Working hours
• Leave entitlements
• Termination clauses
• Dispute resolution mechanisms

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🗂️ Retention Rule: Keep both digital and physical copies of all signed employment contracts for at least 6 years.

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2. Salary Payments, WPS & DEWS (DIFC/ADGM)

Unlike UAE mainland companies governed by MOHRE, DIFC and ADGM have independent payroll reporting systems and do not mandate WPS uploads. Still, compliant salary payments are essential.

✅ Key Requirements:

• Entity registration via the DIFC Authority portal or ADGM Access Platform
• UAE bank account setup for salary payments and DEWS contributions
• Salaries paid via bank transfer, with more flexibility in timing than WPS-regulated zones

⚠️ DIFC and ADGM allow you to choose your pay cycle (e.g., monthly, bi-weekly), but payroll must match the employment contract and be processed on time.

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💰 DEWS Compliance (DIFC Only)

If your business operates in DIFC, you're legally required to:

• Register with DEWS or a Qualifying Alternative Scheme
• Enroll new hires within 30 days of their start date
• Submit and pay contributions monthly via a CSV upload
• Ensure payment by the 1st of the following month or within the contractually agreed timeframe

Late submissions or payments will trigger automatic penalties and may suspend your access to the platform.

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📁 Required Payroll Records

Maintain these records for audits and dispute protection:

• Bank transfer confirmations
• Payment advice slips
• DEWS contribution reports (for DIFC)
• Salary breakdowns
• Employment contracts
• WPS files (if applicable for any dual-registered workers or transitions)

🔍 Pro Tip: Even though WPS isn't required in DIFC/ADGM, many firms still generate compliant SIF files for internal tracking or group-level reporting.

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3. Working Hours, Leave Entitlements & Overtime (DIFC & ADGM)

Both DIFC and ADGM follow provisions that align closely with UAE Federal Labour Law, while introducing their own nuances. Employers must define clear policies on working hours, leave entitlements, and overtime and apply them consistently at both the payroll and leave approval stages.

🕐 Working Hours

• Standard limit: 48 hours per week
• During Ramadan: Daily hours are reduced by 2 hours (mandatory, regardless of religion)
• Employers may choose to implement shorter workweeks contractually

Pro Tip: Working hour caps include time spent on training, onboarding, and internal meetings, ensure your timesheets account for these.

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📆 Leave Entitlements

Entitlements vary by type of leave and employment agreement, but generally include:

• Annual Leave: 20–30 working days per year
• Sick Leave: 60 working days per year (fully/half/unpaid tiers)
• Maternity Leave: Up to 65 days (33 paid, 32 half-paid in ADGM; different structures in DIFC)
• Paternity Leave: 5 days (both DIFC and ADGM)
• Compassionate, Hajj, or Study Leave: As outlined in company policy or employment contract

📌 Check DIFC Law No. 4 of 2021 and ADGM Employment Regulations 2019 for the exact wording on leave types and entitlements.

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⏱ Overtime Pay

• Overtime typically applies after 48 hours/week unless otherwise stated in the contract
• Overtime compensation must be clearly outlined in the contract
• DIFC and ADGM do not prescribe specific uplift percentages but reasonable compensation or time in lieu is expected

⚠️ Failing to compensate overtime properly may trigger legal claims or audits during visa renewals and terminations.

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🗂️ Records to Keep

To ensure audit readiness and legal protection, maintain:

• Employee timesheets (manual or automated)
• Approved leave applications (digital/paper)
• Payroll journals and summaries
• Overtime approval logs
• Monthly leave balances & accruals

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4. End-of-Service Gratuity (EOSG) & Pension Contributions

When an employee exits, whether through resignation, termination, or contract expiry, end-of-service benefits and pensions become a critical compliance checkpoint in both DIFC and ADGM.

🏦 DIFC: DEWS Replaces Traditional Gratuity

In DIFC, gratuity obligations are fulfilled through the DEWS (DIFC End of Service) scheme:

• Employer Contributions:
  
  • 5.83% of basic salary (for employees with <5 years of service)
  • 8.33% of basic salary (≥5 years of service)
• Voluntary Employee Contributions are permitted and governed by the DEWS Plan Rules.
• Enrollment & monthly contributions must continue until the employee’s exit date.
• Pre-DEWS Liabilities: If the employee joined before DEWS came into effect (Feb 2020), any gratuity accrued before that must be paid as a lump sum within 30 days of exit.

