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Short-term working expressly recognised in new DIFC employment law

Out-Law News | 01 Jul 2019 | 11:36 am | 2 min. read

The Dubai International Financial Centre (DIFC) has enacted a new employment law, designed to reflect international best practice and better balance the interests of employers and employees.

The new law will come into force on 28 August 2019, 90 days after it was enacted. It contains provisions on paternity leave, sick pay and end of service settlements, and extends the application of parts of the DIFC's employment regime to seconded, part-time and short-term employees.

Dubai-based employment law expert Luke Tapp of Pinsent Masons, the law firm behind Out-Law, described the new law as "a very significant development in the employment and HR landscape of the UAE".

"The DIFC is one of the key free zones within the Middle East region and often leads the way in terms of attracting top tier international companies and talented individuals from around the world," he said.

Dubai-based employment law expert Andrea Hewitt-Sims said: "One of the key changes is that the new DIFC employment law extends its scope to expressly recognise short term and part-time employees, as well as extending the reach of the equality and anti-discrimination provisions. These types of developments will support DIFC companies in creating inclusive environments that are able to accommodate the demands of a modern workforce."

The new DIFC Employment Law, Law No. 2 of 2019 (37-page / 767KB PDF) repeals and replaces the previous law, which dated back to 2005. It will apply to the around 24,000 people employed in the DIFC free zone.

Under the new law, the minimum working age in the DIFC has increased from 15 to 16 years old. The provisions explicitly cover employees on short-term contracts and part-time employees, whose entitlements to leave are pro-rated when compared to full-time employees. The new law also makes provision for seconded employees.

The new law reduces the amount of accrued but untaken annual leave an employee is able to carry forward from 20 working days to five working days. Sick pay entitlement has also been reduced. The new law adds a number of new provisions relating to parental leave affecting nursing breaks, paid time off for fathers and paternity leave.

The anti-discrimination provisions in the old law have been expanded, including a new definition of discrimination and new grounds of harassment and victimisation. Penalty provisions and time limits have also changed. Age, pregnancy and maternity are now 'protected characteristics' for the purposes of discrimination law.

The new law contains provisions to facilitate settlement agreements between employers and employees on termination of employment or regarding a dispute. Employees will be able to waive their entitlement to raise a claim as part of a settlement agreement.

Article 18 of the old law, setting out employer penalties, has been updated by article 19 of the new law. Under the new system, a penalty will only be triggered when the amount due and not paid to the employee is in excess of the employee's weekly wage, meaning basic salary and allowances but not bonuses, grants or commission. The penalty may be reduced where the court considers it reasonable to do so, and will stop accruing once a complaint is issued to the court.