HH Sheikh Mohammed enacts amendments to DIFC Employment Law and new regulations to introduce new end of service savings plan

HH Sheikh Mohammed enacts amendments to DIFC
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ⓘ A file-photo of HH Sheikh Mohammed; credits: wam.ae


Dubai, UAE, 13 January 2020: Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, today announces that His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai, has enacted the Employment Law Amendment Law No. 4 of 2020.

The Amendment Law introduces the new Qualifying Scheme workplace savings scheme in the DIFC, replacing the current end-of-service gratuity payment regime that has been in place since the inception of the DIFC in 2004.

The new regime commences on 1 February 2020, from which employers will make mandatory monthly contributions to a professionally managed and regulated savings plan. The plan replaces the existing accruing of end-of-service gratuity benefits in favour of employees, which is currently in line with the rest of the UAE.

The Board of Directors of the DIFC Authority has also issued new Employment Regulations that set out the requirements for Qualifying Schemes. Employers will have until 31 March 2020 to enrol into a Qualifying Scheme. These include the DIFC Employee Workplace Savings (DEWS) Plan, established by the DIFC as a best-in-class default Qualifying Scheme after an exhaustive competitive bidding process. Alternatively, employers may seek a Certificate of Compliance from the DIFC Authority for an alternative Qualifying Scheme under the Regulations.

The requirements for Qualifying Schemes reflect the DIFC’s commitment to robust regulation in the DIFC. The requirements include having an oversight body that will have the right to appoint and remove the scheme operator, review its governance and fees and charges imposed on the scheme. In addition, Qualifying Schemes must require employer and employee representation and independent oversight with the aim of ensuring the proper protection of the employee’s interests.

Other key changes include:

  • allowing employees to make voluntary workplace savings contributions into a Qualifying Scheme on top of the mandatory monthly contributions to be made by employers under the Employment Law;
  • ensuring that any accrued end-of-servi