New ADGM Employment Regulations 2024: Key Updates from the Previous Framework

The Abu Dhabi Global Market (ADGM) has overhauled its employment law framework with the Employment Regulations 2024, repealing the prior Employment Regulations 2019. These “New Employment Regulations” come into force on 1 April 2025, giving employers a transition period to update contracts and policies. The reforms aim to reflect global shifts in work practices and provide greater clarity on rights and obligations, thereby promoting best employment practices within ADGM. This article examines the major changes introduced in the new regulations – in areas such as probation, termination, working hours, leave, end-of-service benefits, anti-discrimination, remote working, and dispute resolution – and analyzes their implications for employers and employees. The focus is solely on how the ADGM framework has evolved from the previous regime, without comparison to UAE mainland or DIFC laws.

Broader Scope for Remote Work and Flexible Arrangements

One of the headline changes is the expanded definition of “Employee” to accommodate modern work models. Under the 2019 regulations, an individual had to hold an ADGM work permit and work in or from the ADGM to be considered an employee. The new rules remove this restriction, allowing companies to hire remote employees based outside ADGM. In other words, staff can now be on the ADGM company’s payroll even if working entirely abroad or outside the ADGM, which greatly increases flexibility in hiring and retaining talent. Correspondingly, the law introduces the concept of “Remote Employees” (whether in the UAE or overseas) and specifies that certain workplace provisions won’t apply to them – for example, requirements on physical workplace conditions (like office health and safety standards) do not apply to remote staff, and if they are based abroad, the visa and employer insurance provisions are exempted.

To support remote work, employers are now explicitly required to provide necessary equipment to remote employees, unless otherwise agreed. This ensures that remote staff have the tools to perform their job, aligning with best practices for work-from-home arrangements. For employers, this means budgeting for laptops or other equipment for off-site workers. For employees, it provides assurance that they can effectively work remotely without personal expense. Overall, by formally recognizing remote workers, ADGM’s new framework modernizes its scope to encompass global and flexible working arrangements, enabling ADGM companies to tap into a wider talent pool while maintaining employees’ rights and benefits regardless of location.

Clearer Terms for Part-Time Employees

The New Employment Regulations also bring clarity to part-time work, an area that was previously vague. In the past, there were no explicit rules on pro-rating benefits for part-time employees, leaving their entitlement to leaves and other benefits uncertain. The 2024 regulations now define part-time employment and mandate pro-rated leave and benefit entitlements based on the employee’s working days per week. For example, if a normal full-time employee receives 20 working days of annual leave, a part-time employee working 3 days a week would accrue a proportional amount of leave. This change protects part-time workers by guaranteeing they receive a fair share of benefits (such as vacation, sick leave, and end-of-service gratuity) relative to their schedule. Employers, in turn, must adjust HR policies to calculate and grant these entitlements correctly. The clarification removes ambiguity and helps both employers and part-timers understand their rights and expectations from the outset.

Employment Contracts and Hiring Obligations

Written Contract Requirement: ADGM continues to require that all employees have written employment contracts. Now, the new law strengthens this by mandating that contracts be in English and signed by both parties within one month of the employee’s start date. The one-month execution deadline existed in the old law, but the 2024 update makes it explicit and attaches penalties for non-compliance. If an employer fails to provide a duly signed English contract within one month, they can incur a fine (up to a Level 3 fine on ADGM’s standard fines scale). This change underscores the importance of documenting terms and ensures every employee has a clear, accessible contract early in the employment relationship.

Transparency in Recruitment: A new provision holds employers accountable for truthful representations during hiring. Previously, there was no specific penalty if an employer misled a job candidate about critical terms (such as salary, role, or conditions). Under the 2024 Regulations, employers can be fined for providing false or misleading information to job candidates about compensation, job duties, or working conditions. This addition seeks to promote fairness and transparency in recruitment. For employees, it offers legal recourse if they were lured into a job under false pretenses. For employers, it raises the stakes – recruitment processes and offer letters must accurately reflect the role to avoid liability.

Contract Amendments: The new rules also stipulate that any substantive changes to an employment contract must be agreed in writing by both employer and employee (except for minor administrative changes that do not affect the employee’s rights). This aligns with the principle of mutual consent and prevents employers from unilaterally altering key terms. Employers should hence document any contract variations (e.g. promotions, salary changes) with signed addenda.

Overall, these measures around hiring and contracts improve clarity and trust. Implication for Employers: They need to ensure timely issuance of contracts, review their onboarding checklist to include the one-month deadline and English language requirement, and train HR staff to avoid any misrepresentations during hiring. Implication for Employees: New hires can expect to receive a formal contract in English quickly, and they gain protection against deceptive job offers or unwritten changes to terms.

Probationary Period: Rights and Restrictions

Duration of Probation: The maximum probationary period remains capped at six (6) months – consistent with the old framework and now clearly reaffirmed in the new regulations. Employers cannot extend probation beyond six months. This cap protects employees from being kept in indefinite probationary status. Employers must decide within this period whether to confirm or terminate the employee.

