The Dubai International Financial Centre (DIFC) is a hive of ambition and opportunity. As a global financial hub, it attracts some of the brightest minds from around the world. Imagine sleek skyscrapers, vibrant networking events, and a dynamic work culture that pushes boundaries. But beyond the glamour, there’s a focus on providing a well-rounded experience for professionals.

That’s where the DIFC’s Employment Law comes in. This legal framework ensures fair treatment, competitive benefits, and a healthy work-life balance for all employees. Recently, in March 2024, the DIFC introduced some key amendments through DIFC Law No. 1 of 2024. Let’s delve deeper into these changes and explore how they further enhance the already impressive work life offered by the DIFC.

According to the recent amendment, DIFC employers must now make “top-up” payments to retirement schemes for their GCC national employees if the standard social security contributions are lower than what they would have received under the old law. This ensures GCC nationals get comparable benefits to non-GCC nationals. The law also covers situations where sanctions prevent contributions, requiring employers to accrue benefits until the sanctions are lifted. Finally, the update strengthens regulatory oversight within DIFC.

Good news for UAE/GCC national employees!

The new law requires DIFC employers to make top-up contributions into a Qualifying Scheme for eligible UAE/GCC national employees. This ensures they receive benefits comparable to non-UAE/GCC nationals, who are subject to mandatory Qualifying Scheme contributions.

How it works:

• Employers will need to compare the Core Benefits that would be paid to a non-UAE/GCC national with the pension contributions currently being made to the GPSSA on behalf of the UAE/GCC national employee.
• If there’s a gap (meaning the Core Benefits are higher than the GPSSA contributions), a top-up payment must be made to a Qualifying Scheme.
• There’s a minimum top-up threshold of AED 1,000 per year for eligible employees.
• Not complying with this can lead to penalties of up to USD 2,000 per employee.

End-of-service gratuity for sanctioned individuals

The law also clarifies how to handle end-of-service gratuity for employees classified as “Sanctioned Persons” (by the UN, UAE, or any entity managing the Qualifying Scheme). In such cases, employers must accrue these benefits until the sanction is lifted or the employment ends, whichever comes first. Once clear, the employer must transfer the accumulated amount to a Qualifying Scheme or directly to the employee.

What’s next?

• DIFC employers should review their payroll practices to assess if top-up contributions are needed for their UAE/GCC national employees.
• For employees impacted by sanctions, employers should start accruing their end-of-service gratuity separately. They are not liable for any investment gains or losses during this period.

Here’s a breakdown of how the DIFC law changes promote fairness, ensure compliance, and benefit businesses:

Fairness:

• Equal End-of-Service Benefits: The “top-up” payments ensure GCC nationals receive retirement benefits comparable to non-GCC nationals, even though they contribute to a different social security system (GPSSA). This eliminates discrimination based on nationality.
• Sanctions Protection: The law protects employees even during international sanctions. By requiring employers to accrue benefits during these periods, employees don’t lose out due to factors beyond their control.

Compliance:

• Clearer Regulations: The amendments address specific scenarios like sanctions, providing clear guidelines for employers to follow. This reduces confusion and the risk of non-compliance.
• Enhanced Oversight: Expanded powers for the RoC mean stricter enforcement of business regulations. This discourages non-compliance and promotes a fair and transparent business environment.

Benefits for Businesses:

• Reduced Risk: Clearer regulations and stronger enforcement minimize the risk of legal issues for employers.
• Talent Attraction & Retention: Offering competitive benefits like equal end-of-service helps DIFC businesses attract and retain skilled GCC nationals.
• Reputation Boost: Following fair labor practices and complying with regulations enhances a company’s reputation, making it a more attractive employer.

Overall, these changes promote fairness and ensure compliance for DIFC businesses. By taking these steps, DIFC businesses can operate with greater confidence, attract top talent, and contribute to a more stable and fair business environment within the free zone.

Have you ever wondered why top talent from around the world is flocking to Dubai? Various factors contribute to this trend, with one of the key reasons being the Dubai International Financial Centre (DIFC). The DIFC’s proactive approach, consistently reviewing and refining its policies, fosters an exceptional environment for attracting and retaining top-tier international talent. Aligning with the forward-thinking vision of the United Arab Emirates’ National Agenda and Dubai Plan 2021, the DIFC prioritizes the creation of a global hub for talent and innovation.

