Understanding company types

The first step is to establish the legal entity of the company, in order to be eligible to conduct business within DIFC.

The main types of companies that are set up in the DIFC are Financial, Non-Financial, and Retail.

The different legal entities that can be set up are:

In order to hire employees in the DIFC, companies have to meet the following criteria:

Company License: You must always maintain a valid license in order to run your company and comply with all applicable UAE and DIFC laws.

Employee Background Check: The company will need to verify that the candidate is qualified to do the work, and has the relevant degrees and qualifies to be a resident in the UAE according to UAE Immigration Law.

Salary Payments and Health Insurance: The company will be sure to provide timely salary payments and health insurance to employees.

Sponsorship Fees: The company ensures to pay all fees required by the authorities associated with employee sponsorship. The employer must provide a cash deposit of AED 2,500 per employee for the max number of employees as per the Employee Allocation permits.

Office Space Requirements

Every company is required to invest in a physical space with its company license, which determines the number of visas the company can apply for.

There are different options that you can choose in the most sought after real estate area in the business district of Dubai.

Some of the options provided by the DIFC are as follows:

• Commercial office spaces
• Retail space
• Co-working spaces
• Business Centre (serviced offices)
• DIFC Academy venues
• Event spaces
• Data centres

You can reach out to the DIFC directly to better understand your space requirements for the number of people you wish to hire. The different options above have different space - visa allotments that you can avail, for example, if you opt for a co-working space, they offer one visa/desk, whereas if you opt for office space, the sq. ft requirement per visa will be slightly different

Company Establishment Card

A valid Establishment Card is required for all visa related services in Government Services Office.

• The Establishment Card is valid for one year only or until the expiry of the DIFC commercial license, whichever comes first, and is renewed annually as part of the DIFC license renewal process with Registry Services.
• Companies holding expired Establishment Cards will not be allowed to submit any visa related applications at the Government Services Office.
• Establishment card should be amended if there are any changes made to ‘Trade Name’ on the DIFC license.
• Failure to renew the Establishment Card within one month of expiry will result in fines issued by the Federal Authority for Identity and Citizenship of Dubai at a rate of AED 100 per month of delay.

New Establishment Card

Application Process

Log into the DIFC portal and select the service ‘Apply for Establishment Card’ under ‘Employee Services’. Fill in the request with accurate information, upload the required documents, and submit.

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You will then receive an email to sign Personnel Sponsorship Agreement (PSA) digitally through DocuSign.

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Sign the document electronically and submit it.

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An email and SMS notification will be received once the Electronic Establishment Card is ready, with a copy attached.

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Fees and Service Time

Note: The service time does not include any unforeseen delays from the Federal Authority for Identity and Citizenship – Dubai.

Visa

The next step in the process is to apply for the company owner's Residency Visa & Emirates ID.

This process is reasonably straight forward and can be completed through the DIFC portal. You may apply either as an applicant from outside or within the UAE.

You need to upload the required documents in the specified format and undergo a medical test. Once the medical fitness results are issued, the Emirates ID registration and visa stamping will be processed. Next, register for Health Insurance and if required, complete the biometrics for the Emirates ID.

More details about the process are shared here.

Creating an effective offer letter:
Once you have found the candidate you want to hire in the DIFC, you can make a formal offer. The offer letter should specify the terms and conditions of the employment and the timeline for the candidate to revert back to the offer.

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Employment Contracts in DIFC

After accepting a job offer, the company should provide a written contract in English to the employee within seven (7) days of starting work.

An Employment Contract shall include:

• Employer and Employee names;
• The Employee's date of commencement of employment;
• The Employee’s Wage;
• The Employee's Pay Period;
• The Employee's hours and days of work;
• The Employee's entitlement to Vacation Leave;
• The notice that each of the Employee and the Employer is obliged to give to terminate the Employee's employment;
• The Employee’s job title;
• Whether the Employment Contract is for an indefinite duration or a fixed-term period. If for a fixed-term period, the Termination Date;
• The Employee’s place of work;
• Reference to any applicable disciplinary rules or grievance procedures;
• Any applicable probation period up to a maximum of six (6) months;
• A reference to any applicable policies and procedures, including any code of conduct, and where these can be accessed; and
• Any other matter that may be prescribed under the Regulations.

