Introduction

In recent years, Dubai International Financial Centre (DIFC) has cemented its status as a premier global financial hub, attracting a diverse array of businesses and professionals. With evolving business strategies, market downturns, or regulatory challenges, organizations operating in DIFC may face the critical decision to cease operations through a strike-off or formal liquidation. At the heart of this process lies a complex interplay of legal obligations—chief among them, the handling of employee entitlements and procedural compliance with UAE labour and company closure regulations.

This expert legal analysis unpacks the latest legal landscape for DIFC company strike-offs and closures in light of 2024-2025 UAE law updates, including Federal Decree-Law No. 33 of 2021 (as amended), DIFC Employment Law (DIFC Law No. 2 of 2019, as amended), and Ministerial Guidelines issued by the Ministry of Human Resources and Emiratisation (MOHRE). We scrutinize the statutory exit steps, the risks of non-compliance, and practical best practices for HR, legal teams, and executives. This guidance is indispensable for practitioners seeking to protect business continuity, uphold employees’ rights, and achieve seamless legal compliance during company closure within the DIFC and the wider UAE context.

Table of Contents

Key Legislation and Authorities

The legal intricacies of company closure in the DIFC are governed by a blend of local and federal statutes, DIFC-specific regulations, and mandatory employment rules. The primary sources include:

  • DIFC Companies Law (DIFC Law No. 5 of 2018) – sets the procedural norms for company deregistration.
  • DIFC Insolvency Law (DIFC Law No. 1 of 2019) – provides alternative mechanisms for formal winding up and creditor settlements.
  • DIFC Employment Law (DIFC Law No. 2 of 2019, as amended by DIFC Law No. 4 of 2020) – governs the minimum rights of employees during termination, redundancy, and company closure.
  • Federal Decree-Law No. 33 of 2021 (UAE Labour Law) – as applied to non-financial free zones, for comparative context.
  • UAE Federal Law on Bankruptcy (Federal Decree-Law No. 9 of 2016, as amended) – relevant for formal insolvency procedures.
  • MOHRE regulations and Cabinet Resolutions – guidance on end-of-service benefits and exit requirements.

The DIFC’s autonomous legal framework gives it a unique position. However, the centre follows international best practices, with close alignment to UAE federal law, especially post-2021 reforms. All company closure activities must also adhere to DIFC Authority and Registrar procedures, as well as the Dubai Registrar of Companies (ROC) notifications.

Recent UAE Law 2025 Updates

The legal regime has witnessed significant updates impacting both closures and employment terminations:

  • Federal Decree-Law No. 33 of 2021 (current UAE Labour Law) introduced fixed-term employment contracts, streamlined redundancy, and clearer end-of-service entitlements.
  • DIFC Employment Law Amendments 2020/2023 reinforced the structure for redundancy, sick pay, unused leave, and payments of end-of-service gratuity (the Employees’ Workplace Savings Scheme replaced the old gratuity system for many).
  • MOHRE Ministerial Resolutions (2022, 2024) clarified documentation, notification, and settlement requirements for exiting firms.

The combination of these reforms demands heightened diligence for legal, HR, and compliance teams tasked with stewarding a just, transparent, and legally sound company closure or strike-off.

Framework of DIFC Company Strike Off and Closure

What Constitutes a Company Strike Off?

In DIFC, “strike off” refers to the administrative removal of a company from the DIFC Register, either voluntarily or compulsorily. Distinct from formal liquidation governed by Insolvency Law, strike-off is typically pursued when a business is solvent but seeks to cease trading. Voluntary dissolution may follow where companies wish to wind up affairs in an orderly manner.

Procedural Steps Under DIFC Companies Law

  1. Board and Shareholder Resolution: Clear internal approval is required, evidenced by a directors’ or shareholders’ resolution for winding up or strike-off.
  2. Settling Debts and Liabilities: Directors must ensure all liabilities—including employee entitlements—are settled in full prior to closure notification.
  3. Regulatory Notification: Formal notice must be given to the DIFC Registrar of Companies.
  4. Public Announcements: In some cases, public notice requirements apply to inform potential creditors and stakeholders.
  5. Striking Off or Voluntary Liquidation Application: The relevant form is filed. For voluntary strike-off, Form ROC-STRIKE-OFF is submitted, with supporting evidence of no outstanding obligations.
  6. Receiving Strike-Off Confirmation: The ROC investigates, may issue queries, and upon satisfaction, confirms strike-off with final notice.

