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Significant amendments in DIFC Employment Law: Increase in vacation leave and much more!

Significant amendments in DIFC Employment Law: Increase in vacation leave and much more!

Dubai International Financial Centre (DIFC) Employment Law is the fundamental legislation which governs the rights and liabilities of employers and employees within the DIFC. Recently, after an extensive consultation and deliberation, this employment law has been amended.

With this Amendment, DIFC Law No.4 of 2021 (the Amendment Law) and the Employment Regulations (Qualifying Scheme requirements under Article 66 of the Law) have been pronounced. The aforesaid changes will directly affect almost 24,000 employees based in the DIFC.

Change in Employment Law

A host of changes has been introduced in the employment law, which are as follows-

  1. The amended law will come into force immediately. The employees can bring their claim during the course of employment, and the limitation period will be 6 months.
  2. In a fixed term employment contract for a period of six month or less, the duration of the probationary period must be less than half of the period of the employment Contract.
  3. Through this amendment, new provisions have been introduced which aim to regulate the employee’s ability relating to bringing a claim for unlawful deduction from their wages. Subject to some restrictions, the time claims for outstanding wages has been fixed for 2 years.
  4. The employee is legally entitled to have at least 5 vacations in a single vacation leave year.
  5.  Since, due to the pandemic, a large number of employees are working from home, the new amendment provides that the employer will be exempted from basic workplace-related health and safety duties of employees in such situations.
  6. When an employee has inked multiple fixed-term contracts, they all must be aggregated for calculating employee’s end of service gratuity and contributions into DEWS.
  7. The definition of “additional payment” has been broadened as it encompasses bonuses, incentives, grants commission, drawings, distributions and any other payments which are discretionary and non-recurring in nature. These additional payments will not be taken into consideration while calculating Employee’s DEWS Contribution.
  8. The definition of the term “Exempted Employee” has been amended with an objective to reflect that a large number of “equity partners” of international firms have partnership interest or affiliation with the entities working in DIFC.
  9. The employees on “Secondment” will be governed by the provisions of settlement agreements and employees’ statutory obligations. The protection from Harrasment and Discrimination has been extended to short-term employees also.

Key Highlights of the Amendment to the Employment Regulations

  1. The certificate of compliance will only be issued to those Qualifying schemes which are established in the form of DIFC Trust. Further, it is essential that the operator and administrator of the trust must be established in the DIFC and regulated by the DFSA.
  2. The certificate of exemption will only be issued to the employer in the following circumstances-
    If there is a statutory duty on the employer to make contributions toward pension, retirement, gratuity, etc in a scheme running in another country.
    If the employer, on behalf of employees, makes a payment toward a group scheme and the cost incurred therein has exceeded the core Benefits payable under the Amendment Law. A scheme will only be qualified as a “group scheme” when it has been in presence in at least 4 countries.
  3. A fee of US$500 will be charged while applying for a certificate of compliance or a certificate of exemption.
  4. The employers holding a certificate of compliance or a certificate of exemption will get a grace period of 12 months to comply with the new regulations.
  5. After the amendment, the employer will be in an obligation to notify the operator of a qualifying scheme about any change in circumstances that will affect the amount of employee’s contribution.

In short

The recent amendment has been made to encourage free and fair trade in DIFC while balancing the rights of employer and the employees. The new law amended the definition of “additional payment” and “existing employees” to make provisions clear while calculating the End of Service Benefits. Similarly, with the amendment in the employment regulations, the procedure for getting certificate of compliance and certificate of exemption has also been streamlined.

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