Employee Entitlements During Probation: The New Employment Regulations clarify what employees are (and are not) entitled to while on probation, an area that caused some confusion under the old law. Key points include:

• Sick Leave: Employees on probation can take sick leave, but only as unpaid leave. Previously, probationary employees were not entitled to any sick leave at all. Now they may take up to one day of sick leave per month of probation, albeit without sick pay. This change recognizes that new employees might fall ill, allowing them time off to recover, though employers are not required to compensate those sick days during probation.
• Maternity and Parental Leave: Probationary employees are not entitled to paid maternity leave or paid ante-natal appointments. In practice, this means if an employee becomes eligible for maternity leave while still in her probation, the leave would be unpaid (though she would still have job-protected leave). This provision, coupled with a newly introduced 12-week service requirement to qualify for maternity pay (discussed under Parental Rights below), ensures that paid maternity benefits kick in only after a minimum tenure.
• Other Leave: An employee on probation may take other forms of leave (e.g. annual leave), subject to the employer’s approval. This implies that while on probation, taking vacation or personal days is not an automatic right – the employer has discretion to approve or defer such leave during the critical probation period.
• Notice Period: If either party wishes to terminate the employment during probation, a minimum of one week’s written notice is required. This one-week notice rule is carried over from the 2019 regulations. It provides a basic level of security for probationary employees so they are not terminated without any notice, while still allowing a relatively quick exit if things aren’t working out.
• Repatriation Flight: In the event an employer terminates a probationary employee who was recruited from abroad, the employer must provide a one-way repatriation flight ticket to the employee’s home country. The only exception is if the employee resigns to take up employment with another employer in the UAE, in which case the original employer is relieved of the repatriation ticket obligation. This clarifies the old ambiguity – previously it wasn’t explicit that even probationary leavers are owed a flight home. Now it is clear: termination at any stage (after relocation for the job) entitles the employee to a ticket back, protecting foreign hires from being stranded.

For employers, these probation provisions mean onboarding and probation management must be handled carefully: they should inform new hires of their limited benefits during probation (for example, that any sick days will be unpaid), and they must budget for a possible flight cost if a probationer is let go. For employees, there is now transparency about what to expect in the first few months – limited paid leave benefits but at least some allowance for unpaid sick time and guaranteed notice and return travel if things don’t work out.

Working Hours and Overtime

Standard Working Hours: The maximum standard working hours remain 48 hours per week (typically 8 hours per day in a 6-day week) under the new regulations. This is unchanged from the old law and is in line with international norms. Employees must also still receive at least one day off in every seven-day period (a standard weekend day off).

Overtime Consent: A notable change is that while the cap of 48 hours can be exceeded, any overtime now requires the employee’s written consent. In other words, an employer cannot unilaterally impose overtime beyond the standard hours without agreement. This empowers employees to decline excessive extra hours and encourages employers to formally agree on overtime arrangements (for example, through an opt-in agreement if an employee is willing to work longer hours). It recognizes work-life balance concerns, giving employees more control over their time.

Overtime Pay: The statutory overtime pay provisions have been removed from the ADGM law. Under the previous framework, there were specific requirements for overtime compensation (e.g. increased pay rates for hours worked beyond the normal workweek). The new regulations deliberately omit any mandated overtime premium, leaving it entirely to employer and employee to agree on overtime compensation (if any) as part of the contract or company policy. Employers should therefore ensure that the employment contract or HR policy spells out how overtime will be handled (whether as time off in lieu, additional pay at a certain rate, or no extra pay if on a fixed salary that covers overtime). While this change offers flexibility to employers, employees should be mindful to negotiate overtime terms up front since the law no longer guarantees extra pay. ADGM may issue guidance in the future on overtime practices, but as of now it’s a matter of agreement.

Ramadan Hours: In a new addition, the ADGM regulations now explicitly address working hours during Ramadan for Muslim employees. The working hours for Muslim staff are reduced by 25% during the holy month of Ramadan. This essentially mirrors the common practice in the UAE (where typically the workday is shortened by 2 hours in Ramadan). By codifying a 25% reduction, ADGM provides clarity to employers on adjusting schedules for observant Muslim employees in Ramadan. Non-Muslim employees’ hours are not automatically reduced by the law (employers may use discretion), but for Muslim employees the reduction is a right. Employers should plan ahead for coverage or shift adjustments during Ramadan to comply with this provision.

Annual Leave Carryover: The regulations made a subtle yet important change to annual leave policy. Previously, an employee could carry forward a maximum of 5 unused leave days into the next year if agreed by the employer. The new law flips this to a minimum of 5 days must be allowed to carry over. In effect, employers must permit at least five working days of accrued but untaken annual leave to roll over to the following leave year. This change benefits employees by ensuring they don’t lose earned leave at year-end (up to 5 days at least). Employers can still cap carryover (for example, they could choose to allow exactly 5 days and no more), but they cannot refuse carryover of at least that amount. Aside from carryover rules, the standard annual leave entitlement (which remains at 20 working days per year for full-time employees, as under the old law) is unchanged. Employers may still require employees to take annual leave on certain dates – the law continues to allow an employer to direct an employee to use their leave by giving at least one week’s notice.

