The Dubai International Financial Centre (DIFC) Authority has introduced the DIFC Employment Law No.3 of 2012 (the Amended DIFC Employment Law), which amends the DIFC Employment Law No.4 of 2005.

The Amended DIFC Employment Law affords greater protection to employees working in the DIFC by enhancing certain employment rights.

The Amended DIFC Employment Law, which came into effect on 23 December 2012, applies to employees of establishments having a place of business within the DIFC, and is the applicable law of a contract of employment of an employee based within, or who ordinarily works within or from, the DIFC. It has amended the law in relation to (among other things) the employee’s right to an employment contract, leave entitlements, end of service gratuity, termination for cause, and discrimination.

The significant changes include:

  • Termination for cause

A new ‘termination for cause’ provision states that ‘an employer or employee may terminate employment for cause in circumstance where the conduct of one party warrants termination and where a reasonable employer or employee would have terminated the employment’ (Article 59A of the Amended DIFC Employment Law). It remains to be seen how this provision will be interpreted by the DIFC courts in practice and in particular, how the DIFC courts will apply the reasonableness test.

  • Discrimination provisions

The law now prescribes in significantly more detail what constitutes discrimination in the workplace, and prohibits harassment, direct and indirect discrimination, subject to certain defences available to employers (Article 58(2) of the Amended DIFC Employment Law).

The law is silent on compensatory measures available to employees that have been discriminated against. However, a breach of the anti-discriminatory provisions may entitle an employee to terminate for cause.

  • Abolition of Director of Employment Standards (DES)

DES, the body that was responsible for receiving and investigating employment disputes has been abolished in its entirety. All employee complaints must now be brought before the Small Claims Tribunal (SCT) or the DIFC Court of First Instance, depending on the monetary amount of the employee’s claim. This will likely result in employees incurring significant costs from the outset. In addition, hearings before the DIFC Court of First Instance (unlike the SCT) are public unless otherwise ordered and therefore not confidential, which may deter employees bringing their cases forward.

Action for employers

Employers operating in the DIFC should consider whether company policies require amendment in light of these significant changes to the DIFC employment law.