DIFC introduces new Employment Law

The Dubai International Financial Centre (DIFC) brought its new Employment Law – DIFC Law 2/2019 – into force on 28 August. The Law, which repeals and replaces the Employment Law 2005 (DIFC Law 5/2004), supports the DIFC’s commitment to international best practice by addressing key issues for both employees and employers including paternity leave, sick pay and end-of-service settlements.

The new DIFC Employment Law introduces the foillowing provisions:

  • Recognition of employees on “secondments” (valid secondment card issued by DIFC Authority), part-time and short-term employees. The minimum age for an employee will increase from 15 to 16 years of age;
  • Anti-discrimination provisions for age, pregnancy and maternity;
  • Five days paternity leave for male employees who have been continuously employed for at least 12 months;
  • Female employees returning from maternity leave to be entitled to specific nursing breaks. Female employees adopting a child under the age of five will also be entitled to statutory maternity leave;
  • Sick leave remains at 60 days with the first 10 days at full pay, next 20 days at half pay and the remaining days unpaid;
  • Employers will be entitled to place an employee on ‘gardening leave’ for all or part of their notice period;
  • The end of service gratuity (ESG) is payable to all employees, even in circumstances where the termination is for cause. This change is based on the rationale that ESG stands in place of employer contributions to pension, and it would therefore be unfair to deprive employees of this, whatever the reason for termination;
  • Salary breakdowns must meet particular thresholds, such that ESG can no longer be artificially reduced. Basic pay must now comprise at least 50% of an employee’s gross wage;
  • DIFC employees can opt to receive pension contributions in lieu of the ESG, provided that the pension contributions are not less than the value of ESG that the employee would otherwise have been entitled to on termination;
  • An employee may enter into a written agreement with an employer (with certain specifications) to terminate the employment or settle a dispute;
  • A stringent penalty system in the event of breaches or non-compliance with the new DIFC law.

The new law was subject to substantial research and global benchmarking, as well as thorough public consultation, to ensure that the DIFC remains the most sophisticated and business-friendly Common Law jurisdiction in the region.

Contact Sovereign Dubai
Get in Touch

Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.