New DIFC Presidential Directive in respect of COVID-19 emergency employment measures

The Dubai International Financial Centre (“DIFC”) has now published an important new Presidential Directive No. 4 of 2020, otherwise known as the DIFC COVID-19 Directive, which can be found here and is effective from 21 April 2020 (the “Directive”).

The Directive has been introduced in response to the COVID-19 outbreak to address the related issues currently being faced by employers and employees within the DIFC. The Directive is intended to be in force until 31 July 2020 (pending any later decision by the DIFC to extend the duration of the applicability of the Directive) (the “Emergency Period”).

We summarise the key provisions of the Directive as follows:

A. Emergency Employment Measures

The Directive introduces a number of emergency employment related measures which a DIFC employer may, during the Emergency Period, lawfully implement without first obtaining employee consent being:

• Impose reduced working hours;
• Impose vacation leave;
• Impose unpaid leave;
• Reduce remuneration on a temporary basis;
• Restrict workplace access; and
• Impose remote working conditions and requirements including imposing means of measuring an employee’s engagement and productivity during remote working.

(collectively referred to as the Emergency Measures”)

An employer is required to notify any affected employees in writing at least 5 days’ in advance of implementing any of the Emergency Measures.

During the Emergency Period, employers will be required to maintain a list of (i) any terminated employees (an employee who is terminated during the period from 1 March 2020 up to the end of the Emergency Period) and; (ii) any employees that are surplus to its current requirements. This information will be provided to the Government Services Office who (with the employee’s consent) shall create and maintain a virtual labour market during the Emergency Period known as the “DIFC Available Employee Database”. Any DIFC Employer wishing to hire during the Emergency Period can utilise the DIFC Available Employee Database for recruitment purposes.

B. COVID-19 Related Sick Leave

The Directive provides that any sick leave taken by an employee during the Emergency Period as a consequence of either (i) having contracted COVID-19 (as confirmed by a sick leave certificate issued by a ‘Competent Authority’ such as the Dubai Health Authority or Ministry of Health and Prevention) or; (ii) being placed in quarantine by any Competent Authority to deal with limiting the spread of COVID-19, shall not count towards any sick leave entitlement that an employee is entitled to under the DIFC Employment Law.

Employees will be entitled to full pay during any COVID-19 sick leave period (for as long as the sick leave certificate is valid and/or the quarantine is imposed by the Competent Authority), and may not be subjected to any Emergency Measure that did not apply to them prior to any such sick leave period.

The Directive further provides that it will not be permissible to terminate the services of an employee who has taken more than the maximum aggregate 60 working days of annual sick leave entitlement under the DIFC Employment Law because of any COVID-19 related sick leave.

C. End of Service Gratuity Payment Protection

The Directive ensures that any end of service gratuity payments will not be effected by the implementation of any Emergency Measures as follows:

• where the employee’s basic salary has been reduced subsequent to 1 March 2020 (as a consequence of an Emergency Measure or otherwise), the gratuity accrual for that employee for any period of service prior to 1 February 2020 (when the mandatory DIFC employee workplace savings scheme became effective) shall be calculated with reference to their basic salary as at 29 February 2020 for the duration of the Emergency Period; and
• In circumstances where an Employer is looking to transfer any end of service gratuity which an employee has accrued prior to 1 February 2020 (“Gratuity Transfer Amount”) into a DIFC employee workplace savings scheme on an employee’s behalf, where the basic salary of an employee has been reduced subsequent to 1 March 2020 (as a consequence of an Emergency Measure or otherwise), the basic salary used in the calculation of the Gratuity Transfer Amount shall be the basic salary as at 29 February 2020 for the duration of the Emergency Period.

Significantly, the Directive does not provide for payment protection during the Emergency Period for any mandatory employee workplace saving scheme contributions, and therefore these contributions should be calculated with reference to the employees’ applicable basic salary at the time when the employer contribution to the scheme is due to be transferred. For example, if an employee was placed on unpaid leave and was not in receipt of a basic salary as at the applicable monthly pay period, a contribution would not require to be made by the employer to the DIFC employee workplace savings scheme.

Visas and Permits of Terminated Employees

Under the Directive it will be permissible for employer’s to defer the cancellation of any terminated employees’ residency visas and/or sponsorship (post the 30 days’ statutory limitation period). However, in these circumstances no rights or benefits shall accrue under the DIFC Employment Law in favour of the terminated employees (with the exception of health insurance which will require to be maintained by the employer for as long as the visa is active).

Employers in the retail, service or hospitality industry who provide employees with accommodation as part of their employment contract, will require to continue to provide accommodation to those employees until the cancellation of their residency visa.

In summary, the Directive sets out much extended measures which an employer is lawfully permitted to implement as a result of the COVID-19 outbreak resulting in a significant departure (albeit on a temporary basis) from the obligations set out under the DIFC Employment Law. On the other hand, the Directive affords protection to employees who fall sick as a result of COVID-19 and also in respect of visa cancellation timelines should employment be terminated.

If you have any questions or wish to discuss in more detail, please do not hesitate to contact us.

Key Contacts:

Samir Kantaria
Partner, Head of Employment & Incentives
s.kantaria@tamimi.com

Gordon Barr
Partner, Employment & Incentives
g.barr@tamimi.com