The DIFC Employment Law No. 2 of 2019| Free HR Courses| 03

 The DIFC Employment Law No. 2 of 2019 is a comprehensive, modern legal framework governing employment relationships within the Dubai International Financial Centre (DIFC). It is distinct from the UAE Federal Labour Law and is heavily influenced by international best practices and common law principles.

Here is a detailed explanation of its key features and provisions.

Recommended Book for the new managers:

1- Navigating Managerial Challenges: Practical Solutions for Everyday Success

2- Update yourself with HR Knowledge :The Evolved HR

3- Enhance Your career as HRBP: Becoming HRBP ( Listed on Harvard Books , organically).

Core Philosophy & Overview

The DIFC Law is designed to provide a clear, predictable, and balanced legal environment for both employers and employees in a global financial hub. It emphasizes:

·       Clarity: Written in straightforward, accessible language.

·       Flexibility: Provides a framework for negotiation, particularly for senior-level employees.

·       High Standards: Offers strong protections for employees, often exceeding those in the broader UAE.

·       Non-Discrimination: Has robust anti-discrimination and anti-harassment provisions.

 

Key Provisions of DIFC Employment Law (No. 2 of 2019)

1. Scope of Application

·       Who it covers: It applies to all individuals employed within the DIFC, with very few exceptions (e.g., certain seconded government employees).

·       "Vicinity Clause": It can also apply to employees who regularly perform part of their duties within the DIFC, even if their employer is registered elsewhere.

2. Mandatory Written Employment Contract

·       A detailed written contract is mandatory and must include specific key terms, such as job title, description, remuneration, working hours, and notice period.

·       The contract cannot waive the employee's statutory rights under the Law. Any clause that attempts to do so is void.

3. Types of Termination

The law is very specific about how employment can end:

• Termination by Notice: Either party can terminate the contract by serving written notice. The required notice period is:

o   90 days for employees with 5+ years of service.

o   60 days for employees with 3-5 years of service.

o   30 days for employees with less than 3 years of service.

o   Parties can agree to a longer notice period, but not a shorter one.

• Summary Dismissal (For Cause): An employer can dismiss an employee without notice only for "serious misconduct" (e.g., gross negligence, fraud, theft, breach of confidentiality). The process for investigating and alleging this is strict.
• Termination for Redundancy: The law recognizes redundancy (layoffs) as a valid reason for termination. However, there are specific consultation requirements and employees may be entitled to a redundancy payment.

4. End of Service Gratuity

This is a critical financial benefit, calculated differently from the UAE Federal Law:

• Calculation: Based on the employee's final basic wage.
• Formula:

o   First 5 years of service: 21 days' basic wage for each year.

o   After 5 years of service: 30 days' basic wage for each subsequent year.

• Total Cap: The total gratuity cannot exceed the equivalent of two years' basic wage.

5. Anti-Discrimination and Harassment

·       Protected Characteristics: The law prohibits discrimination based on age, race, nationality, religion, disability, gender, pregnancy, and marital status.

·       Harassment: It explicitly prohibits sexual and other forms of harassment in the workplace.

·       Burden of Proof: In discrimination claims, if the employee establishes a prima facie case, the burden shifts to the employer to prove that discrimination did not occur.

6. Working Hours, Leave, and Remuneration

·       Working Hours: Standard working hours are 48 hours per week (8 hours per day, 6 days a week). During Ramadan, it is 36 hours per week.

·       Overtime: Generally, employees are not entitled to overtime pay if their annual remuneration is above a certain threshold (which is common for professional roles in the DIFC).

·       Annual Leave: 20 working days per year for employees with more than 1 year of service. For those with less than a year, it accrues at 2 days per month.

·       Sick Leave: Up to 60 working days per year: Full pay for the first 10 days, half pay for the next 20 days, and unpaid for the subsequent 30 days. A medical certificate is required.

·       Maternity Leave: 65 working days of paid leave: First 33 working days at 100% of pay, next 15 days at 50% of pay, and the final 15 days are unpaid. Protection from dismissal during pregnancy and maternity leave is strong.

7. Grievance and Dispute Resolution

·       DIFC Courts: Employment disputes are heard by the DIFC Courts, not the UAE mainland courts.

·       Statutory Limitation Period: Claims must generally be filed within 6 months of the termination of employment.

 

Comparison Snapshot: DIFC vs. UAE Federal Law

Feature	DIFC Employment Law	UAE Federal Labour Law (No. 33 of 2021)
Governing Body	DIFC Authority & DIFC Courts	MOHRE & Local Courts
Notice Period	30 to 90 days (based on tenure)	30 to 90 days (by mutual agreement)
End of Service	Based on Basic Wage (21/30 days p.a.)	Based on Full Wage (21/30 days p.a.)
Gratuity Cap	2 years' basic wage	2 years' total wage
Probation Period	Max 6 months	Max 6 months (new law aligned)
Maternity Leave	65 working days (mix of full/half pay)	60 calendar days (full pay) + further unpaid
Dispute Forum	DIFC Courts	UAE Courts (on mainland)

 

Key Takeaway for HR Professionals

The DIFC Employment Law creates a highly regulated environment that favors transparency and employee protection. For a company operating in the DIFC, compliance is non-negotiable.

Critical actions include:

1. Use DIFC-Specific Contracts: Never use a mainland UAE or other free zone template.
2. Update Policies: Ensure employee handbooks and policies (on discrimination, harassment, termination) are written to align with DIFC law.
3. Understand Termination Rules: The notice and gratuity calculations are strict and must be followed precisely to avoid liability.
4. Seek Specialist Advice: Always consult with legal counsel specializing in DIFC law for complex matters like redundancies, allegations of misconduct, or disputes.