New Dubai Employment Law Introduces Significant Changes

Replacing the law of 2005, in June 2019, Dubai implemented DIFC Employment Law No.2 of 2019. The legislation effectively overhauls that previous regime and addresses a number of ongoing issues with employee benefits and entitlements. The Law was enacted by Sheikh Mohammed bin Rashid Al Maktoum, Prime Minister of Dubai, and was accompanied by a statement from the Dubai International Financial Centre (DIFC), which emphasised the organisation’s commitment to meeting international best practice standards and balancing the interests of both employers and employees.

The new law came into effect on 28 August 2019 and applies to all employers and employees in Dubai - including part-time and short-term employees. Given the consequences for both sides of the relationship, we’ve put together a list of some of the most important changes for employers and employees.

Measures for Employees in the 2019 Employment Law

Maternity and Paternity Benefits

• 5 days of paternity leave for employees with at least 1 year of service, within the first month of childbirth.
• Male employees may now accompany wives to antenatal appointments.
• Nursing breaks for working mothers in the six months following childbirth.
• Parental leave extended to female and male employees adopting children under 5 years old (extended from adoptions under 3 months old).

Equal Rights

• Non-discrimination provisions extended to include age, maternity, and pregnancy discrimination cases.
• Legal clarification on what constitutes discrimination, and protection for employees bringing claims against employers.
• Penalties for discrimination may be up to an employee’s full annual wage.

Gratuity System

• Gratuity payments are now paid out when employees are dismissed for cause.
• Basic wage must be at least 50% of an employee’s annual wage.
• Employees may choose to receive pension contributions from their employers - these must not be less than the amount they would have received under the gratuity system.

Settlement Agreements

• Employees may now waive their statutory employment rights by entering a settlement agreement.
• Making a payment in lieu of notice is only permitted under a settlement agreement (unless an employee is terminated for cause).
• Settlement agreements must show that employees were given the opportunity to receive independent legal advice (unless the parties engaged in court mediation prior to the agreement).

Measures for Employees in the 2019 Employment Law

Claims Against Employers

• Employees must make dismissal claims within 6 months of their termination.
• Employees must make discrimination claims within 6 months of the offending act. Courts may extend this period with discretion.

Probation Periods

• Probation periods are now permitted but must be stated in employment contracts.
• Probationary employees do not have a minimum notice period.

Sick Pay

• Employees now only receive 100% sick pay for the first 10 days of their absence (reduced from the first 60 days).
• Sick pay is paid at 50% for the following 20 days, and may be ended in the next 30 days.

Employment During Notice

• The right to take ‘reasonable’ time off to look for work during notice has been repealed.
• Employers can now insist that employees do not attend work during their notice

General Measures in the 2019 Employment Law

The law introduces a range of general measures concerning the way employers must run their business, including record-keeping obligations (extended from 2 to 6 years), and financial penalties for the late payment of employment remuneration.

The Employment Law is intended to maintain Dubai’s trajectory as a thriving global business hub. Essa Kazim, Governor of the DIFC stated that the Law is an essential step towards “creating an attractive environment” for Dubai’s 24,000 strong employee population.

For more information about Dubai’s employment, tax, and payroll laws, browse activpayroll’s Global Insight Guide to the United Arab Emirates.