Implementation of DIFC Employee Workplace Saving plans delayed

Middle East, United Arab Emirates

We recently reported on the proposed amendments to the DIFC Employment Law (DIFC Law No. 2 of 2019) (the “Employment Law”) and the introduction of regulations in connection with the replacement of the existing end-of-service gratuity payment regime with workplace savings schemes.

The introduction of workplace savings requirements was originally expected to be implemented on 1 January 2020. However, with the regulations yet to be issued and information regarding alternative qualifying schemes and enrolment yet to be released, that date has now been pushed back one month to 1 February 2020 to give employers and employees more time to familiarise themselves with the regulations and the procedural requirements for onboarding employees once issued.

Employees’ entitlement to end of service gratuity under the existing Employment Law provisions will continue to accrue until the end of January 2020, with DIFC employers then obliged to make contributions into a qualifying scheme with effect from 1 February 2020.

The DIFC has confirmed that there will be a grace period up to 31 March 2020 for DIFC employers to enrol employees into the DIFC Employee Workplace Savings plan (“DEWS”) or an alternative qualifying scheme, however contributions will need to be made retrospectively from the February salary. Employers will not be responsible for any investment profits or losses in respect of any contributions made retrospectively on or before 31 March 2020.

For those choosing not to participate in DEWS, Certificates of Compliance for alternative qualifying schemes will need to be applied for and obtained prior to 31 March 2020 and the DIFC has announced that it will publish the forms and requirements for this shortly.

We understand the DIFC plans to publish an Employer Executive Guide setting out the onboarding process and a detailed DEWS Members’ Guide soon and we recommend DIFC employers continue with their efforts to prepare themselves to meet the new requirements. Further information on the implications of the changes  for employers and employees, and what employers can be doing now to prepare ahead of the implementation date, can be found in our previous article on this subject available here.

We will continue to follow developments in this area and provide further updates as more details become available. If you have any questions on how the new regime may affect your business, or you would like assistance in updating your employment terms and policies for the incoming changes, please do get in touch.