Any amendment to an Employment Contract must be in writing and signed by both the Employer and Employee, unless such amendment is of an administrative nature only, in which case the Employer shall be required to record such amendment in writing and to give written notice thereof to the Employee prior to the amendment taking effect.

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Apply for a Visa

This section provides details on documents required for applying for a residence visa, timelines, and steps involved In order to apply for a visa for an employee, the company can login to the DIFC portal and choose from the different services/options that are applicable to them as given below:

1. Applying for a new resident visa from outside the country
2. Applying for a new resident visa from within the country
3. Transfer of employment visa from government or other free zone to DIFC
4. Transfer of employment visa from one company to another within the DIFC free zone

The documents required for visa sponsorship includes:

1. Color Passport copy
2. Recent Passport photograph with white background in jpg format
3. Signed copy of employment contract
4. Attested copy of highest educational certificate by the UAE embassy in the country of the certificate origin
5. Additional supporting documents such as previous visit visa/employment visa, Emirates ID, Good Conduct Certificate issued by UAE authorities (for Kenyan nationals) etc.,

Employers have the option to choose between the normal & the express route for visa applications with varying service fees. Generally, the process takes between 3-10 working days based on the pending volume of applications.

Addition resources
Please check the section related to Employment Visa services in the Dubai Government Services Handbook found on the DIFC website. Please refer to pages 15-34 to understand of additional services such as Transferring visas, Renewal, Cancellation & Amendment.

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Medical Exam Requirements
In order to obtain the residence visa, all applicants will have to complete the medical fitness test at the DIFC medical center Located at level B1, The Gate. Dubai Health Authority will share the medical test result with the DIFC. For express applications, Medical fitness tests will be scheduled at Smart Salem Medical Centre located at level 1, Index Tower, DIFC.

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Updated Visa Stamping Process in DIFC
Previously, employees had to submit passports for the residence visa stamp. However, effective June 2022, the DIFC will be issuing only electronic residence visa permits and will not collect passports for visa stamping.

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Register with the DIFC
The employer must register the employee with the DIFC authority and obtain an identification card (ID card) for the employee. The ID card is necessary for access to the DIFC premises.

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Apply for Emirates ID (EID)

The Emirates ID is issued by the Federal Authority for Identity, Citizenship, Customs and Ports Security for UAE citizens and residents. It is important to carry it at all times for identification purposes and for accessing government services.

Steps to apply for Emirates ID card

1. Submit application online: An application can be submitted online via the ICP website or via a registered typing center.
2. Fees payment: The next step is to pay the service fees due as per the visa type you’ve applied for.
3. Biometric Scan: If this is your first time you are applying for an Emirates ID, you will need to visit an ICP center to provide your biometrics for the Emirates ID database.
4. Collect your Emirates ID: You will receive SMS & email notifications regarding the status of the application. After the card has been issued, an SMS will be shared of the post office from where the Emirates ID can be collected from.

The visa process will generally take between 7-10 working days if the correct documents are submitted and no unforeseen delays by the relevant authorities.

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Info on Notice periods, End of Service Gratuity, Cancelling work permit & residency visa, Recruitment costs

An employment contract can be terminated:

Notice periods

A company may decide to terminate an employee and will have to give written notice to the employee as per the following criteria.

1. Employed for less than 3 months, a minimum of 7 days of notice period is required.
2. Employed between 3 months to 5 years, then 30 days of notice period is required.
3. Employed for more than 5 years, then 90 days of notice period is required:

• A company may offer to compensate an employee for their notice period (a part of it, or the entire amount) only if the employee agrees to it via an agreement.
• The notice period does not apply in the case of:

1. the probation period in an employment contract
2. the end date of an Employees fixed term contract
3. taking excess sick leave

End-of-Service Gratuity

Please ensure that the final wages and the benefits any including any outstanding salary, accrued leave, and end-of-service gratuity (ESG) are all paid to the employee before the employment ends.