Beyond competitive salaries, the DIFC acknowledges the importance of long-term benefits that contribute to employees’ financial security and professional development. A cornerstone of this commitment is the implementation of the DIFC Employee Workplace Savings (DEWS) plan. Introduced in February 2020, the DEWS plan marks a significant transformation in how the DIFC manages end-of-service benefits for its workforce.

Benefits of the DEWS in DIFC

The DEWS plan offers a structured approach to accumulating end-of-service benefits by mandating employer contributions based on employees’ basic salaries and length of service. Additionally, employees have the option to make voluntary contributions to further enhance their savings, providing them with a flexible and robust tool to achieve their financial goals.

DEWS in DIFC: Key Entities Involved

DEWS Supervisory Board: This board oversees the plan, ensuring it meets the needs of members and aligns with international standards. It comprises an independent chairperson, representatives from Dubai’s Department of Finance, Dubai Government Human Resources, DIFC Authority, a DIFC employer, and a DIFC employee.

1. Plan Administrator: Zurich Workplace Solutions (ZWS): ZWS administers the DEWS plan, handling enrolment, contributions, investments, and withdrawals. They provide real-time access to plan information through an online portal and support via a DIFC-based team.
2. Master Trustee: Equiom: Equiom ensures the DEWS plan meets members’ needs, acting as the independent legal owner of contributions and overseeing investment options.
3. Investment Adviser: Mercer: Mercer provides independent investment advice, managing a range of dynamically managed investment portfolios.

Employer Contributions

Participation in DEWS is mandated by law for all DIFC employers. Employers contribute a percentage of employees’ basic salaries to their DEWS accounts monthly. The contribution rates are:

• 5.83% for employees with less than 5 years of service.
• 8.33% for employees with 5 years or more of service.

Voluntary Contributions

Employees can enhance their DEWS savings by making voluntary contributions through salary deductions. This is a simple way to achieve long-term financial goals. Employees can contribute up to 100% of their basic monthly salary, either regularly or as a lump sum.

Investment Options

The DEWS plan offers a range of investment options to suit different risk appetites and financial goals. Employees can choose from conservative, moderate, and aggressive investment funds managed by professional asset managers.

Fees and Charges

The DEWS plan has fixed fees for service providers and variable fees based on investment choices. The fixed fees are:

• 0.80% for the Plan Administrator (Zurich).
• 0.20% for the Trustee (Equiom).
• 0.23% for the Investment Advisor (Mercer).

Variable fees for investment management range from 0.03% to 1.88%.

Default Investment Strategy of DEWS in DIFC

By default, all contributions are invested in the DEWS Low Moderate Growth strategy, which aims for medium to long-term growth using a balanced approach with exposure to both growth and defensive assets. Employees can remain in the default strategy or switch to other available strategies using their online DEWS account. Employers seeking to opt out of DEWS will have to implement a Qualifying Scheme and apply to DIFC Authority (DIFCA) to obtain a Certificate of Compliance.

The DEWS in DIFC plan exemplifies the DIFC’s commitment to attracting and retaining top international talent. By offering a structured, transparent, and flexible approach to end-of-service benefits, the DEWS plan empowers employees to take control of their financial future while ensuring a secure and competitive work environment. This innovative solution aligns perfectly with the DIFC’s vision of becoming a global hub for talent and innovation, fostering a thriving and dynamic ecosystem that benefits both employers and employees.

Dubai’s impressive skyline and reputation for innovation attract professionals from around the globe who are seeking ideal career opportunities. However, before embarking on a new career path in Dubai, a thorough understanding of the city’s employment regulations is essential. Dubai operates under a unique legal framework, and the Dubai International Financial Centre (DIFC) presents a distinct set of employment laws specifically tailored to the international business community.

Key Aspects of the DIFC Employment Law

• Written Employment Contracts: The DIFC Employment Law mandates written employment contracts for all employees. These contracts must clearly outline essential terms like job title, duties, remuneration, working hours, and notice periods. Clear and comprehensive contracts help prevent misunderstandings and disputes down the line.
• Minimum Employment Standards: The law establishes minimum employment standards covering working hours, rest breaks, annual leave entitlements, sick leave, and end-of-service gratuity. Employers must comply with these standards to ensure fair treatment of their workforce.
• Termination Procedures: Specific procedures govern termination of employment in the DIFC. Employers must provide notice to the employee, pay outstanding wages or entitlements, and issue a termination certificate. Understanding these procedures helps ensure lawful termination practices.
• Dispute Resolution: The DIFC provides a robust system for resolving employment disputes through its Employment Tribunal. Employers should be prepared to engage with the Tribunal and comply with its decisions to avoid further legal issues.

