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The legislative changes in respect of the new DIFC employee workplace savings scheme (“Scheme”) have now been finalised and enacted by way of the Employment Law Amendment Law (DIFC Law No. 4 of 2020) which amends certain provisions of DIFC Law. 2 of 2019, as amended (“DIFC Employment Law”). The DIFC Authority has also issued Employment Regulations, which set out the Scheme requirements in detail (“Regulations”).
Unless defined in this summary, the capitalised terms below have the meanings given to them under the DIFC Employment Law or the Regulations, as applicable.
The following summarises the key issues, including a number of developments since the draft legislation was released for public consultation last year:
Provided that an employee has at least one full year of continuous service with their DIFC employer (including before and after the Qualifying Scheme Commencement Date) as at the termination of the employment, the employee is entitled to end of service gratuity in respect of their period of employment prior to the Qualifying Scheme Commencement Date (which would be calculated on a pro-rata basis if less than one year of service had accrued prior to the Qualifying Scheme Commencement Date).
Any end of service gratuity which an employee has accrued prior to the Qualifying Scheme Commencement Date (“Gratuity Transfer Amount”) may either be paid to them directly on termination of their employment or transferred into the employee’s Qualifying Scheme. Provided that the latter is done with the employee’s prior written consent, the employer would not be required to make up for any shortfall between the Gratuity Transfer Amount (calculated on the employee’s basic salary as at the Qualifying Scheme Commencement Date) and what their end of service gratuity entitlement would have been, had it been paid to the employee on termination of their employment (based on their final basic salary) rather than being transferred into the employee’s Qualifying Scheme.
To help you manage the transition process, we would be happy to assist by:
Copies of the DIFC Employment Law and the Regulations are now available in the “Employment” section of the DIFC website: https://www.difc.ae/business/laws-regulations/difc-laws-regulations/
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