Disburse Last Pay

Arrange a meeting with the employee to discuss the reasons for termination, the notice period, and any other relevant issues, such as outstanding pay or benefits.

Cancel Work Permit

If the employee is a non-UAE national, you must cancel their work permit and residency visa with the DIFC no later than 30 days following the termination date.

If the employee has dependents on their visa (spouse, children, parents etc.), the dependent visas should be cancelled prior to cancelling the employees visa.

Calculating End of Service Gratuity (ESG)

• For the first 5 years of service, 21 days of basic wage for each year is considered.
• Beyond 5 years, 30 days of basic wage is considered for every additional year.

Understanding Recruitment Costs in DIFC

The following explains the regulations regarding recruitment costs in the DIFC:

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Details on Contract types, Taxes, NDA, Equipment, and Exclusivity

Contract Types and Templates

As per the UAE Labour Law, there are 2 types of contracts, Limited Term & Unlimited Term contract. There isn’t much of a difference between a limited term or fixed term contract with an unlimited term contract in the DIFC. There is no specified maximum or minimum duration for contracts and they can be for less than 6 months as well.

Tax Implications in DIFC

The UAE does not levy income or additional taxes but the government is introducing a 9% corporate tax on profits generated after 1 June 2023. However, DIFC incorporated companies will have a 0 tax rate for a period of 50 years from the time the law in question enters into effect.

Non-Disclosure Agreements

A Non-Disclosure Agreement (NDA) requires both parties (in the case of a mutual NDA) or one party (in the case of a one-way NDA), to keep the information confidential and to use that information only for a specific purpose.

The DIFC has specific laws and regulations related to the use of NDAs. According to the DIFC Contract Law, an NDA must meet certain requirements to be enforceable. These include:

• The NDA must be in writing and signed by all parties.
• The confidential information must be clearly defined in the agreement.
• The NDA must specify the duration of the agreement and the circumstances under which it may be terminated.
• The NDA must specify the consequences of breach, including damages and injunctive relief.

Equipment Provision

Employers are responsible for providing their employees with the necessary equipment and resources to carry out their work duties. This includes providing equipment such as computers, phones, and other necessary tools.

Employers may provide the necessary equipment to employees in different ways. For example, they may provide company-owned equipment for employees to use exclusively for work-related purposes. Alternatively, they may provide employees with a stipend to purchase their own equipment.

In either case, it is important for employers to ensure that the equipment provided is suitable and safe for use. Employers should also ensure that the equipment is maintained and replaced as necessary.

Employers are also responsible for ensuring that employees are properly trained to use the equipment provided. This includes providing training on how to use the equipment safely and effectively, as well as providing training on any relevant software or applications.

Employers may also need to ensure that the equipment provided complies with any relevant regulations, such as data protection laws. For example, if employees are working with sensitive data, the employer may need to ensure that the equipment provided has appropriate security measures in place.

Understanding Exclusivity

In the DIFC free zone, exclusivity refers to the concept of restricting employees from working for competing businesses during their employment with a particular company. An exclusivity clause can be included in the employment contract to prevent employees from working for competing businesses or engaging in any activities that may conflict with their duties to their current employer.

Exclusivity is commonly used in the financial industry and other highly competitive sectors to protect trade secrets and confidential information. By including an exclusivity clause in the employment contract, companies can prevent employees from taking their skills and knowledge to competing businesses or using their position to gain an unfair advantage.

It is important for companies to ensure that exclusivity clauses are reasonable and proportionate. The clause should not unfairly restrict an employee's ability to earn a living or pursue their career aspirations. To be enforceable, exclusivity clauses must be clearly stated in the employment contract, and the employee must receive adequate compensation for agreeing to the restriction.

It is also important to note that exclusivity clauses are not permitted for all types of employment. For example, in the DIFC, exclusivity clauses are not allowed for domestic workers, such as maids and drivers.

