Employment Law Amendment Law DIFC Law No. 4 of 2021
DIFC Amendment Employment Law 2021
Sarah Malik and Saher Khan
On 21st September 2021, following the consultation on the DIFC Law No. 2 of 2019 (as amended by DIFC Law No. 4 of 2020) (“Old Employment Law”) announced by the Dubai International Financial Centre Authority (“DIFCA”) in February 2021, the DIFCA confirmed the consultation by way of DIFC Law No. 4 of 2021 (“Amended Employment Law”) and announcing the Employment Regulations 2021 (“the New Regulations”). The Amended Employment Law and the New Regulations come into effect immediately.
The Amended Employment Law introduced several changes which are important for DIFC Employers and employees. The New Regulations assists DIFC employers who are seeking an alternative to the DIFC Employee Workplace Savings Scheme (“DEWS”).
Some of the key changes introduced under the Amended Employment Law are summarised as follows:
- Although as per Clause 10 of the Old Employment Law, the limitation period for employees to bring claims in the DIFC Courts continues to remain 6 months, the Amended Employment Law provides that an employee may bring a claim/s during the course of their employment. This may give rise to discrimination claims whilst employed.
- For employees under a fixed-term employment contract for six months or less, the probationary period (if any) must not go beyond half the period of the term of the employment contract.
- If an employee/s is working from home, the employer is discharged of his obligation to provide basic workplace health and safety duties to the employee.
- The Amended Employment Law also introduced new provisions in respect of a 2-year time limit for an employee to bring claims at the DIFC Courts for unlawful deductions of wages (with caveats).
- An employee is not prohibited from rolling over at least 5 vacation days per vacation leave year.
- If an employee is under a number of fixed-term employment contracts with the employer, the duration of all employment contracts must be totalled to ascertain the employee’s period of service for the purposes of calculating their end of service gratuity and contributions into DEWS.
- The definition of “Additional Payment” as stated in the Old Employment Law has been amended to include commission, bonus payments, incentives and all other payments which are discretionary or calculated in reference to any profits made by the company, or an associate of the company. The “Additional Payment” may be omitted when calculating an employee’s DEWS contributions.
- Provisions in respect of settlement agreements, employees’ statutory obligations and discrimination and harassment in the Old Employment Law will now extend to include employees who are seconded, and short-term employees will also benefit from protection from discrimination and harassment.
The New Regulations welcome the following provisions:
1. A Certificate of Compliance will now only be issued to Qualifying Schemes that are established as an EMP Scheme as DIFC Trust with both the operator and administrator being in the DIFC and are regulated by the DFSA.
2. Any Certificates of Exemption will only be delivered to an employer for specific employees in the following circumstances:
- If the employer is required by law in another country to make contributions such as pensions or retirement into a Scheme for their employees; or
- If the employer is making contributions into a Group Scheme for its employees and the amount of the payment is in surplus of the Core Benefits that is payable to Employees under the Amended Employment Law. It should be noted that a scheme will only classify as a “Group Scheme” if it is in at least four countries (this may be waived on the DIFCA’s discretion), is restricted to employees of the Group and is regulated by a financial services regulator of the jurisdiction.
4. Employers who hold a Certificate of Compliance or Certificate of Exemption will be provided a grace period of 12 months to conform with the New Regulations.
5. US$500 will be charged as fee when applying for a Certificate of Compliance or a Certificate of Exemption.
6. Employers will now be obligated to notify the Operator of a Qualifying Scheme (Zurich for DEWS) of any new variation in circumstances that will affect the sum of an Employee’s contributions.
The Amended Employment Law and the New Regulations are welcomed in the ongoing strive to provide clarification. As employment law evolves within the DIFC to keep up with the changing employment landscape, the effects of the pandemic, new working patterns, the workforce and the protections offered, we have no doubt that further clarifications will be provided in due course. The law is keeping abreast of the on-ground changes as required.
This publication is not intended to offer legal advice and is solely for informational purposes.
Also published by LexisNexis Middle East in the LexisNexis Middle East HR Alert December 2021