DIFC Employment Laws: Understanding Recruitment and Hiring Practices in DIFC

• Compliance with Anti-discrimination Laws: Job postings and recruitment practices must comply with anti-discrimination laws, ensuring fairness and equal opportunities for all candidates.
• Work Permits and Visas: Foreign employees require the necessary work permits and visas to be employed legally. Employers must follow the procedures for obtaining these.
• Background Checks and Qualifications: Conducting background checks and verifying qualifications helps ensure candidates are suitable for the position.
• Minimum Wage and Working Hours: Employers must adhere to the minimum wage requirements and working hours regulations set forth by the DIFC Employment Law.
• Probationary Period: A probationary period of up to six months is allowed to assess new hires. The terms of the probationary period should be clearly outlined in the employment contract.
• Onboarding Process: A comprehensive onboarding program helps new employees acclimate to their roles and responsibilities, setting them up for success.

Employment Contracts and Offer Letters in DIFC

• Governing Law: DIFC Employment Law No. 2 of 2019 governs employment contracts in DIFC. It outlines the rights and obligations of both parties.
• Essential Elements of Employment Contracts: Key elements to include in an employment contract are names of parties, job title and description, start date, contract duration (if applicable), salary and benefits package, and notice period for termination. Specific terms relevant to the industry or role can also be included.
• Offer Letters: Offer letters formally propose a position to a candidate before they sign the employment contract. They should detail the job title, salary, start date, and any other relevant terms.
• Execution and Legal Advice: Both parties must sign the documents, and it’s advisable to provide each party with a copy of their records. Seeking legal advice before finalizing contracts ensures they are legally sound and compliant.

DIFC Employment Law: The Wage and Salary Regulations in DIFC

The DIFC Employment Law safeguards employee rights regarding wages and salaries. Here’s a breakdown of the key points for employers:

• Timely Payment of Wages: Wages must be paid at regular intervals, not exceeding one month. Employers must also provide pay slips detailing wage breakdown, deductions, and bonuses, and should be in a printable format.
• Payroll: The payroll should be processed within 7 days of the payment period.
• Benefits and Leaves: The DIFC Employment Law mandates several benefits and leave entitlements for employees:
• Annual Leave: A minimum of 20 days of paid annual leave is mandated, with some companies offering more.
• Sick Leave: Employees are entitled to paid sick leave for a limited period, as outlined in the employment contract or company policy.
• Maternity Leave: Female employees are entitled to paid maternity leave, with specific durations and conditions defined by law.
• Paternity Leave: Fathers are also entitled to a period of paid paternity leave, although typically shorter than maternity leave.
• End-of-Service Gratuity: Employees are entitled to a gratuity upon termination, calculated based on their salary and length of service. The DIFC has launched the DIFC Employee Workplace Savings (DEWS) plan to modernize the end-of-service benefits system for employees. By reflecting global best practices, DEWS replaces the traditional, unfunded end-of-service gratuity structure with a transparent, professionally managed, and regulated savings plan.
• Termination of Employment: Both employers and employees can initiate termination of employment, adhering to the legal procedures:
• Notice Periods: Minimum notice periods for termination are stipulated in employment contracts or as per the law.
• Redundancy: In case of redundancy, employers must follow specific procedures and provide severance pay.
• Disciplinary Action: Termination due to disciplinary issues requires following fair procedures and due process.
• Termination Certificates: Upon termination, employers must issue a termination certificate to the employee.
• Dispute Resolution: The DIFC Employment Tribunal provides a mechanism for resolving employment disputes between employers and employees.
• Steps for Dispute Resolution: Employees can file a claim with the Tribunal if they believe their rights have been violated. The Tribunal will then hear the case and issue a binding decision.
• Alternative Dispute Resolution (ADR): Employers and employees can explore ADR options like mediation or conciliation before taking the matter to the Tribunal.

Dubai’s DIFC stands out with its distinctive employment regulations designed to support an international business environment. For professionals looking to advance their careers in this thriving metropolis, understanding these legal requirements—from detailed employment contracts and fair wage practices to robust dispute resolution processes—is essential. Compliance with DIFC Employment Law not only ensures adherence to legal standards but also contributes to a positive and efficient work environment. By being proactive in understanding and applying these regulations, both employers and employees can explore Dubai’s job market with confidence, making the most of the opportunities this innovative city has to offer.