Understanding Salary Structure

As per the DIFC employment laws, the basic salary should be at least 50% of the total salary with the rest as allowances. The common practice in Dubai is to set 60% as the base salary and 40% as allowances.

• Basic salary: This is the amount paid to an employee for their regular working hours.
• Allowances: This may include housing, transportation, or other allowances, which are paid in addition to the basic salary.
• Overtime pay: If an employee works beyond their regular working hours, they may be eligible for overtime pay.
• Bonuses: This may include performance-based bonuses or other types of bonuses, which are paid to employees as a reward for their work.
• Deductions: This may include taxes, social security contributions, or other deductions required by law.

Currency

As per the UAE Labour Laws, employers can pay salary in any currency that is agreed in writing with the employee in the employment contract.

Wage Protection Service (WPS)

The Wage Protection Service (WPS) is a system implemented by the UAE government to ensure that salaries are paid to employees on time via approved channels, such as banks, exchange bureaus, and financial institutions. This system is followed only on companies registered in Mainland or Jebel Ali Free Zone (JAFZA) and not the DIFC.

Bonuses

No set bonuses cycles by the govt, but as per company rules

DIFC Employee Workplace Savings (DEWS)

The new workplace savings scheme has replaced the previous end-of-service gratuity payment system. Employers will now contribute monthly to a professionally managed & regulated savings plan based on the service length of the employee. The minimum contributions are as follows:

• Less than 5 years of service - 5.83%
• More than 5 years of service - 8.33%

Employees can also opt to make voluntary contributions (upto 100% of salary in that payroll period) into DEWS and the amount will be invested into the Default Low/Moderate Fund unless employees designate their investment choice prior to investment of contributions.

Employers and employees will have the option to track contributions, investments, portfolio valuations, and place instructions for withdrawals via the DEWS system. The contribution will be made to the account of Master Trustee, Equiom, which will be in USD and with Standard Chartered Bank, UAE. The employers will be provided with the information of the bank account along with a dedicated Virtual Bank Account Number (VBAN) when they enrol into DEWS.

Employers seeking to opt out of DEWS will have to implement a Qualifying Scheme and apply to the DIFC Authority (DIFCA) to obtain a Certificate of Compliance.

Insurance

An Employer is required to obtain and maintain health insurance cover for each of its Employees as may be required pursuant to the Regulations, Federal Law or Dubai Law. Companies should offer health insurance to employee dependents as well if they are under their visa sponsorship.

Pension for GCC Nationals

Where an Employee is a UAE or a GCC national, the Employer shall ensure that the Employee is registered with the GPSSA and shall make the necessary pension contributions in accordance with Federal Law. Employees registered for the pension scheme are not eligible for the Gratuity Payment on termination of their employment with their Employer.

Workers’ Compensation

Where an Employee sustains an injury or dies as a result of an accident or illness arising out of or in the course of the Employee's employment with their Employer, and such accident or illness arose as a result of the Employer's negligence, the Employee may be entitled damages of up to two (2) years' Annual Wage as determined by a Court, in accordance with the Law of Obligations and the Law of Damages and Remedies.

Allowances

Companies can set their own allowance structure as per the job requirement. The most common allowances are:

• Housing
• Transportation
• Phone/other allowances
• Overtime
• Variable pay/Commissions
• Continuing Education
• Children’s Education

Flight

Some companies provide an annual ticket to employees to their country of origin as a benefit, where as some companies provide an amount in the salary breakdown, but they are not legally required to do so.

Company Holidays

Employers in the DIFC free zone are required to grant vacation leave or paid time off to their employees. The break down of the different types of leaves are available below.

Paternity Leave

A male Employee may take Paternity Leave of up to five (5) Work Days if he:

• Will have been continuously employed by his Employer for at least twelve (12) months, including any period of Secondment, immediately preceding the expected or actual week of his wife giving birth; and
• Notifies his Employer in writing that his wife is pregnant at least eight (8) weeks before the expected week of childbirth.