Key DIFC Authority Guidelines

  • The company must be up-to-date with all filings, annual returns, and licensed activities.
  • No ongoing regulatory or court proceedings should be pending.
  • All employee matters must be resolved prior to application.

Statutory Employee Entitlements in DIFC Closures

Employee Protections Under DIFC Employment Law

During company closure or strike-off, DIFC Employment Law (DIFC Law No. 2 of 2019 and its amendments) places the following obligations on employers:

  • Redundancy Procedures: Employees whose employment is terminated due to closure must receive written notice (minimum of 30 days, unless otherwise agreed in contract), full salary up to the termination date, and all accrued benefits.
  • End-of-Service Benefits: For most, entitlements are now channeled through the DIFC Employee Workplace Savings (DEWS) Plan, which replaced the legacy gratuity regime. Employers must ensure full contributions to date and transparency over accounts.
  • Unpaid Salary and Allowances: Immediate payment of any outstanding wages, commissions, and allowances is required by law.
  • Unused Leave Compensation: Employees are entitled to payment for accrued but unused annual leave days.
  • Relocation, Repatriation, and Visa Costs: For expatriates, employers must cover repatriation costs consistent with contract and statutory obligations.

Relevant Legal Provisions

  • DIFC Employment Law Articles 56–62: Rights to payment, notice, and end-of-service compensation.
  • Article 63(2) mandates liquidation of all salary and benefits within 14 days of termination.
  • Article 63(3) stipulates penalties for delayed or incomplete settlement.

Practical Insights

Businesses must:

  • Conduct a detailed audit of all workforce obligations prior to closure procedures.
  • Disburse all entitlements via traceable banking channels, with documentary evidence retained for compliance audits.
  • Engage with the DEWS Scheme facilitator (Zurich Workplace Solutions) to verify final employee balances and facilitate timely payment or transfer.

Exit Steps and Compliance Process

Phased Approach to Company Closure and Employee Settlements

  1. Pre-Closure Audit: Comprehensive review of all company debts, with a focused audit on employee-related liabilities (salaries, DEWS contributions, leave accruals, visa and repatriation costs).
  2. Notification:
    • Internal – Employees should receive written notification with details of their entitlements, reason for termination (redundancy due to closure), and expected timeline.
    • Regulatory – Notification to DIFC ROC, Labour Affairs Department, and DEWS trustee/facilitator.
  3. Settlement of Dues:
    • Prepare a settlement matrix for each employee.
      Table suggestion:
      Employee Name Final Salary Unused Leave DEWS Balance Repatriation Total Due Payment Status
      Jane Doe AED 20,000 AED 5,500 AED 60,000 AED 6,000 AED 91,500 Paid
  4. Visa and Residency Cancellation: Employers must cancel visas and report to immigration authorities for all departing expatriates.
  5. Final Regulatory Notification: Issue final notice to DIFC Registrar, confirming full discharge of workforce and all entitlements paid.

Official Documentation

  • Final Settlement Letters for Employees
  • DIFC Registrar Clearance
  • Proof of DEWS Discharge/Transfers
  • Visa Cancellation Reports

Visual Placement Suggestion

Consider embedding a flow diagram outlining the end-to-end process from pre-closure audit to ROC confirmation of strike-off.

Comparison: Old vs New Regulations

Key Shifts in Employee Entitlements and Closure Process

Aspect Pre-2020 (Old Regime) 2021–2025 (New Regime)
Redundancy Rights Limited clarity on redundancy as valid termination Explicit redundancy provisions; written notice required
End-of-Service Gratuity Conventional gratuity formula (21–30 days’ pay/year) DEWS Plan contributions; transparency, portability, real-time balance access
Notice Period Variable, lacked statutory minimum Statutory & contractual minimum (generally 30 days)
Settlement Timeline No rigid compliance timeline Mandatory settlement within 14 days post-termination
Penalties for Failure Low, rarely enforced Stricter penalties, public reporting of defaulters

Professional Analysis

The reforms provide greater certainty for both employers and employees. The statutory requirement for timely payments, robust documentation, and use of the DEWS Plan significantly elevates compliance standards, diminishing litigation risk and reputational harm for organizations.

