Connecticut, US

Jun 18 2019

Stricter Employment Laws for Dubai International Financial Center Forthcoming

United Arab Emirates

At a Glance

  • The Dubai government approved a new employment law that applies in the Dubai International Financial Center that is expected to go into effect on August 28, 2019.
  • The law introduces updated benefits for employers and employees, covers employment termination, cancelation of residence permits, the issuance of secondment cards, and penalty schedules, among other topics.
  • This law is another example of the continued clarification of labour laws in the United Arab Emirates during the country’s efforts to draw foreign investors.

The situation

The government of Dubai approved a new employment law for the Dubai International Financial Center (DIFC) that is expected to go into effect on August 28, 2019.

A closer look

Details of the forthcoming employment law include:

  • Employment contracts. Employment contracts will need to be provided to the employee within seven days of the start of employment. Currently, there is no deadline to provide an employment contract. 
  • Cancelation of residence permits. Employers will need to cancel residence permits no later than 30 days from the end of employment. Currently, the law does not specify this deadline.
  • Secondment card issuance. Secondment cards, issued for foreign nationals on short assignments in the DIFC, will be issued once for up to 12 months, unless the DIFC approves the employer’s request for a longer validity. Currently, regulations for the issuance of secondment cards are less clear.
  • Outlined penalties. The law will introduce a more structured list of penalties, including a USD 2,000 fine for employers for each instance of noncompliance with visa and sponsorship regulations.
  • Additional topics covered.  Additional topics covered by the new employment law include leave (including the introduction of paternity leave), end-of-service gratuity payment, rules regarding employment termination and clearer definitions of part-time employment, short-term employment and secondment.

 

Impact on employers

The law clarifies many labour laws and provides structure to a currently practice-based area of law.

Employers in the DIFC should work with their human resources department to ensure that company policies comply with the new law.

Impact on foreign nationals

Foreign nationals should ensure that they take advantage of the new labor protections granted under the law.

Background

The DIFC is one of the world’s top financial centers and the leading financial hub for the Middle East, Africa and South Asia regions with over 2,000 actively registered firms. While the DIFC can create its own employment laws, immigration laws are created by the federal government. The employment laws in the DIFC affect foreign and local workers and are therefore relevant in the immigration context as well.

Looking ahead

Amendments to the DIFC law are in line with the UAE government’s strategy aiming to increase protection of employees’ rights (e.g. by replacing the existing bank guarantee systems with insurance schemes in the mainland and in select free zones, and by introducing mandatory labour awareness sessions for foreign workers and Emiratis). The government has also relaxed regulations (e.g. waived administrative fines) and created residency programs (i.e. long-term residence permit and permanent residence programs) in an effort to make the United Arab Emirates more attractive for investors and foreign workers. More programs are likely to be developed that will continue to bring transparency to and improve the employment environment for foreign workers and their employers.

The Abu Dhabi Global Market free zone is expected to adopt changes to its labour laws as well, including new rules for freelance workers, interns and overtime pay. Fragomen will report on the relevant adopted policies, which could take over a year to adopt since it took this long for the DIFC rules to be implemented from the time of their proposal.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to mideast@fragomen.com.