In summary, implications: Employers in ADGM should update their employee handbooks to reflect the need for consent for overtime and the removal of guaranteed overtime pay, and include the Ramadan hours reduction for Muslim staff. They should also adjust leave policies to ensure at least 5 days of leave can carry over. Employees gain more say in overtime and enjoy clearer rights regarding carried-forward leave and Ramadan schedules.

Enhanced Leave Entitlements and Family-Friendly Policies

The New Employment Regulations introduce several enhancements to various leave entitlements, especially those related to family and compassionate circumstances. These changes align ADGM with more employee-friendly practices and provide greater support for work-life balance:

• Maternity Leave and Benefits: Statutory maternity leave remains 65 working days (approximately 3 months) as under the old law. However, the coverage and conditions have expanded. Previously, adoptive mothers were entitled to maternity leave only if adopting a baby under 3 months old. Now, maternity leave rights explicitly extend to women adopting a child under five years old, a significant broadening that recognizes adoptive parenting of toddlers and young children (not just newborns). Additionally, the new law explicitly covers situations of stillbirth and miscarriage: if a mother has a stillborn baby or a miscarriage after the 25th week of pregnancy, she is now expressly protected and entitled to maternity leave provisions. This compassionate inclusion means that such mothers can take maternity leave to recover without job loss, which was not clearly addressed before. Another important safeguard is that if an employee is terminated during her maternity leave, the employer must still pay her full maternity pay (unless the termination was for cause). In practice, this deters employers from dismissing someone on maternity leave to avoid paying benefits – it guarantees that maternity pay is provided even if the employment ends, so long as the dismissal isn’t due to gross misconduct.
• Qualifying Period for Maternity Pay: The new regulations introduce a 12-week qualifying service period to be eligible for paid maternity leave. This means an expectant mother must have worked for her employer for at least 12 weeks to receive maternity leave with pay. (She would still get the leave itself, but it could be unpaid if she has less than 12 weeks’ service.) This addition ensures that maternity pay is reserved for employees with a minimal tenure, balancing the interests of employers (who might be concerned about immediately paying benefits to very short-term hires) and employees (who still get leave but may not be paid if brand new). Many jurisdictions implement a similar qualifying period. Employers should take note to calculate an employee’s start date relative to her due date when determining paid maternity benefits.
• Paternity Leave: Paternity leave for new fathers remains at 5 working days as in the old law. The improvement is that it now explicitly applies to adoptive fathers as well. In the past, it wasn’t clear if a male employee adopting a baby was entitled to paternity leave; the new law clarifies that he is, putting adoptive fathers on equal footing with biological fathers. The conditions (such as the leave being typically paid and to be taken within a certain time of the birth/adoption) remain the same as before. This change promotes equitable caregiver leave for all types of new parents.
• Nursing Breaks: A new entitlement has been introduced for mothers returning from maternity leave. For nine months after childbirth, a new mother is allowed paid nursing breaks of up to one hour per day during work. This is in line with regional practices supporting breastfeeding mothers (for example, enabling them to arrive an hour late or leave an hour early, or take a mid-day break, to nurse the infant). Employers will need to accommodate this reduced working time for nursing employees, without salary deduction, for the specified period.
• Bereavement (Compassionate) Leave: The updated law adds a compassionate leave benefit that did not exist before. Employees are now entitled to 5 working days of paid bereavement leave on the death of a close family member. “Close family” is defined to include a spouse, parent, child, or sibling (covering the immediate family). This leave is to allow the employee time to grieve and make arrangements in the unfortunate event of such a loss. Previously, any bereavement leave would have been at the employer’s discretion; now it is a right, which shows a shift towards more humane workplace policies. Employers should update leave policies to incorporate this allowance, and employees should be aware that they can take time off with pay if faced with a family bereavement.

Overall, these enhancements in family-related leave entitlements demonstrate ADGM’s commitment to providing a supportive work environment. Implications: Employers will need to adjust their leave management – for instance, modify their HR systems to track the 12-week qualifying period for maternity pay, ensure adoption cases are flagged for the correct leave, plan staffing around potentially longer or more frequent leaves, and train managers about the new nursing break and bereavement leave rights. For employees, these changes offer greater security and support during significant life events like childbirth, adoption, and family loss. It can improve employee morale and loyalty, knowing that the law backs them in balancing work and family responsibilities.

