The employer-employee relationship in the Dubai International Financial Centre (“DIFC”) is regulated by the laws of the DIFC. DIFC Authority has enacted the amendments to DIFC Law No. 2 of 2019 vide DIFC Law No. 4 of 2021 (“Amendment Law”) and Employment Regulations 2021 (Qualifying Scheme requirements under Article 66 of the Law) (“New Regulations”). The changes are effective September 21, 2021.
The relevant key provisions as per the “New Regulations” i.e., Employment Regulations (Qualifying Scheme requirements under Article 66) are as follows:
| Topic | Details |
| Requirement to obtain a certificate of compliance for an alternative qualifying Scheme. | The Qualifying Scheme is defined as a contribution savings scheme (e.g., superannuation, provident fund, etc.) into which an employer is obliged to make mandatory contributions into a professionally managed and regulated savings plan for the benefit of their employees. For an alternative qualifying scheme employees are required to obtain a certificate of compliance. It must be issued only when certain requirements are met where the scheme must take the form of a DIFC Trust with both its operator and administrator being established in the DIFC and regulated by the DFSA. |
| Certificate of Exemption to specific employees |
The DIFC Authority may exempt an employer from the requirements of a Qualifying subject to certain conditions by issuing a “Certificate of Exemption”.
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| Grace period for complying with new regulations | Employers already holding a Certificate of Compliance or Certificate of Exemption, will be granted a 12-month grace period to comply with the new regulations. |
| Obligation to notify change in circumstances | The new regulation has put an obligation on an employer to notify the Operator of a Qualifying Scheme of any change in circumstances that will impact the contributions made on behalf of an employee. |
| Fee for obtaining certificates | A fee of USD 500 has been introduced for obtaining Certificate of Compliance or a Certificate of Exemption. |
The relevant key provisions as per the “Amendment Law” – DIFC Law No. 4 of 2021 amendment law are as follows:
| Topic | Details of amendment |
| Vacation leave carry forward | Subject to a minimum of 5 working days an employer and employee can decide between them the maximum leaves to be carry forward that are accrued and pending from a vacation year to the next for a maximum period of 12 months after which any unused Vacation Leave shall lapse. |
| Limitation period for employees’ deductions claim | The limitation period introduced is 2 years particularly for making claims related to unlawful deductions and discrimination in paying the amount owed to employees. |
| Probation period for short or fixed-term employment | Probation period of fixed term employees – cannot exceed half of contracted term. |
| Provisions for work from Home | Where an employee is working from home, employers will be exempt from providing basic workplace-related health and safety obligations. |
| Aggregation of multiple fixed-term contracts | Where employee is employed by way of multiple fixed-term contracts – for purpose of calculating the period of service for gratuity, all fixed terms of employment are counted in an aggregate. |
| Amendment in the definitions | “Additional Payment” now includes profit shares or drawings and any other payment which must be discretionary, non-recurring, or calculated by reference to the profits of the employer or any affiliate. Definition of “Exempted Employee” has also been amended under the amendment law. |
| Protection extended to employees on “Secondment” and short-term employees | Provisions of protection relating to settlement agreements, employer’s confidential information, statutory obligations, and protection from discrimination and harassment have now been extended to employees on “Secondment”. Short-term employees are now also entitled to protection from discrimination and harassment. |
Implication:
The companies doing business in DIFC are required to update their employment policies and amend employment contracts wherever necessary.