New DIFC employment law introduces family-friendly benefits

Provisions include paternity leave and nursing breaks for the first time, while sick leave and sick pay have been reduced

DUBAI, UAE. February 05, 2014 - Stock photograph of the DIFC Gate in Dubai, February 05, 2014.  (Photo by: Sarah Dea/The National, Story by: STANDALONE, Business Stock)
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The new employment law for companies in the Dubai International Financial Centre, coming into effect on August 28, introduces family-friendly benefits such as paternity leave and nursing breaks, while reducing sick leave and sick pay.

“Overall the law is now very nicely balanced between the interests of employers and employees,” said Rebecca Ford, employment partner at global law firm Clyde & Co in Dubai, which helped the DIFC Authority draft the new law.

The protection around gratuity is greater than it used to be.

The DIFC Employment Law — No 2 of 2019, which replaces the legislation in place since 2005, provides updated benefits for both employees and employers, including greater protection from discrimination and more clarity on gratuity payments.

Age, maternity and pregnancy have been added to the non-discrimination clause, which previously said employers could not discriminate based on sex, marital status, race, nationality, or mental or physical disability.

A new section on victimisation states that an employee should not suffer a detriment for making an allegation or bringing a discrimination claim against an employer. Employers may also be held liable for an act of discrimination made by an employee against another.

A six-month limitation period for bringing employment claims has been introduced, although that can be extended in the case of discrimination. The DIFC courts may award a compensation for discrimination of up to 12-months' salary or up to two years' salary in cases where the employer has failed to comply with a court recommendation, Ms Ford said.

Employees will now be entitled to a gratuity payment, regardless of the termination circumstances. Previously an employee was not entitled to gratuity if terminated for misbehaviour.

“So in fact the protection around gratuity is greater than it used to be,” Ms Ford said.

Among the family-friendly provisions are five days of paid paternity leave for new fathers and one-hour nursing breaks for new mothers in addition to the normal daily one-hour break. Fathers who have worked with the company for at least a year are able to take the paternity leave within one month from the child being born or from a child's adoption.

“In addition to the five days of paid paternity leave, there is also now a right for a father to take paid time off to attend appointments with their wife for antenatal care,” said Ms Ford.

The maternity leave has changed from a minimum of three months to a maximum of 65 work days - which equates to about the same amount of time. As before, the first half of the leave is paid at full pay and second half at half pay.

At the same time, sick leave has been reduced from 90 days to 60 days. Instead of full pay for 90 days, employees are only entitled to full pay for 10 working days and half pay for 20 working days.

“I suspect it was partly to be in line with other parts of the world and also to reflect the needs of businesses to keep costs down where necessary,” Ms Ford said. “It’s still very generous — 12 weeks of sick leave with six weeks of those at full or half pay.”

Other updates in the law include an increase in the minimum hiring age from 15 to 16 and a stipulation that any investment schemes replacing gratuity payments must offer the same value.

In April the DIFC said it would replace expatriate workers' end-of-service gratuity with a funded, trust-based savings scheme starting on January 1, 2020. The new employment law states a gratuity payment will not apply to an employee "who agrees in writing to receive contributions from their employer into a pension scheme, retirement savings scheme or any substantially similar scheme, whether located in the UAE or elsewhere, instead of a gratuity payment".

The 2005 law stated that employees had the option to choose between a gratuity payment and “pension scheme”. The 2019 law specifies that the aggregate contributions made by an employer for the investment or pension scheme must not be less than the gratuity payment.

The gratuity payment is equal to 21 days of the employee’s basic wage for each year of the first five years of service and 30 days of the basic wage for each additional year of service, provided that the total does not exceed an amount equal to double the annual wage of the employee.

The law also puts limitations on the penalties for employers who do not pay employees the gratuity payments within 14 days after termination. An employee is entitled to a penalty equal to his/her daily wage for each day the employer is late. However, the penalty may only be awarded if the amount due is greater than the employee’s weekly wage. Penalties are waived if there is a dispute pending in court or the employee’s “unreasonable conduct” is the cause of the employee failing to receive the amount due.

Ms Ford said that this reflects “a more practical approach of where clearly there is wrongdoing on the part of the employer they should have to pay the penalty, but where there is for example an accounting error or a genuine dispute between the parties, then that penalty does not arise”.

Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, enacted the new employment law, along with a new DIFC insolvency law earlier this week. The insolvency law, which will facilitate bankruptcy restructuring and provide an administration process where there is evidence of mismanagement or misconduct, comes into effect Thursday.