Strengthened Anti-Discrimination and Harassment Protections

ADGM has reinforced its commitment to equal opportunity and a respectful workplace by updating and expanding its non-discrimination provisions:

• Protected Characteristics Updated: The list of grounds on which discrimination is prohibited was refined. Previously, the ADGM law prohibited employment discrimination on grounds such as gender, marital status, race, nationality, religion, age, and disability (and also “colour” was listed separately). The new regulations replace “gender” with “sex” as a protected characteristic, explicitly add “pregnancy and maternity” as protected categories, and remove “colour” from the list. In practice, the protection for pregnancy and maternity means it is now clearly unlawful to treat an employee unfairly or dismiss them due to pregnancy or taking maternity leave – a protection that existed in a limited form before, but now is unequivocally stated as a discrimination issue. Removing “colour” is largely a technical cleanup, since discrimination based on a person’s skin color is generally covered by race and nationality protections; its removal avoids redundancy. The switch from “gender” to “sex” aligns the terminology with that used in many jurisdictions and clarifies that discrimination against someone for being male or female (sex) is prohibited (and presumably it would also cover gender identity under interpretation, though not explicitly stated). For employers, these tweaks mean policies and training should explicitly mention “sex” and “pregnancy/maternity” in anti-discrimination clauses. For employees, it gives confidence that pregnancy is formally recognized as a protected trait, offering legal grounds if they face bias for maternity-related reasons.
• Introduction of Victimisation Protection: In a significant addition, the 2024 Regulations introduce detailed anti-victimisation provisions. Victimisation refers to retaliating against an employee because they have done a “protected act” in relation to asserting their rights (for example, complaining of discrimination or participating in an investigation about equal treatment). The new law makes it unlawful for an employer to subject an employee to any detriment (including dismissal) because the employee made or supported a complaint of discrimination. Protected acts include things like filing a discrimination claim, giving evidence or information in such a case, or making an internal complaint alleging a breach of the non-discrimination rules. If an employee raises concerns (in good faith) about discriminatory practices, the employer cannot punish them for speaking up. The law even clarifies that false allegations made in bad faith would not be protected – ensuring the provision isn’t misused. The inclusion of victimisation protection is crucial as it closes a loophole; without it, an employee might hesitate to assert their rights out of fear of reprisal. Remedies for victimisation are also outlined: an affected employee can directly apply to the ADGM court for a declaration that they were victimised and can seek compensation up to the equivalent of three years’ wages. The court can also order the employer to take specific steps to remedy the situation or mitigate the effects on the employee. This is a strong deterrent against retaliatory behavior. Employers must train their managers that any negative treatment of whistleblowers or complainants could result in hefty penalties. Employees should feel more empowered to raise genuine concerns, knowing the law protects them from retaliation.
• Harassment: While harassment (particularly sexual harassment) was already implicitly covered under the old discrimination provisions, the new regulations bolster the framework by the changes noted above (protected categories and vicarious liability, discussed below). “Harassment” is treated as a form of discrimination – for instance, harassment on the basis of sex, race, etc., is prohibited. The law continues to require employers to provide and maintain a workplace that is free of harassment, safe, and does not risk employees’ health (as was the case in 2019 regulations, and remains so). By strengthening related aspects (like making employers vicariously liable and adding victimisation protections), the new regime indirectly strengthens harassment protections too. Employers should ensure they have robust anti-harassment policies and reporting mechanisms in place.
• Vicarious Liability of Employers: In line with common law principles, the ADGM Employment Regulations now explicitly state that employers can be held vicariously liable for discriminatory acts, harassment, or victimisation committed by their employees in the course of employment. This means that if, for example, a manager sexually harasses a subordinate, the company itself can be legally responsible for that manager’s actions. The regulations also provide a defense for the employer: the employer may avoid liability if it can show that it took all reasonable steps to prevent the employee from engaging in the unlawful behavior. “Reasonable steps” could include having appropriate anti-discrimination policies, training staff on acceptable conduct, and promptly addressing any complaints. This provision essentially codifies what many jurisdictions follow – encouraging employers to be proactive in preventing discrimination/harassment, or else face liability. For employers, the implication is to review their training and policies because those will form the basis of a defense. For employees, this change ensures that they can hold employers accountable for the actions of supervisors or colleagues who violate the law, which often is crucial for getting redress (since individual perpetrators may not always be able to compensate a victim adequately, but the employer can).

Furthermore, if an employee successfully proves discrimination, harassment, or victimisation, the new law sets a clear limit on compensation (capped at three years’ salary as noted) and also allows compensation for “injury to feelings” – i.e., non-financial harm such as distress or humiliation. This was hinted at in prior law but now is clearly spelled out, aligning with remedies in jurisdictions like the UK.

Implications: Employers in ADGM must take these enhanced protections seriously: update employee handbooks to reflect the revised protected characteristics, ensure there is a zero-tolerance stance on discrimination, harassment, and retaliation, and perhaps introduce or strengthen training programs. The potential liability (including significant compensation awards and vicarious liability) means non-compliance is a costly risk. For employees, the workplace should become safer and more equitable, with stronger recourse available if they experience bias or harassment.

