DIFC and ADGM are the only two free zones in the UAE with genuinely separate gratuity rules, and they’re different from each other too. DIFC replaced gratuity entirely with a mandatory monthly savings scheme called DEWS in 2020. ADGM still runs on traditional gratuity by default, with an optional employer-offered savings alternative only since April 2025.
DIFC: DEWS Replaced Gratuity Entirely, in 2020
If you work for a DIFC-registered employer, the standard 21/30-day gratuity formula covered elsewhere on this site doesn’t apply to you at all.
DEWS works like this:
- Your employer contributes 5.83% of your basic monthly salary for each month during your first 5 years of service.
- That rises to 8.33% per month from year 6 onward.
- Contributions go into a ring-fenced trust account structure, currently administered by Equiom as trustee, with Zurich and Mercer involved in administration and investment management, regulated by the Dubai Financial Services Authority.
- There’s no one-year minimum service requirement the way standard gratuity has. Contributions start from day one.
- Employer contributions generally vest after one year of continuous service. Any voluntary extra contributions you make yourself are always fully yours, and vest immediately.
- If you worked in DIFC before 1 February 2020, any gratuity you accrued under the old system up to that date is preserved separately.
The practical effect is that DEWS money sits in your own account, growing with investment returns, rather than remaining an unfunded promise your employer only pays out when you leave. It’s also protected if your employer becomes insolvent, since the funds are held in trust rather than sitting on the company’s books.
ADGM: Still Traditional Gratuity, With an Optional Alternative Since 2025
This is where a lot of content online gets it wrong, and it’s worth being precise. ADGM has not replaced gratuity with a DEWS-style mandatory scheme. Under ADGM’s current Employment Regulations, effective 1 April 2025, the default entitlement is still a lump-sum gratuity, calculated on the same structure as the federal formula:
- 21 days’ basic wage per year for the first 5 years of service
- 30 days’ basic wage per year for each additional year
Two real differences from the federal formula are worth knowing. First, the 2-year salary cap that applies under federal law was removed under ADGM’s 2025 update, so ADGM gratuity isn’t capped at two years’ pay the way mainland gratuity is. Second, ADGM’s daily wage rate has historically been calculated based on the number of days in the year, rather than the flat 30-day month used under federal law, which can produce a slightly different daily figure. Also under the 2025 update, gratuity is now payable even where an employee is terminated for cause, which wasn’t guaranteed under ADGM’s older rules.
Since 1 April 2025, ADGM employers have also had the option, not the obligation, to offer employees a choice between traditional gratuity and an alternative pension or savings scheme. If an employer offers this choice and an employee accepts it in writing, that employee gives up their entitlement to the standard gratuity in exchange for the savings scheme instead. This is opt-in on both sides: an employer isn’t required to offer it, and an employee isn’t required to accept it if offered. If you work in ADGM, check your specific employment contract to see whether your employer has actually implemented this alternative, since traditional gratuity remains the default unless you’ve been offered and accepted the switch.
Why the Removed Cap Matters
The 2-year cap removal isn’t just a technical footnote, it changes real outcomes for long-serving employees. Under the federal formula, someone with AED 15,000 basic salary is capped at AED 360,000 in gratuity no matter how many years beyond that point they work. Under ADGM’s current rules, that cap doesn’t apply, so an ADGM employee with the same salary and, say, 30 years of service would keep accruing gratuity at the 30-day rate for every year past year 5, without hitting a ceiling. For long-tenured ADGM staff, particularly senior professionals who’ve spent decades in Abu Dhabi’s financial free zone, this is a meaningful, calculable difference from what the same career would produce on the mainland.
DIFC vs ADGM: Side by Side Comparison
| DIFC | ADGM | |
|---|---|---|
| Default system | DEWS (mandatory monthly savings) | Traditional lump-sum gratuity |
| Since | 1 February 2020 | Gratuity always applied; savings option added 1 April 2025 |
| Formula | 5.83% / 8.33% of basic salary monthly | 21/30 days’ basic wage per year |
| Minimum service | None, starts day one | 1 year |
| 2-year cap | Not applicable (funded monthly, not capped) | Removed under 2025 update |
| Savings scheme | Mandatory for all eligible employees | Optional, only if employer offers it |
| Protection if employer becomes insolvent | Funds held in trust, protected | Standard unfunded liability, same risk as federal gratuity |
What About DMCC, DAFZA, and Other Dubai Free Zones?
This is worth clearing up because search volume for “DMCC gratuity calculator” is real and growing, and it’s easy to assume DMCC works like DIFC since both are prominent Dubai free zones. It doesn’t. DMCC, DAFZA, and the large majority of other UAE free zones follow the standard federal formula under Federal Decree-Law No. 33 of 2021, the same 21/30-day structure covered on our homepage calculator and our JAFZA gratuity page. DMCC in particular formally confirmed its alignment with federal labour law provisions for gratuity, applying to the many thousands of companies registered there. DIFC and ADGM are the only two exceptions with genuinely separate employment legislation and gratuity frameworks, and neither DMCC nor DAFZA has ever run a DEWS-style scheme of its own.
FAQs
No, and they’re different from each other too. DIFC replaced gratuity entirely with the mandatory DEWS savings scheme in 2020. ADGM still uses traditional gratuity, on a formula similar to the federal one but without the 2-year cap, with an optional employer-offered savings alternative only since April 2025. Nearly every other UAE free zone, including DMCC, DAFZA, and JAFZA, follows the standard federal formula.
DEWS is DIFC’s mandatory workplace savings scheme. Instead of your employer owing a lump sum calculated at the end of your service, they pay 5.83% (or 8.33% after 5 years) of your basic salary into a trust account every month while you work. The money is yours, invested and protected, rather than an unfunded promise sitting on your employer’s books until you leave.
This page provides general information about DIFC and ADGM employment frameworks and is not legal advice. Both jurisdictions have their own courts and legislation, separate from mainland UAE law. If your situation involves DIFC or ADGM specifically, confirm details with your employer’s HR team, the DIFC or ADGM authorities directly, or a lawyer familiar with these jurisdictions.
For the standard federal formula that applies to most of the UAE, see our Dubai gratuity page or Abu Dhabi gratuity page, and use the UAE gratuity calculator on the homepage for a quick estimate.