🏛 ADGM: EOS Gratuity Follows Federal Model

While ADGM doesn’t use DEWS, it mandates a gratuity-style severance payout:

• 21 days’ basic wage/year for the first 5 years
• 30 days’ basic wage/year for service beyond 5 years
• Cap: The total amount must not exceed 2 years' basic wage
• EOS benefits must be calculated monthly and reported internally even if payout only occurs upon termination

🚨 Visa Cancellation Obligations

In both DIFC and ADGM, employers are responsible for cancelling the employee’s work visa within 30 days of termination. Delays can result in fines or blocks on future visa processing.

🗂️ Records to Maintain

Ensure you document the following for each exiting employee:

• EOSG calculation sheets
• Final salary and DEWS/pension contribution receipts
• Bank transfer confirmations
• Termination/resignation letters
• Visa cancellation proof
• Signed final settlement statement

✅ Final Tip: Automate EOS calculations and DEWS contributions using payroll tools integrated with DIFC/ADGM systems. It reduces manual errors and protects against non-compliance during audits.

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5. Statutory Reporting & Record-Keeping (DIFC & ADGM)

DIFC and ADGM employers are legally required to maintain accurate employee records and submit statutory reports at intervals mandated by the respective authorities.

🧾 What Must Be Filed and When

• Annual filings (financial and employment-related) may be required depending on your company classification and zone authority
• Monthly or quarterly payroll reports, if specified during licensing
• On-demand submissions during inspections, audits, or visa renewals

📌 Check your DIFC Client Portal or ADGM Access account for specific submission deadlines and templates.

🗂️ Records to Maintain (Minimum: 6 Years)

You must keep the following documents for at least 6 years unless otherwise stated in your Free Zone regulations:

• Employee registers (join/exit dates, job titles, visa status)
• Signed employment contracts
• Payroll summaries & monthly payslips
• DEWS contribution files (DIFC only)
• Work permits & visa documentation
• Bank transfer proofs for salary and final settlements
• Audit logs and compliance correspondence

✅ Best practice: digitize all records, back them up securely, and store them in a searchable HR/payroll management system for faster audit response.

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6. AML & Data Protection Compliance (DIFC & ADGM)

Payroll operations in DIFC and ADGM must align with both Anti-Money Laundering (AML) requirements and zone-specific data protection laws. These controls kick in not only during payroll processing, but at every point where employee data is collected, stored, shared, or destroyed.

🛡️ AML Obligations

Under UAE-wide AML regulations, companies operating in Free Zones, especially those in financial services, must monitor transactions and payroll activity for suspicious behavior.

• Maintain a written AML policy tailored to your business activity
• Assign an AML compliance officer where applicable
• Flag, document, and report unusual or large payroll transactions
• Integrate AML checks into payment approval workflows (especially final settlements, bonus spikes, or offshore transfers)

🔐 Data Protection Requirements

Each Free Zone enforces its own data privacy laws:

• DIFC: Data Protection Law No. 5 of 2020
• ADGM: Data Protection Regulations 2021

Key compliance steps include:

• Obtaining informed employee consent before collecting or processing personal data
• Maintaining data processing registers detailing how and where payroll data is handled
• Ensuring cross-border data transfers (e.g., to global payroll providers) meet adequacy standards or have appropriate safeguards
• Encrypting and securing access to employee records

📌 Both frameworks align with GDPR principles. HR teams must apply the same level of care when processing or storing payroll data.

🗂️ Records to Maintain

For both AML and data protection compliance, retain the following:

• AML policy documentation
• Suspicious activity logs (if any)
• Data processing register
• Signed employee consent forms
• Access logs or audit trails for payroll platforms
• Cross-border data transfer documentation (if applicable)

✅ Best Practice: Conduct an annual payroll data audit to review AML triggers, consent validity, and access rights, especially before year-end filings or external audits.

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7. Onboarding & Offboarding (DIFC & ADGM)

Both onboarding and offboarding in DIFC and ADGM require tight coordination between HR, Finance, and Legal to remain compliant with zone-specific employment and visa laws.

👋 New Hire Onboarding

DIFC:

• Enroll new hires in the DEWS scheme (or a Qualifying Alternative Scheme) within 30 days of their start date.
• Failing to do so can result in late enrollment penalties and non-compliance notices from the DIFC Authority.

ADGM:

• No DEWS equivalent yet, but end-of-service accruals should begin from day one.
• Ensure employment contracts are filed via the AccessADGM portal.

📌 Always issue a written contract before work starts, and confirm visa sponsorship is aligned with the zone’s registration process.