Protected Disclosures (Whistleblowing)

In addition to anti-discrimination measures, the ADGM Employment Regulations 2024 incorporate new whistleblower protections (referred to as protections for “protected disclosures”). This was introduced via an amendment in 2024 and now forms part of the employment law. Under these provisions, if an employee discloses information about wrongdoing in the workplace (for example, reporting legal violations, financial impropriety, or other misconduct), that disclosure is protected by law. Key points include:

• An employee who makes a protected disclosure is not considered in breach of any confidentiality agreement or duty by doing so. This means confidentiality clauses in contracts cannot be used to silence whistleblowers when they report issues in good faith.
• Employers are forbidden from retaliating or threatening retaliation against an employee for making or intending to make a protected disclosure. Retaliation could include firing, demotion, reducing benefits, or any action that would dissuade someone from whistleblowing.
• Employees who suffer retaliation for whistleblowing can seek remedies in court, similar to the victimisation remedies: the court can award compensation for losses and even injury to feelings, and order the employer to take steps to mitigate the damage caused.

These whistleblower protections mean ADGM employees have a safe channel to raise concerns about malpractice without fear of losing their job or being penalized. For employers, it encourages fostering an internal culture where employees can report issues openly. Companies should update their internal whistleblowing policies to align with these legal protections and ensure management understands that any reprisal against whistleblowers is unlawful.

Termination of Employment: Notice and Procedures

The new regulations fine-tune several aspects of termination, building on the previous framework but adding employee safeguards and clarifications:

Notice Periods: The standard notice periods remain unchanged from the 2019 law. This means: a minimum of 7 days’ notice for employees who have worked less than 3 months, and 30 days’ notice for those with 3 months or more service (some employers may agree longer notice for senior staff by contract, which is permitted). What is new is the introduction of a penalty for failing to adhere to these notice requirements. If an employer does not give the required notice (or pay in lieu as allowed), the employer can be required to pay the employee an amount equal to the wages and benefits the employee would have earned during the period of notice that was not given. In essence, if an employer breaches the notice rule, they must financially compensate the employee as if the employee had worked that notice period. This was implied before but now is explicitly a legal obligation, which incentivizes employers to either allow employees to work out their notice or properly compensate them if not.

Termination for Cause (Summary Dismissal): The new law continues to permit employers to terminate without notice in certain cases of gross misconduct (termination “for cause”). It adds clarity by stating that an employer may terminate for cause if an employee is absent from work without authorization. Repeated or extended unauthorized absence is now expressly recognized as valid cause for summary dismissal. While this was generally understood in practice, making it explicit helps employers know they are within rights to act if an employee absconds or abandons their job. Of course, other forms of gross misconduct (theft, violence, etc.) remain cause for immediate termination as well.

Payment in Lieu of Notice (PILON): Under the old ADGM rules, many employers would include a contract clause allowing them to pay out an employee’s notice period instead of having the person work through it. The New Employment Regulations significantly change this – an employer cannot unilaterally impose a payment in lieu of notice unless the employee provides written consent at the time of termination (or when either party gives notice). In other words, the practice of relying on a pre-agreed contract clause for PILON is no longer effective on its own. The employee must agree at termination to accept pay instead of working the notice. If the employee does not agree, the employer would have to let them serve their notice (or potentially still pay them but keep them as an employee on “garden leave” during notice). This change is very important for HR planning: it means employers should include garden leave provisions in contracts if they want the flexibility of removing an employee from active duty during notice, since a straight PILON clause won’t suffice. For employees, this offers a bit more control – they might negotiate terms of departure in exchange for agreeing to PILON, or otherwise insist on working notice which could extend benefits like housing or insurance coverage till the end of notice.

Right to Written Termination Reasons: Previously, if an employee asked for a reason for their termination, the employer was obliged to provide a written statement of the reasons, but there was no deadline or penalty for not doing so. The new regulations strengthen this right: upon an employee’s request, an employer must provide a written statement of the reasons for termination within 21 days. Failing to comply could expose the employer to legal sanctions. This change ensures employees can obtain official documentation of why they were let go – which can be important if they believe it was unlawful or if they need it for future job applications. Employers should prepare truthful and clear termination letters when requested, and diarize the 21-day deadline to avoid fines or disputes.

Post-termination Obligations: Two new requirements are introduced once an employment ends:

• Experience Certificate: An employee who leaves can request a “certificate of experience” (certificate of employment), and the employer must provide it within 14 days. This certificate should include the employer’s name, the employee’s name, dates of employment, the last position held, and the final salary. If an employer fails to provide this certificate in time, or if they issue a false/misleading certificate, they can be liable to pay a penalty of one month’s wages to the employee. This mirrors practices in some other jurisdictions where service certificates are mandated. It helps employees by formally documenting their work history. Employers should standardize a process for issuing these certificates promptly upon request.
• Visa Cancellation and Waivers: The law now prohibits employers from making the cancellation of an employee’s visa conditional upon the employee waiving any rights or claims. In the past, there were instances where an employer might delay canceling a former employee’s work visa (which is needed for the person to switch jobs or leave the country) until the person signs a settlement or waiver of claims. This practice is no longer allowed – an employer cannot use visa cancellation as leverage to force a waiver. (Notably, a properly executed settlement agreement is still permissible as long as it’s truly voluntary; the new law even specifies that a valid settlement should include a clause that the employee had the opportunity to take independent legal advice, to ensure the employee understood their rights before waiving anything.) The takeaway is that administrative processes like visa handling must be kept separate from legal settlements – employees cannot be coerced into giving up rights just to get their visa sorted. For employees, this offers protection that they can get their visa canceled (to move on) without signing away legal claims, although in practice most will settle amicably. For employers, it means any end-of-service settlement must stand on its own merits (usually with an ex-gratia payment or other consideration) rather than tying it to visa formalities.

