26 Feb 2018

STOP PRESS! New draft DIFC Employment Law published

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A draft of the new proposed DIFC Employment Law ("proposed DIFC Law 6 of 2018") has been published for public consultation. It is intended to replace the current law (DIFC Law 4 of 2005, as amended) and contains a lot of proposed changes. Some changes are aimed at tidying-up and providing clarity on existing provisions; others create significant new rights and obligations for employers and employees.

Stephenson Harwood's specialist employment lawyers highlight the headline proposals.

What are the main changes?

  • End-of-service gratuity entitlement:
     
    • will be calculated on the basis that basic salary accounts for no less than 50% of total remuneration (including allowances, bonuses, commission and certain other payments); 
    • will no longer be forfeited on dismissal for cause;
    • may be waived in exchange for an employer's agreement to make contributions to alternative retirement savings schemes.
  • Anti-discrimination regime expanded significantly:
     
    • adding age and maternity as grounds on which discrimination will be prohibited; 
    • introducing penalties for discrimination including: a declaration of rights; and/or a recommendation for action; and/or compensation of up to one year's salary;
    • allowing employees to ask their employers questions about suspected discrimination. 
  • Relaxation of the strict liability penalty regime under Article 18 (in respect of delays in paying termination dues after the statutory 14-day time limit).
  • New remedies for employees who resign "for cause" in response to their employer's conduct, including compensation up to one year's salary. 
  • New legal protection for "whistleblowers" (employees who report wrongdoing) from dismissal or being subjected to any detriment, and fines of up to US$30,000 for breach by employers.
  • New express right for employers and employees to enter into a contractual agreement to settle or waive statutory rights, obligations, or claims. 
  • New right to paid time off for expectant mothers to attend ante-natal appointments.
  • Fathers to benefit from five days' paid paternity leave (and respective protection from dismissal or changes to their role or other terms and conditions of employment) and paid time off to accompany their wife to ante-natal appointments.
  • Right to paid time off to look for new work following receipt of notice of dismissal (not for cause), which applies from day one of employment.
  • Sick pay entitlement significantly reduced.
  • Pro-rating provisions for part-time employees in respect of various types of leave, and working hours. 
  • Short-term employees (working up to 30 days in total over 12 months) expressly excluded from certain rights.
  • Minimum notice periods will not apply during the probation period (which is not expressly limited in time in the law).
  • Salary delays of more than seven days to be subject to a fine of up to US$2000.
  • New fines of up to US$2,000 for a breach of the DIFC Personnel Sponsorship Agreement, which is the agreement entered into between employers and the DIFC Authority under which employers make a number of undertakings (including responsibility for the cost of repatriating employees to their home country on termination). 
  • Express prohibition on employers recouping visa and other regulatory costs from employees.
  • Expressly allowing parties to choose another law to govern the employment contract subject to specified minimum terms of the Employment Law that must apply. 

What happens now?

The public consultation runs until 22 March 2018. The DIFC Authority will then, under the supervision of the DIFC Legislative Committee, consider the comments received and make any amendments it considers necessary. Arrangements will then be made for the law to be enacted (possibly before the summer 2018) specifying date on which it will become effective.

The proposed new law makes provision for separate Employment Regulations to be introduced that will provide statutory guidance on certain aspect of the proposed law, such as those in relation to health and safety, health insurance, and discrimination queries. There is currently no indication when these Employment Regulations will be released.

What do you think?

If you want to know more about the full suite of proposed changes (including others not listed here), how they may affect your business, and what you should do to be prepared for their introduction, please contact Stephenson Harwood's team of specialist employment lawyers.

The team has worked closely with the DIFC Authority during the drafting stage of the proposed new law, drawing on our expertise in, and experience of, both DIFC employment law and English employment law (which is the source of number of the proposed changes). The team has also been awarded the honorary title of 'Specialists in DIFC Employment Law' by the DIFC Academy of Law. As a result, we are ideally placed to discuss any queries you may have about the proposed new law, and would be delighted to receive (and share with the DIFC Authority, with your permission) any feedback or concerns.

If you wish to respond to the consultation formally, you can send your comments direct to the DIFC Authority at consultation@difc.ae in the prescribed form.

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KEY CONTACT

Kiersten Lucas

Kiersten Lucas
Partner

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Anne Pritam

Anne Pritam
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Emily Aryeetey

Emily Aryeetey
Senior associate

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