Vice President and Prime Minister of the UAE, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, in his capacity as the Ruler of Dubai, has amended the gratuity law in Dubai.

This new law introduces the new qualifying scheme workplace savings scheme in DIFC, replacing the present end-of-service gratuity payment scheme that has been in place since the formation of the DIFC.

The new law comes into effect from February 1, 2020, from which employers will make compulsory monthly contributions to a professionally managed and regulated savings plan. The plan replaces the current accruing of end-of-service gratuity benefits in favor of employees, which is presently in line with the rest of the UAE.

The Board of Directors of the DIFC Authority has also issued new Employment Regulations that starts the needs for Qualifying Schemes.

The requirements for Qualifying Schemes shows the DIFC’s commitment to make strong regulation in the DIFC. The requirements include having an oversight body that will have the authority to appoint and remove the scheme operator, analyse its governance and fees and charges enforced on the scheme.

Key changes are

  • Granting employees to make voluntary workplace savings contributions into a Qualifying Scheme on top of the compulsory monthly contributions to be made by employers under the Employment Law;
  • Making sure that 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;
  • Making exemptions for certain types of employees, such as those on secondment in the DIFC, short-term workers, equity partners, and employees working for government departments and bodies that have a presence in the DIFC;
  • Settling the compulsory contributions to be made by employers at 5.83 percent of monthly basic wage (for employees who have less than five years service), and 8.33 percent of the monthly basic wage for employees who have long service;
  • Miscellaneous enhancements

    “With a firm commitment to creating a prosperous hub for our 24,000 professionals based at the DIFC, these comprehensive enhancements to DIFC Employment Law Amendment will give clear guidance to employers and employees seeking to grow their savings securely while fortifying both their interests. By doing this, the DIFC also sets a clear example for others to follow global best practice in this regard. As we gear up for embarking upon expansion that will define the future of finance, amending DIFC Employment Law further demonstrates our position as a forward-thinking international financial hub aligned with global best practice that consistently maintains the best interests of DIFC’s dynamic workforce.” Said Essa Kazim, governor of DIFC.

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