Final Pay and Settlements: On termination, all final wages and entitlements must be paid within 21 calendar days of the last working day. The old rule was 14 days; the new law gives employers a bit more time (21 days) but introduces a penalty for missing this deadline. If an employer fails to pay all due amounts (salary, accrued leave, end-of-service gratuity, etc.) within 21 days, a penalty accrues equal to one day of the employee’s wages for each day of delay. This penalty is capped at 6 months’ worth of wages maximum. There is also a grace threshold: no penalty is applied if the outstanding amount is equivalent to less than one week’s wages (in other words, minor administrative delays on small sums won’t trigger the fine until 7 days have passed). Additionally, a court has discretion to reduce or waive the penalty if the employer can show a good reason or if the employee’s conduct contributed to the delay. Nonetheless, the message to employers is clear – timely payment of end-of-service dues is critical, or there will be a financial consequence. This aligns ADGM with international best practice of prompt final settlements (and is actually stricter in enforcement than many jurisdictions). Employers should streamline their exit procedures to calculate and pay dues quickly. For employees, this provision is highly beneficial: it ensures they get what they are owed without undue delay, and it gives them a means to claim additional pay if the employer drags its feet.

End of Service Gratuity and Retirement Benefits: The end-of-service gratuity (EOSG) system – a lump-sum benefit based on length of service – has been maintained with some employee-friendly tweaks:

• The formula for calculating gratuity itself remains the same (21 days of basic wage per year for the first 5 years, 30 days per year thereafter, as per the old law). However, an important change is that the previous cap of two years’ wage for the maximum gratuity payout has been removed. Under the old law, no matter how long an employee served, the gratuity could not exceed the equivalent of 24 months’ basic pay. Now, with the cap abolished, long-serving employees will continue to accrue gratuity without an upper limit. This significantly increases the potential benefit for employees with very long tenures and should be factored into employers’ financial planning for long-term staff liabilities.
• It is now explicitly stated that the employee’s basic salary (the amount used to calculate gratuity) must be at least 50% of the total salary. This prevents employers from structuring pay into a low basic wage and high allowances to dilute the gratuity. For example, if an employee’s total monthly compensation is AED 10,000, at least AED 5,000 must be designated as basic salary for gratuity purposes. This ensures a fair calculation base and aligns with common regional practice. Employers may need to review contracts, and if an employee’s basic is currently set very low relative to total package, adjustments might be needed to comply with the 50% rule.
• Gratuity Payable on Termination for Cause: Perhaps one of the most impactful changes – under the Old Law, if an employee was terminated for cause (serious misconduct), they could be denied their end-of-service gratuity. The New Law reverses this for the sake of fairness: even if an employee is terminated for cause, they are still entitled to receive their accrued end-of-service gratuity (as long as they have a year or more of service). This change aligns ADGM with the idea that gratuity is an earned benefit akin to a pension, rather than a reward that can be forfeited. It provides greater financial security to employees; even in scenarios of dismissal for wrongdoing, an employee won’t lose the savings-like benefit of their past years of service. Employers must be aware that no matter the cause of termination, they should budget for paying out gratuity.
• Pension/Savings Plans: ADGM continues to permit employers to offer an alternative retirement benefit arrangement in lieu of the end-of-service gratuity, such as a contributory pension scheme or a funded savings plan, provided it meets certain criteria. The new regulations confirm that this option for employees to participate in a pension or savings scheme as an alternative to gratuity remains available. If an employer does set up such a scheme (often with the employee’s consent to contract out of the statutory gratuity), the contributions to that scheme would replace the accrual of the standard gratuity. This is similar to the approach seen in some other jurisdictions (for example, the DIFC introduced a mandatory savings scheme). While ADGM’s new law doesn’t mandate a change to a savings scheme, it keeps the door open for modernizing end-of-service benefits on a company-by-company basis. Employers considering this should ensure any scheme is properly structured to at least match the value of gratuity benefits, and employees should understand their rights to either keep the gratuity or opt into an alternative if offered.

Implications for termination and end-of-service changes: Employers in ADGM will need to revise their termination procedures and templates: update contracts to include garden leave, remove automatic PILON enforcement without consent, and inform managerial staff about the new requirements (reason letters, visa handling, certificates). Payroll and finance teams must be ready to calculate final settlements swiftly and account for the fact that even terminated-for-cause employees get gratuity and that long-serving employees’ gratuities are uncapped. From a budgeting perspective, the removal of the cap and guarantee of payout in all cases could increase the liabilities on the balance sheet for longstanding staff – companies might consider whether offering a pension plan (with regular contributions) is prudent to manage that. For employees, these changes greatly enhance their position: they are assured of receiving their earned benefits and wages on time when leaving, with legal remedies if that doesn’t happen; they cannot be strong-armed during the exit process (visa/waiver issue); and they will not lose their hard-earned gratuity even if termination is contentious.

