Coronavirus: DIFC emergency employment law introduced

Out-Law Analysis | 13 May 2020 | 10:57 am | 2 min. read

Employers have been given scope to restructure contracts with their employees to adapt to the challenges posed by the coronavirus pandemic under a temporary new emergency law introduced in the Dubai International Financial Centre (DIFC).

Under the new legislation, which came into force on 21 April, employers can unilaterally decide to reduce employee working hours and remuneration on a temporary basis, and make further changes to work practices and employee benefits.

However, the new presidential directive, known as the DIFC Covid-19 Directive, also provides core protections for employees who contract coronavirus, officially Covid-19.

Changes to contracts – a temporary measure

The measures employers can implement under the new directive include:

  • reduced working hours;
  • vacation leave;
  • unpaid leave;
  • reduction of remuneration on a temporary basis;
  • restriction of access to the workplace; and
  • requirements regarding remote working (including means of measuring engagement and productivity).

While DIFC employers can implement the measures without having first to obtain employee consent, they do have to notify affected employees of any changes to their employee contracts in writing at least five days in advance of the changes taking effect.

The measures can only be implemented during the emergency period up to 31 July this year, when the legislation is due to expire.

Pension contributions

The directive ensures that any end of service gratuity payments will not be affected by the emergency measures implemented. End of service gratuity accrued up to 1 February 2020 – the date on which the mandatory DIFC employee workplace savings scheme became effective – will be calculated according to an employee's basic salary prior to the implementation of any emergency measures.

However, the directive does not provide for payment protection for any mandatory employee workplace saving scheme contributions. If an employee was placed on unpaid leave and was not in receipt of a basic salary as at the applicable monthly pay period, a contribution would not require to be made by the employer to the DIFC employee workplace savings scheme. Likewise, any salary reduction would result in reduced contributions.

Record keeping

During the emergency period, employers will be required to maintain a list of: any employees terminated after 1 March 2020 and before the expiry of the emergency period; and any employees who are surplus to requirements.

With an employee's consent, those individuals must be registered onto the DIFC 'available employee database' so other employers can readily find and recruit those employees for work within the DIFC.

Visas and sick leave

The directive allows employers to defer the cancellation of any terminated employees' residency visas and/or sponsorship and the employer must maintain medical insurance for the employee until the visa has been cancelled. If the employer is in the retail, hospitality or service sector and provides the employee with accommodation as part of their employment contract, they will have to continue to provide such accommodation until the cancellation of the visa.

Any sick leave taken by an employee during the emergency period as a consequence of either having contracted Covid-19 or being placed in quarantine should not be counted towards any sick leave entitlement. Employees will be entitled to full pay during such sick leave period, for as long as the sick leave certificate or quarantine period is imposed.

Co-written by Ruth Stephen of Pinsent Masons, the law firm behind Out-Law.