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What you need to know now
The 2020 article records the introduction of DIFC qualifying savings schemes. Current employers should check employee eligibility and their approved scheme arrangements.
The original article is preserved below as a historical record. Earlier deadlines, rates, offers and approval statements should not be used as current guidance.
- DIFC rules are distinct from general UAE labour rules.
- Check any employee exemption and scheme membership.
- Keep payroll and contribution records reconciled.
Separate the old proposal from the operating framework
The historical article discussed the introduction of DIFC workplace savings arrangements. The qualifying-scheme framework subsequently took effect from 1 February 2020 for covered employment. A present-day review should therefore begin with the applicable DIFC employment rules and the employee’s scheme position rather than treat the change as a future proposal. Do not automatically apply a general mainland gratuity calculation to service governed by DIFC rules without first identifying which regime and periods are relevant.
Divide service into the relevant periods
Prepare the employment start date, any changes in employment and the date from which qualifying-scheme participation applies. Earlier accrued gratuity and later scheme contributions may need separate treatment. Obtain records of any transfer of pre-existing benefits into a scheme and do not assume that such a transfer occurred merely because the employee is enrolled today. This timeline provides the basis for checking the employer’s records and helps prevent earlier service from being lost or counted twice.
Reconcile payroll and scheme information
Compare the payroll records used for contribution calculations with the amounts remitted and recorded by the scheme. Identify missing months, corrections, changes in basic salary and any unexplained differences. Where an exception or alternative qualifying arrangement is relied on, retain the supporting documentation and confirm that it applies to the worker concerned. These are evidence checks for the employer and adviser; the correct contribution or benefit assessment should follow the current rules and the actual employment facts.
Review departures with a complete evidence file
When employment ends, assemble the contract, service timeline, payroll history, scheme statements and records of any earlier accrued benefit. Clarify which amounts are payable by the employer and which are held or administered through the scheme. Explain the calculation and supporting dates to the relevant parties, and resolve discrepancies before treating the file as complete. Retaining these records makes a later enquiry easier to answer and keeps the historical change in context without presenting outdated proposal language as current law.
YOUR NEXT STEPS
A practical way forward
- 01
Step 1
Identify employees within the DIFC regime.
- 02
Step 2
Review scheme enrolment and payroll setup.
- 03
Step 3
Reconcile monthly contributions and preserved earlier entitlements.
CLEAR ANSWERS
Frequently asked questions
Is the March 2020 enrolment date a new deadline?
No.
Can this article calculate general mainland gratuity?
No. Use the regime applicable to the employer and employee.
Read the original article First published 21 January 2020 · retained for context
This earlier article is preserved for context. Its rates, deadlines, approvals and announcements may have been superseded. Use the current guidance and official references on this page for your next step.
Gratuity Law Amendment – DIFC
Gratuity Law Amendment – DIFC
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has enacted the Employment Law Amendment Law No. 4 of 2020, the Dubai International Financial Centre (DIFC),the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, announced on Tuesday.
Workplace savings scheme
The amendment law introduces the new qualifying scheme workplace savings scheme in DIFC, replacing the current end-of-service gratuity payment regime that has been in place since the inception of the DIFC in 2004.
The new regime commences on 1 February 2020, from which employers will make mandatory monthly contributions to a professionally managed and regulated savings plan.
The new regime commences on February 1, 2020, from which employers will make mandatory monthly contributions to a professionally managed and regulated savings plan. The plan replaces the existing accruing of end-of-service gratuity benefits in favour of employees, which is currently in line with the rest of the UAE.
The Board of Directors of the DIFC authority has also issued new employment regulations that set out the requirements for qualifying schemes.
Whos covered
Employers will have until March 31, 2020 to enroll into a qualifying scheme.
These include the DIFC Employee Workplace Savings (DEWS) Plan, established by the DIFC as a best-in-class default Qualifying Scheme after an exhaustive competitive bidding process. Alternatively, employers may seek a certificate of compliance from the DIFC authority for an alternative qualifying scheme under the regulations.
The requirements for Qualifying Schemes reflect the DIFC’s commitment to robust regulation in the DIFC. The requirements include having an oversight body that will have the right to appoint and remove the scheme operator, review its governance and fees and charges imposed on the scheme.
In addition, Qualifying Schemes must require employer and employee representation and independent oversight with the aim of ensuring the proper protection of the employee’s interests.
Key changes
- Voluntary Savings
Allowing employees to make voluntary workplace savings contributions into a Qualifying Scheme on top of the mandatory monthly contributions to be made by employers under the Employment Law. - Qualifying Scheme
Ensuring that any accrued end-of-service benefits under the current regime remain in place, also providing employers with the option to pay these accrued benefits into a Qualifying Scheme. - Short-term workers
Creating exemptions for certain types of employees, such as those on secondment in the DIFC, short-term workers, equity partners, and employees working for government departments and bodies that have a presence in the DIFC. - Mandatory contribution
Settling the mandatory contributions to be made by employers at 5.83 per cent of monthly basic wage (for employees who have less than five years’ service), and 8.33 per cent of monthly basic wage for employees who have longer service. - Exemptions
Creating exemptions for international institutions who have a statutory obligation to make pension, retirement or similar contributions on behalf of their employees elsewhere, as well for employers who wish to provide a regulated defined benefit scheme to their employees that provides for benefits in excess of what the mandatory defined contributions are under the DIFC Employment Law; and - Miscellaneous enhancements
Essa Kazim, Governor of DIFC, said: “With a firm commitment to creating a prosperous hub for our 24,000 professionals based at the DIFC, these comprehensive enhancements to DIFC Employment Law Amendment will give clear guidance to employers and employees seeking to grow their savings securely while fortifying both their interests.
“By doing this, the DIFC also sets a clear example for others to follow global best practice in this regard.”
“As we gear up for embarking upon expansion that will define the future of finance, amending DIFC Employment Law further demonstrates our position as a forward-thinking international financial hub aligned with global best practice that consistently maintains the best interests of DIFC’s dynamic workforce.”
Courtesy : Gulfnews
VERIFY THE DETAIL
Official sources & further reading
Source checks support this general guide. Your treatment depends on the facts, tax period and applicable legislation.