Dispute Resolution and Enforcement in ADGM

The evolution of the ADGM Employment Regulations also strengthens the mechanisms for enforcement and resolving disputes, thereby boosting confidence that the rights in the law are meaningful:

• ADGM Courts Jurisdiction: As before, employment disputes in ADGM are heard by the ADGM Courts, which are specialized courts operating on an English common law model. The new regulations reaffirm that employees or employers can bring claims to the ADGM Court for breaches of the employment law (such as unpaid wages, discrimination, etc.). What the 2024 update does is provide more detail on certain remedies the Court can order (e.g. the cap on discrimination/victimisation compensation of 3 years’ wages noted earlier, and the late payment penalties). By codifying specific remedies, the law gives the courts clear guidance and gives parties a better idea of potential outcomes. For example, an employee now knows that if they sue for discriminatory dismissal, the maximum compensation is three years’ salary. This transparency can encourage earlier settlement of disputes because both sides can assess the risk more concretely.
• Administrative Fines: The Registration Authority (RA) of ADGM has the power to enforce administrative penalties for certain breaches of the employment regulations. The new law introduced or increased fines for a range of non-compliance issues – for instance, failing to provide a contract on time, misrepresenting job offers, not paying wages or end-of-service dues promptly, or not issuing a termination reason or certificate when required. These fines (often calibrated by levels) mean that an employer could face regulatory action by the ADGM authorities in addition to any court claims by employees. The presence of fines for specific offenses (e.g. misleading a candidate, which can trigger a fine) is new and emphasizes compliance. Employers should treat the ADGM Employment Regulations similar to how they would treat other regulatory requirements – with proper internal controls and audits to ensure they are meeting obligations, or risk monetary penalties and reputational harm.
• Settlement Agreements: The law explicitly acknowledges that employers and employees can settle disputes by agreement. The new requirement that the employee confirm they had a chance for independent legal advice in a settlement aims to make such settlements more robust if later challenged. In practice, this means if an employer is terminating someone and wants a full waiver of claims, they should consider offering to pay for the employee to get legal advice on the settlement. While this adds a step, it ultimately protects the employer by preventing the employee from arguing they didn’t understand what they signed. It’s an example of the law encouraging fair dispute resolution out of court.
• No Retaliation / No Conditional Visa: As mentioned, the law prohibits retaliation and using visa cancellation to pressure employees. These changes ensure that if a dispute arises or an employee asserts their rights (like filing a complaint or leaving the company), the employer must handle the situation lawfully and cannot resort to tactics that undermine the legal process.
• Time Limits for Claims: The new regulations do not explicitly state a change to limitation periods for employment claims in the summaries we have (and likely they follow a standard period, potentially 6 months for employment-related claims similar to other jurisdictions, or as set by ADGM Court rules). It would be prudent for employees to bring claims promptly. The ADGM Courts Procedure may set specific time limits, so both employers and employees should be aware of any applicable limitation periods to avoid losing rights by delay.

Implications: For employers, the enforcement landscape in ADGM means that compliance is not just a theoretical requirement – it’s backed by active oversight (the RA can fine) and an accessible legal forum for employees (ADGM courts). Companies should invest in legal compliance reviews of their employment practices now that the new law is in place, to identify any gaps that could lead to disputes or fines. For employees, the strengthened dispute resolution framework means their rights are more than just on paper: there are clear avenues to seek justice (whether through complaints to the RA or claims in court) and better protections against being victimized for doing so. In a sense, ADGM’s employment regime has matured, offering a balance of preventative (fines, policies) and remedial (court compensation) measures to ensure a fair workplace.

Implications for Employers and Employees

For Employers: The introduction of the New Employment Regulations in ADGM represents a shift toward greater accountability and higher compliance standards for companies. Employers will need to review and update their employment contracts, staff handbooks, and HR policies to align with the new requirements. Key actions include: adjusting template contracts to meet the English language and signature deadlines; revising probation letters to clarify limited benefits; updating overtime policies to obtain consent; modifying leave policies (annual leave carryover, new parental and bereavement leaves); ensuring payroll systems can handle the 21-day final settlement rule and gratuity calculations with no cap and 50% basic salary rule; and strengthening anti-discrimination and whistleblowing policies. Training sessions for HR and management are advisable so that those implementing the policies understand the new rules – for example, not to insist on a resignation during maternity leave, or how to handle a request for a certificate of service. Employers should also be mindful of the increased legal risks: non-compliance can result in fines or employee lawsuits. There is greater potential liability for discrimination or harassment cases (with sizable compensation awards possible) and for improper termination processes. In short, employers in ADGM must foster a more compliant and transparent workplace culture. While some changes may increase operational costs (such as providing equipment to remote workers, paying gratuity even for cause terminations, or extending leave benefits), these are balanced by the benefits of attracting and retaining talent in a fair work environment. Organizations that proactively adapt will not only avoid penalties but also position themselves as employers of choice in the ADGM free zone.

