What your business needs to know about Dubai's new employment law
By Kathryn Hendy-Ford, Senior HR Manager
In January, Dubai’s ruler Sheikh Mohammed bin Rashid unveiled his 50-Year Charter for the development of the United Arab Emirates. The Charter outlines Sheik Mohammed’s plans to solidify Dubai’s position as a rising global power and improve its citizens’ quality of life.
One of the Charter’s first initiatives is to expand the Dubai International Financial Centre (DIFC). The DIFC is a free-trade zone within the UAE. It was established in 2004 in an effort to diversify the nation’s economic resources and attract foreign investment to the region. Today, the DIFC is recognised as the leading financial centre of the Middle East, Africa and South Asia.
The expansion initiative, often referred to as DIFC 2.0, looks to extend the Financial Centre’s already vital contribution to Dubai’s economy. In a recent press release, Sheikh Mohammed explains that the DIFC has been a driving force behind Dubai’s growing success in the global marketplace. As a result, he says, the development of the financial sector “is a priority that supports the economic future of Dubai and further enhances investor confidence.”
Part of the planned expansion is physical. The initiative will triple the size of the DIFC’s footprint, adding an additional 13 million square feet of space to the Centre. In addition to the development of physical infrastructure, DIFC 2.0 includes plans to update UAE laws to align them with international best practices and foster an environment where innovation and entrepreneurship can thrive.
The first — and perhaps most highly anticipated — of these legislative changes came with the introduction of the DIFC’s new Employment Law, which took effect 28 August 2019. The law aims to achieve better balance between the needs of employers and employees by addressing key issues such as paternity leave, sick pay, end-of-service settlements and more.
Here are some of the new law’s most significant changes.
The UAE’s new employment law covers part-time employees. This group is now entitled to similar rights and benefits as those of their full-time counterparts. Under the new provisions, part-time employees will be entitled to maternity, paternity, special leave and sick leave on a prorated basis.
The law recognizes the concept of secondment. According to the legislation, secondment refers to "the period during which an employee works for an employer in the DIFC under a Secondment Card while employed by a person outside the DIFC." A Secondment Card permits an employee to work for an employer within the DIFC on a temporary basis for a period of up to twelve months.
According to the new provisions, employees who hold the necessary permissions may be “seconded” to another employer within the DIFC. Secondees will also be entitled to similar rights and benefits as their full-time counterparts.
Anti-discrimination provisions have been extended to include:
- Discrimination based on age, pregnancy and maternity
- Harassment, which has been defined as “the unwanted treatment in relation to one of the prohibited grounds, with the purpose of creating an intimidating, hostile, degrading, humiliating or offensive workplace”
- Victimisation of an employee who has raised a claim for discrimination
Employers are now liable for any act of discrimination committed by an employee in the course of their employment, unless the employer is able to provide evidence that it took the appropriate steps to prevent the act from occurring.
In a case of discrimination and/or victimisation, an employer may be subject to a penalty of up to one year of the employee's annual salary. Furthermore, all claims for discrimination must be brought forward within six months of the discriminatory act's occurrence.
The number of vacation days that employees are permitted to carry over into the following year has been reduced from 20 to five.
The current sick pay entitlement of 60 days on full salary has been reduced. According to the new provisions, employees will now be entitled to:
- 10 days of sick leave at full-pay
- 20 days at half-pay
- 30 days of unpaid leave
The law introduces the following family-friendly benefits:
- A male employee is entitled to five days of paid paternity leave
- Both female and male employees will be entitled to statutory leave if they've adopted a child who is less than five years old
- Female employees returning to work from maternity leave will be entitled to a nursing break of at least one hour per day
Retention of employee records
The law extends the required retention of employee records from two to six years after an employee's termination date.
The following changes have been made with regards to termination of employment:
- The introduction of an expanded test to determine whether or not the cause for termination is reasonable
- Employees now have the right to request a written statement as to why the termination was concluded, and the employer is obliged to respond to this request
- Employees who have been terminated are still entitled to gratuity payments, as long as they were terminated for a justifiable cause
- Employment claims must be brought before the DIFC Court within six months of the employee’s termination date
Payments following termination
A number of highly anticipated changes have been made to the late penalty payment regime.
According to the previous law, an employer that fails to pay an employee all amounts owed to them within 14 days of termination is subject to a mandatory penalty that is equal to the employee's daily wage. Furthermore, this amount was to be paid each day that the employee's entitlement was outstanding.
Under the new law, the penalty will only be applicable if the amount owed to an employee exceeds the employee's weekly wage. Most importantly, the penalty will be waived for any period during which there is a court dispute pending, or if the employee's unreasonable conduct is shown to be the material cause of the employer's failure to pay.