🔚 Employee Offboarding

DIFC:

• Settle any pre-DEWS gratuity obligations (for employees hired before DEWS rollout) within 30 days of exit.
• Submit final DEWS contributions up to the last day of employment.
• Cancel the employee’s visa within 30 days of termination.

ADGM:

• All dues, including salary, leave payout, and EOS gratuity, must be paid within 21 days of the employee's exit.
• Promptly cancel visas or work permits through the relevant ADGM authority.

🗂️ Records to Maintain

• DEWS enrollment and contribution logs
• Resignation/termination letters
• EOSG calculation sheets (ADGM)
• Visa cancellation confirmations
• Final payslips and payment transfer records
• Exit interview notes or clearance forms (if applicable)

✅ Pro Tip: Build an automated checklist for each exit, linking finance, HR, and legal steps, to reduce compliance risk during offboarding.

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🏢 Other Free Zones Payroll Checklist (DMCC, JAFZA, TECOM, and Others)

Free Zones like DMCC, JAFZA, and TECOM follow UAE Federal Labour Law and MOHRE guidelines more closely than DIFC or ADGM. However, each still has zone-specific registration steps and operational nuances that must be addressed before payroll can run.

1. Payroll Setup & Registration

• Register your company and employees through the relevant Free Zone authority portal (e.g., DMCC Member Portal, JAFZA e-Services, TECOM Smart Desk).
• Link employee payroll to an approved UAE-based bank for WPS (Wage Protection System) compliance.
• Confirm whether your Free Zone enforces SIF file uploads directly to MOHRE or via zone-managed platforms.

✅ Double-check if your Free Zone offers integrated WPS services or requires manual file uploads each month.

2. Payroll Timing & Deadlines

• Salaries must be paid within 10 calendar days of the contractual due date, per MOHRE's WPS enforcement.
• Failure to pay on time can result in:
  
  • Automated fines
  • Visa service suspension
  • Company blacklisting (for repeated violations)

⚠️ Even if you have more flexible internal cycles (e.g., bi-weekly), WPS uploads must still align with MOHRE's pay date expectations.

3. Compliance Documents to Maintain

• WPS SIF files and bank confirmation receipts
• Employee contracts filed with the Free Zone
• Monthly payroll journals and payslips
• Work permits and visa documents
• MOHRE or Free Zone correspondence on payroll audits

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Leveraging RemotePass to Simplify Free Zone Payroll Compliance

Payroll compliance in the UAE Free Zones isn’t just about getting paychecks out. It’s about juggling multiple systems, authorities, and deadlines, often with serious consequences for slip-ups. Missed WPS uploads, late DEWS filings, or incomplete offboarding can lead to fines, frozen visas, and in severe cases, license revocation.

That’s why companies operating across DIFC, ADGM, DMCC, JAFZA, TECOM, and beyond are turning to HR tech like RemotePass to automate, unify, and de-risk payroll operations.

What RemotePass Does For You

RemotePass acts as your compliance command center, automating submissions, tracking obligations, and keeping you audit-ready.

✅ Automates Compliance Tasks

• WPS File Submission for MOHRE-regulated zones like DMCC, JAFZA, TECOM
• DEWS Contribution Uploads and reconciliations for DIFC
• EOS Accrual Tracking and final settlements for ADGM

🗃️ Centralizes Key Documents

• Secure storage of payslips, contracts, WPS/DEWS records, and bank proofs
• Instant access for audits or internal reviews
• Built-in version tracking and role-based access controls

⚙️ Supports HR Workflows

• Flags upcoming deadlines or compliance gaps before they become violations
• Auto-generates payroll journals, termination packets, and final pays
• Maps benefit packages to zone-specific rules (e.g., leave quotas, insurance, allowances)

🌍 Scales With You Across GCC

• Built-in compliance for Saudi Arabia, Qatar, Kuwait, and Oman
• Seamless experience across borders and legal frameworks

Why It Matters

Without a centralized solution, year-end filings become a mess, DEWS uploads get missed, and manual EOS calculations invite errors. RemotePass cuts through that risk, turning reactive clean-up into proactive control.

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Next Steps

Payroll compliance across UAE Free Zones doesn’t have to be overwhelming.

With the right checklists, a clear understanding of zone-specific rules, and a tech partner like RemotePass, you can:

• Cut down risk
• Avoid costly penalties
• Build employee trust
• And focus on growing your business

Book a RemotePass demo today and take the complexity out of DIFC, ADGM, DMCC, JAFZA, and TECOM payroll.

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