For Employees: The new regulations largely tilt toward improving employee rights and benefits, which is welcome news for those working in ADGM. Employees gain clearer rights (e.g. part-time workers now know how their benefits are calculated; remote workers know their status is recognized) and stronger protections (e.g. against unfair dismissal, discrimination, or late payment of dues). The work environment is likely to become more supportive: with explicit anti-discrimination and victimisation rules, employees can feel safer reporting issues. The enhancements in leave (maternity, paternity, nursing, bereavement) mean employees can better balance work with family needs without fear of losing their job or income. The guarantee of end-of-service gratuity regardless of how the employment ends provides peace of mind that long-term service will be rewarded like a retirement benefit. Also, knowing that any dispute can be taken to an English-language ADGM court with a transparent legal process gives employees confidence in enforcing their rights if necessary. They should, however, also note their responsibilities: for example, even though they have protections, employees should still adhere to company procedures (like providing notice of resignation, not going AWOL since absence can justify summary dismissal, etc.). The law tries to be fair, so abusing the new provisions (e.g. making false claims) is not protected. By understanding the new framework, employees can better advocate for themselves and ensure their entitlements (if something is not provided, they now have clear grounds to request it, citing the regulation if needed).

In conclusion, the ADGM Employment Regulations 2024 mark a significant evolution of the free zone’s labour framework – modernizing it to accommodate remote work, bolstering employee rights, and clarifying obligations to reduce disputes. Both employers and employees should familiarize themselves with these changes. For employers, compliance will be key to avoiding sanctions and maintaining a productive workforce. For employees, the changes provide greater security and fairness in their employment relationships. As ADGM continues to grow as a global business hub, these balanced regulations help foster a stable and attractive working environment within the ADGM’s jurisdiction. By focusing on clarity and equity, the new law benefits the entire ADGM community, aligning it with international best practices while addressing the practical needs of the local context.

How can DY Lawyers and Legal Consultants help you? 

At DY Lawyers and Legal Consultants, we provide legally sound solutions that cater to our clients’ needs in a highly efficient and transparent manner. Our team of corporate lawyers in Dubai drafts contracts, agreements, and internal policies for your institution or corporation in a professional manner so that your organization does not face any legal hassle. 

What services does DY Lawyers and Legal Consultants provides?

Our law firm in Dubai provides drafting, reviewing, and legal risk assessment of all the agreements and internal policies relating to your organization in such a manner that it covers all your needs and protects your business from legal hassle, as compliance is ensured. The following services are being provided by our law firm as follows: 

• Legal Contract Drafting Services
• Policies and Procedures Drafting 
• Risk Management 
• Legal Attestation 
• Litigation 
• Arbitration 

At our law firm, our primary goal is to safeguard the interests of our clients while protecting their businesses from any potential legal or compliance-related risks. We understand that navigating the complexities of the law can be daunting, which is why we are dedicated to providing personalized and comprehensive legal solutions tailored to meet the unique needs of each client. 

Our team is comprised of highly qualified lawyers and legal consultants who bring a wealth of experience across various segments of law. From corporate governance to regulatory compliance, our experts possess the in-depth knowledge necessary to address even the most intricate legal challenges. 

We pride ourselves on building strong relationships with our clients, taking the time to listen and understand their objectives, concerns, and the specific legal landscapes in which they operate. By doing so, we can develop proactive strategies that not only mitigate risk but also empower our clients to seize opportunities for growth and innovation. 

At our firm, you can expect open communication, timely updates, and a commitment to achieving the best possible outcomes. We believe that our clients deserve a law firm that is not just a service provider, but a trusted partner in their journey towards success. 

Let us work together to secure your interests and create a solid legal foundation for your business. Your peace of mind is our priority, and we are here to support you every step of the way. 

For more information, feel free to reach out to us today at [email protected]  or by phone at +971 551470302. We look forward to assisting you!

Ready to protect your business interests with a solid employment contract? DY Lawyers & Legal Consultants offer expert legal services for drafting and reviewing custom-tailored agreements in the UAE and globally. Contact us today to secure your business with a professionally crafted employment agreement.

Key Takeaways

A well-drafted employment agreement tailored for the UAE and international context is essential for a successful business relationship. Make sure each clause is clear, compliant with local laws, and appropriate for the industry. Use well-defined terms and allocate risks sensibly. And remember – professional legal support (like the DY Lawyers team) can help turn a generic template into a contract that truly works for your business.

Disclaimer

The content of this Article is provided for informational purposes only and does not constitute legal, financial, or other professional advice. Neither the author nor DY Lawyers and Legal Consultants or any of its affilates makes any representation or warranty, express or implied, as to the accuracy, completeness, or adequacy of the information contained herein, and expressly disclaims any and all liability for errors or omissions therein or for any reliance placed upon such information.

No reader should act or refrain from acting on the basis of any matter contained in this Article without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue. Reliance on any information contained in this Article is solely at the reader’s own risk, and DY Lawyers and Legal Consultants disclaims all liability and responsibility for any loss or damage that may arise from or relate to use of or reliance on such information.