Case Studies and Practical Examples

Case Study 1: Solvent IT Consulting Firm Exiting the DIFC

Scenario: A mid-sized IT consulting firm with 10 multicultural employees elects voluntary strike-off due to restructuring.

  • Challenge: Ensuring final DEWS contributions, calculating unused leave, and providing letters for future employment.
  • Resolution: Company uses an external legal consultant for an entitlement audit. All dues are settled within 10 days, with ROC clearance received in 3 weeks. Zero post-closure claims. The process ensured employee goodwill in future ventures.

Case Study 2: Dormant Brokerage Failing to Notify DEWS

Scenario: A brokerage, dormant after market downturn, proceeds with strike-off but omits final DEWS payments.

  • Consequence: Ex-employees file complaints. DIFC Authority intervenes and imposes a financial penalty plus public censure. The company endures reputational damage and is barred from future DIFC registrations.

Case Study 3: Expat Employee Entitlement Disputes

Scenario: An expatriate’s employment terminates on company closure. Agreement is unclear on repatriation costs.

  • Advisory: Under DIFC Law, if repatriation is part of contract or industry standard, employer must pay. Legal mediation recommended to avoid labor court escalation.

Risks of Non-Compliance and Strategic Guidance

Regulatory and LegalRisks

  • Monetary Penalties: Significant per-employee fines for late payment of entitlements or incomplete documentation.
  • Criminal Liability: Rare but possible in severe wage theft or visa fraud cases under UAE Penal Code and Labour Law.
  • Future Licensing Issues: Non-compliance can result in bans from DIFC or other UAE free zones, and negative business registry marks.
  • Litigation and Labour Disputes: Employees may file claims with DIFC Courts or MOHRE, leading to protracted legal costs and reputational harm.

Mitigation and Compliance Strategies

  • Engage a legal consultant early in the strike-off planning phase.
  • Adopt a ‘no employee left behind’ policy: settle all dues pre-application.
  • Maintain detailed, transparent records for a minimum of five years post-closure, in line with DIFC Law.
  • Communicate transparently with all workforce stakeholders—clear, documented notifications prevent misunderstandings and litigation.

Compliance Checklist and Process Flow

Practical Compliance Checklist

Checklist Item Status
All ROC filings up-to-date Yes/No
Board & shareholder resolution Yes/No
Final payroll and unused leave computed Yes/No
DEWS balances reviewed & settled Yes/No
Visa cancellations processed Yes/No
Final settlement letters issued Yes/No
DIFC ROC notified, formal strike-off submitted Yes/No

Suggested Visuals

  • Process infographic: Company Closure Workflow from Board Resolution to ROC Strike-Off.
  • Risks Table: Penalties for late settlement vs compliant closure.

Conclusion and Forward Outlook

DIFC company closures and strike-offs demand a high level of legal rigor, with new regulatory frameworks placing employee rights at the center of the process. The shift from discretionary employer practices to statutory mandates—especially with the DEWS Scheme, explicit redundancy codes, and real-time compliance oversight—redefines best practices in the UAE’s business landscape as of 2025.

Executives, HR professionals, and in-house legal teams must proactively align with these enhanced standards to ensure business continuity, minimize risk, and foster a culture of trust, even at exit. The stakes—financial and reputational—are higher than ever for organizations in Dubai and the broader UAE.

Going forward, businesses should institutionalize closure readiness by:

  • Reviewing employment contracts yearly for compliance with DIFC and UAE law updates.
  • Investing in legal training for HR and payroll staff on latest closure protocols.
  • Fostering transparent communication and documentation practices that support both compliance and employee relations.

Legal frameworks will continue to evolve as the DIFC and UAE position themselves among the world’s most robust, transparent, and employee-focused business jurisdictions. Early engagement with specialist legal advisers is therefore recommended—not only to ensure compliance, but also to drive sustainable exit strategies in an era of rapid regulatory advancement.