The Dubai International Financial Centre (DIFC) recently introduced new insolvency and employment laws. In an insolvency context, the key employment law change has been the review of the statutory end-of-service gratuity regime, which will be replaced with a defined contribution pension scheme. This article examines the DIFC insolvency regime in the context of employment relationships and considers what impact the proposed new pension regime will have in practice.
The new Dubai International Financial Centre (DIFC) Employment Law has now been published and will come into force on 28 August 2019. This article discusses what this means for employers in the DIFC and the impact of the key changes being introduced. DIFC employers should familiarise themselves with the new law and ensure that their employment contracts, policies and business practices are in line with the new regime.
Redundancy is a sensitive and challenging topic in any jurisdiction. For companies operating in the United Arab Emirates, the issue is particularly complex as the UAE Labour Law does not set out any express statutory definition of 'redundancy' or 'redundancy procedure'. A company which fails to engage in a reasonable process or retain sufficient evidence to support a dismissal will always face an element of risk.
After a busy 12 months for the development of labour laws in the United Arab Emirates, the authorities look set to continue to focus on modernisation efforts in 2019. The reforms focus on, among other things, employment law, gender equality and multiculturalism, with the authorities announcing 2019 as the 'Year of Tolerance'.
The UAE authorities have been focusing on the development and modernisation of the employment law landscape over the past 12 months and look set to continue to do so in 2019. Of particular note is that 2019 has been declared the 'Year of Tolerance', with a particular focus on establishing the United Arab Emirates as a global reference point for a tolerant culture. Further, the authorities are expected to continue to consult on legislation to support women in the workplace in the short to medium term.
In collaboration with the courts, the Abu Dhabi Ministry of Human Resources and Emiratisation recently launched a summary court to complement the One Day Labour Court. The new court is designed to speed up the process of litigating labour-related matters, including issues relating to the return of a passport or an emirates ID card, health insurance, accommodation and the cancellation of work visas. However, this fast-track system is designed to consider straightforward disputes only.
Non-cash employee benefits can create a value added tax (VAT) headache for businesses. Even fully taxable businesses in the United Arab Emirates may find that VAT recovery is blocked for certain activities. Further, even if input VAT is recoverable on the cost of the benefit, providing it to employees may trigger an obligation to account for VAT on the deemed supply of the benefit to the employee. For many benefits, the VAT treatment will vary depending on the circumstances.
The Dubai International Financial Centre (DIFC) has been reviewing and undertaking consultation on an entirely new Employment Law throughout most of 2018. The proposed amendments are likely to have a significant impact on key elements of the existing Employment Law and on employment relationships within the DIFC in general.
The gig economy is developing and expanding worldwide and has already had an impact on the UAE regulatory framework. Moreover, it is likely to become more central to the landscape of employee and workforce relationships within the next five to 10 years. It is certainly an area that in-house legal teams, HR professionals and senior managers should pay close attention to in the short to medium term.
Part-time and flexible working arrangements are a fundamental part of workforces in western jurisdictions and serve as a significant incentive that employers can use to recruit and retain their talented employees. While these arrangements are not currently offered by many employers in the United Arab Emirates, this may be about to change in light of a significant statutory development. This development is a win-win for all parties, and businesses should consider creating roles for part-time employees.
There is a huge amount of uncertainty and misunderstanding surrounding the legal approach to redundancies and restructures in the United Arab Emirates. Redundancies were particularly prevalent during the 2008-2009 crash and the more recent oil price slump in 2015-2016. During those periods, many UAE employers received judgments against their businesses after they failed to understand or comply with the legal position and expectations of the local courts when undertaking internal processes.