DIFC Employment Law (DIFC Law 2/2019) – DIFC Articles

On and from August 28, 2019, DIFC will see the light of the new Employment law, which applies to employers and employees, including seconded, part-time, and short-term employees. This new Law will certainly catapult DIFC tzo the most sophisticated common law jurisdiction both in UAE and outside. The new law will replace the current DIFC Employment Law (DIFC Law No. 4 of 2005, as amended by DIFC Law No. 3 of 2012) (the ‘Current Law’) in its entirety and introduces quite extensive changes to the Current Law.

The new law will allow secondees to work for an employer in DIFC, provided they have a secondment card. Provisions such as the expansion of employee duties, reduction of the statutory sick pay, limiting the application of mandatory late penalty payments for end-of-service settlements, and recognizing settlement agreements between employers and employees are the hallmark of this new Law. While entering into settlement agreements with employers, the employee can waive employment rights.

A new provision for paternity leave has been introduced. It also provides male employees with paid time off work to attend ante-natal appointments or adoption proceedings with their wives and extends the right to statutory maternity leave to females who are adopting a child under the age of five. The new law has reduced the amount of accrued but untaken annual leave that an employee can carry forward from 20 to five working days.

Sick pay has been reduced under the new law to:

• full payment for the first 10 working days’ absence;
• half pay for the next 20 working days’ absence; and
• no pay for any remaining sickness absence in a 12-month period.

Any discrimination in the workplace will attract penalties. The following namely age, pregnancy, and maternity issues have been added to the list which cannot be discriminated against. The Employers will have to comply with the basic conditions of employment, visa, and residency rules to avoid penalties.

The new law was has come up with a much shorter 6 month limitation period for following up with employment claims only extendable with the interference of the Court.

The new Law has improved the position for employers with respect to the penalty, however, the threshold for the penalty is set low at one weeks’ wages. Employers are likely to find themselves in a difficult position if there is a dispute and where there is even a small chance that an employee is owed more than the equivalent of one weeks’ wages at termination.

The new Law requires the payment of End of Service Gratuity even when the employment contract has been terminated for cause and includes an additional restriction that an employee’s basic wage must not be less than 50% of the employee’s annual wage for the purposes of calculation of End of Service Gratuity.

Soon we might see that the End of Service Gratuity will be replaced with a DFSA regulated employee savings plan.

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This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.