The DIFC has enacted amendments to the 2019 Employment Law (DIFC Law No. 2/2019) and introduced new Employment Regulations which introduce a new end of service savings plan. The amendments to the Labour Law introduce the new Qualifying Scheme workplace savings scheme in the Centre and replace the current end-of-service gratuity payment regime which has been in place since the Centre’s founding in 2004. They come into force on 1 February 2020 and employers will have to make mandatory monthly contributions to a professionally managed and regulated savings plan after that.
The new Regulations set out the requirements for Qualifying Schemes. Employers have until 31 March 2020 to enrol into a Qualifying Scheme. These include the DIFC Employee Workplace Savings Plan. Alternatively, employers may seek a Certificate of Compliance from the DIFC Authority for an alternative Qualifying Scheme under the Regulations.
There will also be a new oversight body which 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.
Employees will also be allowed 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 and ensure any accrued end-of-service benefits under the current regime remain in place, also providing employers with the option to pay these accrued benefits into a Qualifying Scheme. In addition, there are exemptions for certain types of employees, like those on secondment in the Centre, short-term workers, equity partners and employees working for Government departments and bodies which have a presence in the Centre. The mandatory contributions to be made by employers are set at 5.83% of monthly basic wage, for employees who have less than five years’ service and 8.33% of monthly basic wage for employees who have served for longer.