Middle East: The new DIFC Employment Law – 16 key changes

As we recently reported here, the new DIFC Employment Law (Employment Law, DIFC Law No. 2 of 2019) was enacted by His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, in his capacity as Ruler of Dubai, on 30 May 2019. The new law will come into effect on 28 August 2019.  The new law amends the existing employment law in the DIFC in a number of key respects.

We set out 16 key changes in the table here.

Commentary

On the whole, these changes are likely to be welcomed by both employees and employers. On the employee side, the changes aim to increase the minimum level of rights, for example through the widening of the discrimination provisions, the introduction of visa and permit requirements and the express right to compensation for termination for cause.

On the employer's side, the changes introduce and further clarify principles well established under English law such as vicarious liability, and notably seek to impose caps on penalties for late payment of dues. These employer-friendly changes can be seen as part of the overall strategy of the DIFC to further promote itself as one of the leading business hubs, both in the Middle East and more globally.

The applicability of the law to include part-time and short term workers as well as secondees is particularly aimed at addressing the evolving nature of the DIFC and its workers, and in particular account for expatriate workers who now make up the majority of DIFC employees and who do not necessarily fulfil the previous requirement of "ordinarily working in or from" the region.

A large number of issues remain unaddressed in the new law, including unfair dismissal, redundancy protections, rights of appeal, procedural and substantive fairness, disciplinary proceedings, rights for those not qualifying as employees (e.g. those on zero hour contracts), other discrimination grounds (e.g. sexual orientation, beliefs and gender reassignment) and the establishment of an employment tribunal. Whilst there has undoubtedly been progress through these new laws in bringing the DIFC employment regime further in line with other sophisticated jurisdictions, the regime remains constrained by the political and legislative context in the surrounding UAE.

Practical considerations

Companies in the DIFC to which the new law applies will obviously need to undergo a review of their existing policies, procedures and employment contracts and make any necessary amendments to ensure compliance with the new laws.

We will be publishing our thoughts on discrete aspects of the new law over the coming weeks and months. In the meantime, for further information on the new law, please contact Stuart Paterson, Benjamin Hopps or your usual HSF contact.