23 Sep 2019

Are you ready? The new DIFC Employment Law and the end to End of Service Gratuity in the DIFC

Authored by: Rachel Hill

The New DIFC Employment Law is now in force – are you ready?

The new DIFC Employment Law No. 2 of 2019 (the New Law) came into force on 28 August 2019 and will replace DIFC Employment Law No. 4 of 2005 and its amendment law, DIFC Employment Law Amendment Law No. 3 of 2012 (the Old Law).

As a result of the New Law, we recommend that DIFC Employers:

  1. familiarise themselves with the changes  brought in by the New Law. Please see our recent article here which outlines the key provisions of the New Law. You can also find a copy of the full text of the New Law here; and

  2. ensure their existing pro-forma employment contracts, policies, handbooks and document retention procedures are up-to-date and comply with the New Law in order to avoid fines and other potential liabilities for contraventions, non-compliance and/or breaches (a new penalty system of fines has been annexed as part of the New Law).

The end to End of Service Gratuity in the DIFC

In addition to the New Law, the DIFC has announced proposals to bring about the end of the current End of Service Gratuity regime and replace it with the DIFC Employee Workplace Savings Scheme (DEWS). The law/regulations governing the DEWS have yet to be finalised as the scheme is still in its infancy. As such, this alert is subject to revision once the law/regulations have been passed.

For now, please see the proposed timetable below, as set by the DIFC, for implementation of the DEWS scheme:

DATE

DESCRIPTION

May 2019

DIFC to issue a summary of survey responses and employer feedback.

June 2019

DIFC to finalise the legal framework for establishing DEWS and the trust documentation.

July 2019

DIFC to appoint the DEWS trustee and administrator following an RFP process.

August 2019

The trustee and administrator contact employers around the process to transition to DEWS.

September 2019

DIFC employers will be able to opt out of the DEWS scheme subject to offering a qualifying alternative scheme and the associated guidelines re the criteria for a qualifying alternative scheme will be issued after 15 September 2019.

January 2020

DEWS goes live on 1 January 2020 with contributors commencing to the trust and service stopping for the existing defined benefit arrangement.

 

We shall continue to monitor developments and keep you informed of the impending changes and their impact on DIFC employers.

If you would like to discuss any aspects of the New Law or the DEWS and/or require any assistance with compliance, we would be pleased to hear from you. Please direct all enquiries to Rachel Hill, Head of Employment at: r.hill@hadefpartners.com or 04 429 2892.

 
 

This article, including any advice, commentary or recommendation herein, is provided on a complimentary basis without consideration of any specific objectives, circumstances or facts. It reflects the views of the writer which may, in some cases, differ from those of the firm, especially in the developing jurisdiction of the UAE.