COVID-19: DIFC emergency employment law introduced

Introduction
Changes to contracts – a temporary measure
Pension contributions
Record keeping
Visas and sick leave

Introduction

Employers have been given scope to restructure contracts with their employees to adapt to the challenges posed by the COVID-19 pandemic under a temporary new emergency law introduced in the Dubai International Financial Centre (DIFC).

Under the new legislation, which came into force on 21 April 2020, employers can unilaterally decide to reduce employee working hours and remuneration on a temporary basis and make further changes to work practices and employee benefits.

However, the new presidential directive, known as the DIFC COVID-19 Directive, also provides core protections for employees who contract COVID-19.

Changes to contracts – a temporary measure

The measures employers can implement under the new directive include:

• reduced working hours;
• holiday leave;
• unpaid leave;
• reduction of remuneration on a temporary basis;
• restriction of access to the workplace; and
• requirements regarding remote working (including means of measuring engagement and productivity).

While DIFC employers can implement the measures without first having to obtain employee consent, they must notify affected employees of any changes to their employee contracts in writing at least five days in advance of the changes taking effect.

The measures can be implemented only during the emergency period up to 31 July 2020, when the legislation is due to expire.

Pension contributions

The directive ensures that any end of service gratuity payments will be unaffected by the emergency measures implemented. End of service gratuity accrued up to 1 February 2020 – the date on which the mandatory DIFC employee workplace savings scheme became effective – will be calculated according to an employee's basic salary prior to the implementation of any emergency measures.

However, the directive provides no payment protection for any mandatory employee workplace saving scheme contributions. If an employee was placed on unpaid leave and was not in receipt of a basic salary as at the applicable monthly pay period, the employer would not have to make a contribution to the DIFC employee workplace savings scheme. Likewise, any salary reduction would result in reduced contributions.

Record keeping

During the emergency period, employers must maintain a list of:

• any employees terminated after 1 March 2020 and before the expiry of the emergency period; and
• any employees who are surplus to requirements.

With an employee's consent, those individuals must be registered in the DIFC 'available employee database' so that other employers can readily find and recruit them for work within the DIFC.

Visas and sick leave

The directive allows employers to defer the cancellation of any terminated employees' residency visas or sponsorship and the employer must maintain medical insurance for the employee until the visa has been cancelled. If the employer is in the retail, hospitality or service sector and provides the employee with accommodation as part of their employment contract, they must continue to provide such accommodation until the cancellation of the visa.

Any sick leave taken by an employee during the emergency period as a consequence of either having contracted COVID-19 or being placed in quarantine should not be counted towards any sick leave entitlement. Employees will be entitled to full pay during such sick leave period, for as long as the sick leave certificate or quarantine period is imposed.

For further information on this topic please contact Charlotte Holden, Luke Tapp or Ruth Stephen at Pinsent Masons by telephone (+971 4 373 9700) or email (charlotte.holden@pinsentmasons.com, luke.tapp@pinsentmasons.com or ruth.stephen@pinsentmasons.com). The Pinsent Masons website can be accessed at www.pinsentmasons.com.