Introduction:
Employment laws play a crucial role in governing the relationship between employers and employees, ensuring fair treatment, and setting standards for better labor practices. In this article, we will provide a practical comparison between two significant employment laws: DIFC Employment Law No. 2 of 2019 and its amendments, and the Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationship and its amendments. We will delve into key provisions, practical implications, and compliance considerations to guide both employers and employees alike in navigating the legal landscape.
Scope and Applicability:
DIFC Law No. 2 of 2019 and its amendments:
Applies to the employees and employers operating within the Dubai International Financial Centre (DIFC), a special economic free zone in Dubai, United Arab Emirates. Employers within the DIFC should ensure full compliance with this law which is specific to the DIFC jurisdiction.
Federal Decree Law No. 33 of 2021 and its Amendments:
Applies to all employees and employers operating within the United Arab Emirates, excluding the DIFC, and ADGM (Abu Dhabi Global Market).
Employers outside the DIFC & ADGM should adhere to this law and its amendments to comply with the broader employment regulations in the UAE.
Employment Contracts:
DIFC Law No. 2 of 2019 and its Amendments:
Employers within the DIFC must provide employees with a written employment contract, clearly defining terms and conditions such as remuneration, working hours, and notice periods. Both fixed-term and indefinite contracts are recognized under this law.
Federal Decree Law No. 33 of 2021 and its Amendment:
Employers throughout the UAE must ensure a written employment contract is in place, as verbal agreements are invalid. The law introduces a standard employment contract template to ensure compliance with minimum legal requirements, enhancing transparency and consistency. Fixed-term contracts are now the new norm and the indefinite contracts are to be converted into fixed-term employment contracts.
Working Hours and Leave:
DIFC Law No. 2 of 2019 and its Amendments:
Prescribes maximum working hours, rest breaks, and annual leave entitlements.
Employers should ensure compliance with the specified working hours and provide employees with adequate rest breaks. The law also establishes provisions for maternity leave, paternity leave, sick leave and time off for Haji and Umrah.
Federal Decree Law No. 33 of 2021 and its Amendment:
Sets a standard working week of 48 hours, with provisions for overtime work. Employers must ensure employees receive a weekly rest day and paid public holidays. The law introduces provisions for annual leave, sick leave, and maternity leave, aligning with international standards.
Termination and Dispute Resolution:
DIFC Law No. 2 of 2019 and its Amendments:
Employers must follow the prescribed notice periods or provide payment in lieu of notice when terminating employees. The law provides a detailed framework for unfair dismissal claims and dispute resolution through the DIFC courts; depending of the amount claimed by the employee (AED 500,000 or less), SCT (Small Claims Tribunal) will have the jurisdiction; all other amounts, the claims must be filed before the DIFC Courts, unless the parties to the claim elect in writing that SCT oversees the dispute. End-of-service gratuity payments are also addressed in this law.
Federal Decree Law No. 33 of 2021 and its Amendment:
Employers should adhere to the specified notice periods based on the length of employment when terminating employees. The law introduces a mandatory severance pay scheme, ensuring employees receive compensation upon termination. Specialized labor departments are established for resolving employment disputes, emphasizing amicable settlement procedures.
Conclusion:
Employers should review and update their employment contracts, policies, and practices to align with the respective laws and amendments to ensure compliance. Regularly consult legal resources, government websites, and labor law experts to stay updated with any new changes or amendments to the laws. Providing clear communication to employees regarding their rights, entitlements, and obligations under the applicable law is crucial. Employers should establish systems and procedures to track working hours, leave entitlements, and notice periods to ensure compliance with the respective laws. Understanding and complying with employment laws, is essential for employers and employees in the United Arab Emirates. By reviewing and aligning employment contracts, policies, and practices with the relevant laws, employers can ensure fair treatment, protect employee rights, and minimize legal risks. Regularly staying informed about any updates or amendments to the laws will further support compliance efforts and promote a harmonious working environment.
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Written By:
Partner & Head of Arbitration Law Department at Al Safar and Partners Law Firm.