Following our previous update regarding this on 13 September 2023, on 14 March 2024, the DIFC Authority officially released its newly enacted amendments to the DIFC Employment Law. The amendments have significant implications for employers and Gulf Cooperation Council (“GCC”) nationals working within the Dubai International Financial Centre (“DIFC”). The GCC includes nationals of the UAE, Saudi Arabia, Bahrain, Kuwait, Oman and Qatar.
As noted in our previous article, the DIFC had proposed amendments aimed at ensuring GCC nationals receive equitable end-of-service benefits compared to their expatriate counterparts. These proposals have now been solidified into law, following a period of consultation and legislative refinement.
In short, if you employ any GCC national employees in the DIFC, you will now need to carry out an audit to understand whether this amendment applies to your company and if you need to make any top-up payments. This amendment to the DIFC Employment Law came into force immediately on 8 March 2024 although the commencement date for the purposes of this amendment is from 1 April 2024. Although not explicit, we understand that employers have until the 21 May 2024 to make the required top-up payments calculated from 1 April 2024. In any event, we recommend that DIFC employers take action as soon as possible. There is a potential fine of USD 2,000 for employers who fail to comply.
What is new?
The amendments, introduce new provisions requiring employers in the DIFC to make top-up payments for eligible GCC national employees into a Qualifying Scheme, such as the DIFC Employee Workplace Savings plan (“DEWS”), in addition to their pension contributions. This is to address any discrepancies between the General Pension and Social Security Authority (“GPSSA”) contributions and the end-of-service benefits that GCC nationals would have accrued under a Qualifying Scheme.
Key Points:
1. Top-Up Payments: Employers must make top-up payments into a Qualifying Scheme for GCC national employees. This adjustment is to cover any shortfall between the pension contributions made under GPSSA and the Core Benefits that would have been payable if the employee were not a GCC national, ensuring that GCC national employee’s end-of-service benefits are at least the same as their expatriate counterparts.
2. De Minimis Threshold: The monthly contributions to a Qualifying Scheme are subject to a minimum threshold of AED 1,000. This means that the top-up contributions are mandatory only if the calculated difference meets or exceeds this amount.
3. Sanctions Compliance: The amendments also address situations where an employer is unable to contribute to a Qualifying Scheme due to sanctions, mandating employers to accrue the Core Benefits in the form of a Gratuity Payment, ensuring legal compliance while safeguarding employee rights.
What do you need to do as an employer?
1. Review employment contracts and policies for all GCC national employees to identify any adjustments that may need to be made to employee benefits for those employees.
2. Register GCC national employees with a Qualifying Scheme such as DEWS if the amendment applies to them.
3. Update payroll systems to accommodate the calculation and payment of the top-up contributions to ensure compliance with the new law.
4. Communicate these changes to GCC national employees, explaining the enhanced benefits and any actions they may need to take.
For further details on the amendments and how they may impact your business or employment, please contact our employment team (David McDonald, Tara Jamieson or India Dawson).
