UAE: DIFC Subject to New Employment Law

A new employment law for the Dubai International Financial Centre (DIFC) took effect on August 28, 2019, replacing the previous law in its entirety. The DIFC is an independent free zone that is home to many leading financial institutions, law firms, and other professional services companies.

The new law introduces extensive changes to the previous law. For many of the changes, the intention is to strike a fairer balance between the respective rights of employers and employees than existed under the previous law, for example, in relation to employee leave entitlements and termination benefits. Other changes are reflective of recent developments and trends in working practices, for example, the recognition of part-time employment and temporary secondment arrangements, which had not been expressly provided under the previous law.

Certain changes are intended to rectify unintended consequences of the wording of the previous law (including the significant penalty for late payment of employee termination benefits). Other changes are being introduced from a compliance and enforcement perspective, including the right of the DIFC Authority to inspect DIFC companies’ premises and records, and to impose monetary fines (up to USD 10,000) for noncompliance with the new law.

One of the most important new developments is the expansion of the antidiscrimination provisions. In particular, there are now three additional protected characteristics (age, maternity, and pregnancy) in addition to the six protected characteristics under the previous law. Importantly, various legal remedies have been introduced, including court recommendations, court declarations, and, significantly, compensation of up to one year’s salary in the event that an employee has been unlawfully discriminated against (which can be increased to two years’ salary if the employer also fails to comply with any recommendations made by the DIFC courts).

Comment

In light of the extensive changes under the new law, employers in the DIFC may want to review and update their employment contracts, employee handbooks, and human resources policies to ensure compliance with the new law. Employers may also want to consider how they will handle existing employees’ contracts and accrued benefits.

Written by Anna Marshall of Al Tamimi & Company and Roger James of Ogletree Deakins

© 2019 Al Tamimi & Company and Ogletree, Deakins, Nash, Smoak & Stewart, P.C.