Complete Overview of Recent DIFC Employment Law Amendment

Complete Overview of Recent DIFC Employment Law Amendment

Introduction

DIFC employment law recently introduced some changes under DIFC Law No. 1 of 2024, passed on March 1, and will go into effect on March 8, 2024 (the “Amendment Law”). This law includes, among other things, changes to the contributions that must be paid to Qualifying Schemes (DEWS or not) and the implementation of end-of-service gratuity accrual for sanctioned individuals.

Improvement in Qualifying Scheme for UAE/GCC Nationals

Regarding their contributions to the Qualifying Scheme, employees of the UAE and GCC countries working in the DIFC will henceforth be treated differently thanks to the Amendment Law. The updated law requires DIFC companies to guarantee top-up contributions into a qualifying scheme for qualified UAE/GCC national employees previously excluded from statutory Qualifying Scheme contributions. This correction addresses the inequality some employees have encountered due to statutory pension restrictions.

The Amendment Law mandates that DIFC employers compare the Core Benefits that would be payable to a non-UAE/GCC national for each UAE/GCC national employee and deduct the applicable pension contributions being paid to the General Pension & Social Security Authority (GPSSA) on the employee’s behalf.

Some Key Changes

Alternative Working Models

The Old Law expressly permits a person working for a third party to be seconded to a DIFC business; in this scenario, the person’s employment may be governed by a different statute. The new DIFC employment law now extends statutory safeguards and obligations, such as those involving employer-confidential information, following employer directives, and being shielded from harassment and discrimination. Under the New Law, temporary workers are protected against harassment and discrimination.

Probation Periods for Fixed-Term Contracts

The new law states that any probationary period for an employee working on a fixed-term contract for less than six months may be at most half of the contractual term. For instance, if a worker has a four-month contract, their probationary term can only last two months.

Time limits

The Old Law’s six-month statute of limitations is upheld by the New Law, which affirms that employees may file claims while employed. The New Law also clarifies when the six-month statute of limitations “clocks” for claims involving improper deductions from or failure to pay amounts owing to employees.

End of Service Gratuity for Sanctioned Persons

The new amendment in the DIFC employment law gives instructions for managing end-of-service gratuity contributions in situations involving “Sanctioned Persons.” A Sanctioned Person is defined under the Amendment Law as any person or organization listed on any sanctions approved by the UAE Federal Cabinet, the UN Security Council, or any other sanctions that might be imposed on a Qualifying Scheme, its trustee, or administrator.

Since end-of-service benefits must be accrued separately, employers are not accountable for any financial advantages or losses that may have resulted from the non-investment of earnings in a qualifying scheme.

Complete Overview of Recent DIFC Employment Law Amendment

Annual Leave

Under the new amendment, employers and employees may agree on the amount of accumulated annual leave that will be carried forward as long as it equals at least five working days of annual leave. The New Law confirms that the parties may agree on a higher carry-over sum and explains the somewhat unclear situation that existed under the Old Law.

The New Law affirms that yearly leave will continue to accrue during paternity leave, defined as five working days under the New Law or any longer term the employer may provide. This is in addition to the Old Law’s provision of statutory paternity leave.

Final Words

With a focus on compliance and justice, DIFC Law No. 1 of 2024 represents a significant advancement in the legal framework governing employment within the DIFC. Employers must determine if the national workforce of the UAE and GCC qualifies for the enhanced benefits by reviewing the present pension contributions compared to the “Core Benefits.”

If you are looking for a service that can help you understand the DIFC new employee law amendment, NR Doshi and Partners are at your service. We are committed to helping clients become associated with DIFC Employment Law and work accordingly.

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