Weekly Spotlight: The New DIFC Employment Law Introducing Extensive Changes to the Current Law Expected to be Enacted Shortly

A new employment law for the DIFC is expected to be enacted shortly, following a consultation in early 2018 and subsequent amendments made during the course of last year. The DIFC is a financial free zone in Dubai, UAE and is home to many leading financial institutions, law firms and other professional services companies. The DIFC is an independent legal system with its own laws and courts. The current employment law for DIFC companies is DIFC Law No. 4/2005, as amended by DIFC Law No. 3/2012 (DIFC Employment Law) which will be replaced in its entirety by the new law once it is enacted.

The proposed new law introduces quite extensive changes to the DIFC Employment Law. For many of the changes, the intention is to strike a fairer balance between the respective rights of employers and employees than under the current DIFC Employment Law, for example in relation to employee leave entitlements and termination benefits. Other changes are reflective of recent developments and trends in working practices, for example part-time employment and secondment arrangements which are not expressly provided for under the DIFC Employment Law. Certain changes are intended to rectify unintended consequences of the current wording of the DIFC Employment Law, whereas others are being introduced from a compliance and enforcement perspective, including the right for the DIFC Authority to inspect DIFC companies’ premises and records and to impose monetary fines (up to $10,000) for non-compliance.

One of the most important developments is the proposed expansion of the anti-discrimination provisions of the DIFC Employment Law. In particular, under the proposed new law there will be additional protected characteristics and the introduction of various remedies including court declarations, recommendations and most importantly, significant monetary compensation for an employee who has suffered unlawful discrimination. In light of the extensive changes under the proposed new law, DIFC employers should prepare to have their employment contract templates and HR policies reviewed and updated to ensure compliance with the new law. Consideration must also be given to how existing employees’ contracts and benefits will be dealt with in light of the new developments. More broadly, DIFC employers will need to carefully review their policies, procedures and general approach when dealing with HR and employment matters generally (from recruitment and hiring through to the termination of employment) to ensure the company’s legal risks are appropriately managed, particularly in light of the increased scope (and repercussions) for employee discrimination claims under the new law.

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