Vivian Ch’ng, Paralegal

The new employment law, namely, the DIFC Law No. 2 of 2019, came into force on 28 August 2019, replacing the DIFC Law No. 4 of 2005, as amended by DIFC Law No.3 of 2012 to be the current applicable law.

In an effort to accommodate the varied employment arrangements in the DIFC, the newly enacted law addresses the extent to which the new employment regime is applicable to seconded, part-time and short-term employees.

The provisions for a secondment arrangement are added to form part of the employment law for the first time. Under a secondment arrangement, an employee is permitted to work under another employer in the DIFC provided the employee is approved by the DIFC Authority (a secondment card will be given if an employee is approved to work on the basis of a secondment). In addition, for employees who are seconded from outside of DIFC, certain provisions will not apply to such employees and they are able to choose a foreign law to govern their employment contracts save from the mandatory provisions.

Another crucial development under the new law would be the expansion of the anti-discrimination provisions. The scope of these provisions expanded to prevent discrimination based on age, pregnancy and maternity. Companies governed by the new employment law should be careful to review their employee handbook/manual, company policies, protocols and procedures to ensure that there are no provisions, criterion or practices which would constitute discrimination against one of the prohibited grounds ie. nationality, age, gender, race and so on.

The new law also seeks to protect an employee who makes an allegation or brings a claim for discrimination against them as it prohibits the victimizing of such an employee in the situation. It should be noted that an employee has a limitation period of 6 months from the date of alleged discriminatory act or omission of an employer within which a claim for discrimination must be brought against the employer. Nonetheless, an employer should be aware that the courts may extend the aforesaid time limit as it sees fit. In adjudicating the claims filed before the courts, the courts have the power to order payment of compensation as much as the complainant’s annual salary.

Under the new regime, a male employee, having served a requisite amount of time to the company may be entitled to 5 working days of paid paternity leave. The right to take paid time off to attend antenatal appointments is extended to expectant fathers. It is seen that this is a positive development towards giving more respect to the familial role of a father in the antenatal or postnatal process. Moreover, mothers returning to work from maternity leave are also entitled to take nursing breaks.

Other changes govern the position of both an employer and an employee after the termination of the latter. Notice periods are prescribed by the new employment law and the parties are prohibited to agree on a term less than the statutory minimum notice periods. Minimum notice periods will not apply during the probationary period of an employee or where there is an agreement in place that an employee’s employment shall terminate on the expiry of a fixed-term employment contract. An employer is permitted to pay an employee in lieu of notice provided the employee has agreed to such payment and the agreement is recorded in a settlement agreement.

In addition, the new law stipulates that an end of service gratuity or pension is payable to an employee even if the employee is dismissed for a cause. It is given that in calculating a gratuity payment, an employee’s basic salary must not be less than 50% of the said employee’s yearly salary including the employee’s allowance. Instead of receiving a gratuity payment, employees have an option now to receive pension contributions into a non-UAE retirement fund or any schemes similar to the effect subject to the aggregate contributions by the employer being more than the gratuity payment the employee would have been entitled to receive.

While the provisions enumerated above are largely for the enhancement of employees’ interests and benefits, there are certain provisions that appear to be more employer inclined. For instance, an employee under the law is entitled to be paid fully for the first 10 days on sick leave. This is a stark change from 60 days as given by the previous law.  Further, as a result of the 6-month limitation period mentioned above, a penalty for late payment of remuneration or a gratuity payment by the employer is now capped at 6 months’ daily wage. However, whether such a penalty for late payment of remuneration or a gratuity payment is payable is subject to a court’s finding that the amount due and unpaid to an employee is in excess of an employee’s weekly wage.

The new law also recognizes settlement agreements entered into between an employer and an employee to terminate employment or settle a dispute. An employee is required to confirm in the settlement agreement that they have had the chance to obtain legal representation or consultation before entering into the settlement agreement.

In view of the explained changes above, it can be seen that the provisions inclined towards either party in an employment relationship in the DIFC have been drafted or enhanced with a view to creating a fairer representation of both the employers’ and the employees’ interests. In light of the new developments, companies which are subjected to the new employment law must review their existing employment contracts and any agreements with their employees, company policies and procedures to ensure that their objectives align and comply with the current regime.