قراءة في أبرز تعديلات نظام الاكراميات وفقاً لأحكام قانون التوظيف – الامارات
New Amendment to the Gratuity Regime in DIFC Employment Law
A new law amendment is set to be issued on the end of service gratuity regime in Dubai International Financial Centre. The law amendment is expected to set a monthly mandatory contribution by the employees for accruing their end of service gratuity.
His Highness Sheikh Mohammed bin Rashid Al Maktoum has enacted the Employment Law Amendment Law No. 4 of 2020, the Dubai International Financial Centre (DIFC).
This replaces the current end of service gratuity payment regime and introduces the new workplace savings scheme in its place. The end of service gratuity payment regime, previously enacted in the DIFC in 2004, comprised of an accruing gratuity for the employee’s end of service. This is the regime currently in place in the rest of the UAE.
At its core, the new regime requires employees to make mandatory monthly contributions to a professionally managed, regulated savings plan. Employers must seek a certificate of compliance from the DIFC for a qualifying scheme under current regulations. Alternatively, the more simple route is to opt for the DIFC Employee Workplace Savings (DEWS) Plan.
Some requirements for a scheme to be categorised as qualifying include:
Have an oversight body which has the right to appoint and remove an operator for the scheme, review its fees and charges and be in charge of the scheme’s overall governance.
Include employer and employee representation
Must include independent oversight
Must ensure the proper protection of the employee’s interests.
Also, the scheme must ensure that any end-of-service benefits already accrued under the old regime remain in place, and provide employers with the option of transferring this amount into a Qualifying scheme.
Most notably, the law creates a minimum mandatory contribution. This is 5.83% of the monthly basic wage for employees who have less than 5 years of service, and 8.33% of the monthly basic wage for employees who have a longer service.
Exemptions of the new law:
The law makes exceptions for certain types of employees working in the DIFC. This includes:
Those on secondment in the DIFC
Short-term workers
Equity partners
Employees working for government departments, and/or for bodies that have a presence in the DIFC.
Institutional exceptions include:
International institutions who have a statutory obligation to make pension, retirement or similar contributions on behalf of their employees.
For institutions that would rather opt to provide benefits exceeding the mandatory defined contributions under DIFC Employment Law.
Special thanks to:
Nikhat Sardar Khan | Kochhar & Co Inc. Legal Consultants (Dubai Branch)
Michael Lane | Swiss International Legal Consultants Ltd.
for their help in writing the article.
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