Paternity Leave must be taken within a month from the date of:

• The child being born
• Or in cases where the child is adopted, the adoption date of the child.

Sick Leave

An Employee is entitled to Sick Leave of sixty (60) consecutive or intermittent Work Days in aggregate in a twelve (12) month period.

An Employee who needs to take Sick Leave shall personally, or have someone on their behalf:

• Notify the Employer of their absence as soon as reasonably practicable on the first day of absence and at least once every three (3) days thereafter during the same period of absence; and
• If required by the Employer, provide a sick leave certificate from a medical practitioner registered with a Competent Authority covering the entire period of absence.

Sick Pay An Employer shall pay Sick Pay to an Employee based on the following:

• One hundred percent (100%) of the Employee's Daily Wage for the first ten (10) Work Days of Sick Leave taken in a twelve (12) month period; and
• Fifty percent (50%) of the Employee's Daily Wage for the next twenty (20) Work Days of Sick Leave taken in the same twelve (12) month period.
• The Employee shall not be entitled to receive any Wage for any additional Sick Leave taken in the same 12 (twelve) month period.

Special Leave

A Muslim Employee, who has completed at least one (1) year of continuous employment with an Employer, shall be entitled to special unpaid leave not exceeding twenty-one (21) days to perform the Hajj pilgrimage once during the period of their employment with the Employer.

This section contains details about Visa types, Steps to cancel visa, Renew visa, Space - Visa allocation, Golden Visa

Visa Types

In a DIFC free zone contract, employers may sponsor employees for a work visa to legally work and reside in the United Arab Emirates. It is important to note that holders of a residence visa must not be away from the UAE for more than 180 consecutive days. There are several visa types that are available for employees in the DIFC free zone, including:

• Employment Visa: This is a visa that is issued to foreign nationals who have been sponsored by an employer to work in the UAE. The employment visa is usually valid for two years and can be renewed.
• Dependent Visa: This visa is available for the family members of an employee who holds a valid employment visa. The dependent visa is usually valid for two years and can be renewed.
• Visit Visa: This is a short-term visa that is issued to foreign nationals who wish to visit the UAE for tourism, business, or other purposes. The visit visa is usually valid for 30 days and can be extended for an additional 30 days.

Apply for a Visa

Information available here.

How to Renew a Visa

This service request allows you to apply for employment visa renewal of a DIFC sponsored employee. Please ensure that the required original documents for the visa renewal is submitted prior to the expiry of the visa to avoid overstay fines.

The steps involved are:

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Log into the DIFC portal and select the service ‘Apply for Establishment Card’ under ‘Employee Services’. Fill in the request with accurate information, upload the required documents, and submit.

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E-mail and SMS notifications will be sent once Emirates ID registration is completed and medical fitness test has been scheduled.

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Complete the medical fitness test at the DIFC medical center located at level B1, The Gate. Dubai Health Authority will share the medical test result with the DIFC.

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Visa stamping will be processed once medical fitness result is issued by Dubai Health Authority.

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An e-mail notification will be sent once the visa stamping process is completed and DIFC Employee card is ready for delivery.

Visa Allocation by Space

In the UAE, the number of residence visas that a company can apply for is determined by the physical space that is available for each person working at the company. Firms may decide to rent a physical space, or a flexi-desk from a co-working facility or business center. If you choose the flexi-desk option, there will be a fixed cap on the number of visas and if you need to increase that quota, you will likely have to either move to a bigger space or look at options to increase your visa quota. According to the DIFC, if you are based out of a business center, the allocation is 1 visa/desk.

You can read more information about this on the DIFC website.

Golden Visa

This service request allows you to apply long term residence visa for high profile executives (with a monthly salary of more than AED 30,000) under the sponsorship of the DIFC entity, or investors with a minimum investment of AED 2 million in the DIFC entity or Property owners in the DIFC, for a long term Golden Visa. Approval of Golden Visa nominations is at the discretion of the General Directorate of Residency and Foreign Affairs.