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New gratuity law by DIFC

Dubai international financial center has made an amendment to new gratuity laws by replacing the old gratuity law DIFC in 2004. The vice president of UAE has enacted new employment law amendment law no 4 of 2020 which states the new qualifying scheme workplace savings scheme in DIFC replacing the current end of service payment regime.

This new amendment will commence from fib 1 2020 from which the employer will make contributions to the saving pals which is managed professionally.

DIFC authority has also issued other employment schemes in line with the new amendments.

The new scheme covers below mentioned, people;

  • All the employers under DIFC have until 31 march 2020 to enroll in a qualifying scheme after a competitive bidding process.
  • All the employees working under DIFC are included under this new scheme.
  • Certificate of compliance may be requested by the employer from the DIFC for n alternative qualifying scheme.
  • One of the major purposes of this scheme is to have a regulated body that will protect the interest of all the employees and employers working in DIFC. They also have the right to remove and appoint the operator of the scheme.

Key changes made to this also include

Voluntary changes

This allows the employees to make voluntary workplace savings contributions into a qualifying scheme including the monthly contributions that have to be made by employers.

Qualifying scheme

This ensures that any accrued end of service benefits under the currently issued amendment provides employers an option to pay the accrued benefits into the qualifying scheme

Short-term workers

There are certain exemptions that are created for certain employees especially for those on secondment in DIFC, short term works and employees working for the government that has links with DIFC.

Contributions that are mandatory

Mandatory contributions are settled which is mad bey the employer at 5.83 % of basic wage (for those who have less than five years of service)

8.33 percent for those who have been working for a longer period.

Exemptions

The exemption is created for international institutions that have a statutory obligation to make pension, retirement or similar contributions on behalf of their employees that provides the benefits in excess of mandarin contribution under DIFC

Miscellaneous changes made

The firms have committed to creating a proper’s working place to the disc employs and these amendments will help to give a clear picture to all the employees and employers to grow their monthly savings securely.

Imposing of Penalties for Breach on Employment Rights 

New law for DIFC specifically imposes fines on those who try to breach the employment laws and rights. The court chooses to impose additional orders for penalties.

DIFC panel also expands the number of fines imposed but also investigate the matters if it feels necessary.

The employees and employees need to be updated with all the latest changes in the DIFC so they can avoid the risk of facing fines and penalties. The HR department has to amend the employment contracts to reflect the recent changes made in the law.

Labor Lawyers in UAE

HHS lawyers and legal consultants have the best labor lawyers who have experience in dealing with employment rights. We work with an aim to deliver result-oriented services on behalf of our client. Contact us for further consultation.

Is gratuity calculated on basic salary in UAE?

As per the UAE law, the gratitude is calculated once all the employees have completed the term of services and the calculation will depend upon the basic salary of the employee.

What is the maximum amount of gratuity paid in UAE?

As per UAE LABOUR LAW maximum gratuity amount for the employee cannot exceed 2 years’ gross salary.

Hassan Humaid Al Suwaidi., LL.B. is a Senior Partner in HHS Lawyers. He has 20 years of experience dealing with high-value and complex cases. Frequently featured in local and international legal directories and commended for his ability to attain favorable outcomes for clients, Hassan has been involved in some of the largest legal settlements. A major part of his work is providing expert legal advice on UAE legislation and acting for individuals and businesses during disputes and litigation. Read more