The new version of the DIFC Employment Law – Law No.2 of 2019 (the “New DIFC Employment Law”) – will come into force on 28 August 2019 and will entirely substitute the existing employment law regime in operation in the DIFC – Law No.4 of 2005, as amended (the “Old DIFC Employment Law”).
Employers are instructed to have their employment contracts, policies and handbooks up-to-date and in compliance with the New DIFC Employment Law before the go-live date in August 28, 2019.
Application
- All employers and employees can now contractually opt into the New DIFC Employment Law;
- The new law recognises part-time and short-term employees;
Limitation period
Save in discrimination cases, employment claims must be brought before the DIFC Court within six months of the employee’s termination date.
Secondments
The notion of “secondments” has been expressly recognised under the New DIFC Employment Law with a specific secondment card being required to be procured and maintained by the parties from the DIFC Authority in order to legitimise and validate the secondment arrangements.
Late payments
The late penalty payment regime will now only be activated where the amount due and not paid to an employee (which expressly excludes any bonuses, grants and/or commission payments) is thought by the DIFC Court to be in excess of an employee’s weekly wage; The penalty will:
- Have the maximum limit amount of six months’ daily wage;
- Be waived by the DIFC Court in respect of any period during which a dispute is pending in the DIFC Court or where the employee’s unreasonable conduct is the material cause of the employee failing to receive the amount due from the employer.
Discrimination
Anti-discrimination provisions have been expanded to include:
- Additional protected characteristics – such as age, pregnancy and maternity;
- Victimisation – that is, safeguard against a protected act. For example, where an employee makes an allegation of, or brings a claim for, discrimination; DIFC Court can now, in the event of a finding of discrimination and/or victimisation, award the following remedies:
- Compensation of up to one year’s wage (salary and allowances);
- A recommendation for the employer to take certain steps to reduce the adverse effect on the successful employee.
Family friendly benefits
Increased or expanded family friendly benefits include:
- Male employees who will have been continuously employed for at least twelve months immediately preceding the expected or actual week of his wife giving birth will be entitled to five working days of paid paternity leave. The right to take paid time off to attend appointments for antenatal care is extended to expectant fathers.
- Female employees returning to work from maternity leave will be entitled to specific nursing breaks.
- Female employees who are adopting a child will be entitled to statutory maternity leave if the child is less than five years old at the time of adoption.
Sick Leave
Sick leave remains at 60 working days per year but only the first 10 days will be at full pay. The next 20 working days will be at half pay and the remaining 30 working days will be unpaid.
Termination of employment
Same minimum notice periods but parties cannot agree to shorter (only longer) notice periods; employers will only be allowed to make a payment in lieu of notice if an employee agrees to the payment in a settlement agreement (which will now meet specific terms; employers will be entitled to place an employee on garden leave for all or part of their notice period;
ESG/pensions
For ESG calculation purposes, basic salary will need to comprise at least 50% of the employee’s total wage (which comprises allowances but excludes bonuses, grants and commissions). The ESG will be payable to an employee even if the employee is dismissed for cause (gross misconduct);
Employees may choose to receive pension contributions into a non-UAE retirement fund (or substantially similar scheme) instead of receiving an ESG payment, provided the aggregate contributions made by an employer are not less than the ESG the employee would have been entitled to receive.
Settlement agreements
An employee may enter into a written agreement with the employer to terminate the employment or settle a dispute with such an agreement including a waiver of the employee’s rights, remedies, obligations or claims, provided that specific conditions are met.
Miscellaneous
The New DIFC Employment Law also includes additional changes, including but not limited to:
- The introduction of a stringent penalty system of fines (of either US$2,000 or $10,000 per infraction) in the event of breaches or non-compliance with the New DIFC Employment Law
- The minimum age for an employee will increase from 15 to 16 years of age
- The mandatory retention period for employee records will increase from two to six years; and employees will only be permitted to carry over five (rather than 20) days’ accrued vacation to the following year.
The above is a general commentary on the subject matter and should not be construed as specific legal advice. For legal assistance on DIFC Employment Solutions, please feel free to contact us.
Managing Partner