Mohammed Bin Rashid Enacts Amendments to DIFC Employment Law


His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has enacted an amendment in the Employment Law No. 4 of 2020, the Dubai International Financial Centre (DIFC) announced on Tuesday.

The amendment law introduces the new qualifying scheme workplace savings scheme in DIFC, replacing the current end-of-service gratuity payment regime that has been in place since the inception of the DIFC in 2004.

The new regime will come into effect from February 1, 2020, from which employers will make mandatory monthly contributions to a professionally managed and regulated savings plan. 
The Board of Directors of the DIFC authority has also issued new employment regulations that set out the requirements for qualifying schemes. Employers will have until March 31, 2020, to enroll in a qualifying scheme. These include the DIFC Employee Workplace Savings (DEWS) Plan. Alternatively, employers may seek a certificate of compliance from the DIFC authority for an alternative qualifying scheme under the regulations.

Other key changes include:

a) allowing employees to make voluntary workplace savings contributions into a Qualifying Scheme on top of the mandatory monthly contributions to be made by employers under the Employment Law;

b) ensuring that any accrued end-of-service benefits under the current regime remain in place, also providing employers with the option to pay these accrued benefits into a Qualifying Scheme;

c) creating exemptions for certain types of employees, such as those on secondment in the DIFC, short-term workers, equity partners, and employees working for government departments and bodies that have a presence in the DIFC;

d) settling the mandatory contributions to be made by employers at 5.83 per cent of monthly basic wage (for employees who have less than five years’ service), and 8.33 per cent of the monthly basic wage for employees who have long service;

e) creating exemptions for international institutions who have a statutory obligation to make pension, retirement, or similar contributions on behalf of their employees elsewhere, as well for employers who wish to provide a regulated defined benefit scheme to their employees that provide for benefits in excess of what the mandatory defined contributions are under the DIFC Employment Law; and

f) a number of miscellaneous enhancements.