Background

His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai and President of Dubai International Financial Centre (DIFC), has issued Presidential Directive No. 4 of 2020 in respect of COVID-19 emergency employment measures (the DIFC COVID-19 Directive). A copy of the DIFC COVID-19 Directive is available here and it is now in force until 31 July 2020.

Set out below is a brief summary of some of the key changes brought about by the DIFC COVID-19 Directive.

New flexibility for employers in relation to emergency measures

Under the existing DIFC Employment Law No. 2 of 2019 (as amended), employee consent is needed to impose measures such as reduced working hours or reduced pay. The key change under the DIFC COVID-19 Directive is to allow DIFC employers to lawfully impose, with five days' prior written notice, any one or more of the following emergency measures in respect of some or all of the employees, without first obtaining employee consent:

• vacation leave;
• reduced working hours;
• reduced remuneration on a temporary basis;
• unpaid leave;
• restricted workplace access; and/or
• remote working conditions and requirements, including imposing means of measuring an employee’s engagement and productivity during remote working.

Protection for employees who are diagnosed with COVID-19

If an employee takes sick leave during the emergency period due to having contracted COVID-19 or having been placed in quarantine by a competent authority, then such sick leave will not count towards their statutory sick leave entitlement. The employee is entitled to full pay during this time.

Additionally, the above emergency measures cannot be imposed on employees whilst on 
COVID-19-related sick leave or quarantine, unless the emergency measures were applied prior to such sick leave period. 

Protection of accrued end of service gratuity entitlement

In our article earlier this year we considered the status of DIFC end of service gratuity entitlement following the introduction of the DIFC Employee Workplace Savings Scheme (the DEWS Scheme). In welcome news to employees, the DIFC COVID-19 Directive provides that, where the basic wage of an employee has been reduced subsequent to 1 March 2020 (as a consequence of an emergency measure or otherwise), end of service gratuity entitlement will be calculated by reference to the employee's basic wage as at 29 February 2020 for the duration of the emergency period. Additionally, where an employee has been terminated and paid their end of service gratuity on the basis of a wage lower than they earned as at 29 February 2020, the employer is obliged to "top up" the employee's end of service gratuity entitlement in respect of any shortfall.

However, the DIFC COVID-19 Directive does not include any provisions related to the status of DEWS Scheme contributions. Accordingly, such contributions should be calculated by reference to the employee's basic salary at the relevant time, even when such basic salary has been reduced or if the employee has been placed on unpaid leave, as a result of the emergency measures.

DIFC to create an Available Employee Database

Whilst the DIFC COVID-19 Directive remains in place, employers are required to maintain a list of:

• employees terminated since 1 March 2020; and
• employees that are surplus to its current needs. 

This information then needs to be provided to the DIFC's Government Services Office, which will maintain an "Available Employee Database" for any terminated employees or those surplus to current needs. The database can be accessed by employers looking to recruit new employees and will also be shared by the DIFC with other UAE government authorities. The Available Employee Database is similar in concept to the Virtual Labour Market for onshore employees (which we considered here).

Visas and permits of terminated employees

Employers can elect to defer the cancellation of a residence visa of terminated employees beyond the 30-day statutory limitation period. Although no salary is payable during this time period, the employer must maintain health insurance for as long as the visa remains active. That said, where an employer in the retail, service or hospitality sector provides accommodation to an employee, the provision of this accommodation must continue after termination, until the visa is cancelled.

Suspension of wrongful trading rules relating to directors' actions

Articles 113 and 115 of the DIFC Insolvency Law (DIFC Law No. 1 of 2019) set out wrongful trading rules that apply to directors of DIFC companies. In an effort to ensure that directors of DIFC companies are able to take decisions to continue to trade, incur new credit and make decisions during the current uncertain financial environment, which may otherwise cause directors concern regarding the potential for personal liability under the wrongful trading regime, these Articles 113 and 115 of the DIFC Insolvency Law have been suspended for the duration of the emergency period.

Conclusion 

The steps taken by the DIFC as highlighted above are part of the wider measures the UAE government is taking to support businesses, investors, citizens and residents during the global pandemic. Given the situation is changing quickly, with new measures introduced by UAE authorities regularly, we continue to monitor this situation closely.

How Dentons can help your UAE business

As the first international law firm to establish a presence in the Emirates, our UAE-based employment and labour team has an in-depth understanding of local issues and is regularly instructed by local and international clients doing business in the DIFC. We have a diverse practice giving focused, experienced advice and assistance on contentious, non-contentious and advisory employment work.

As the position outlined in this article may change without notice, please get in touch with your usual Dentons contact for an up-to-date position.

Information contained in our COVID-19 articles and publications are correct at the time of print. This is however a constantly evolving situation across the globe and specific advice and guidance should be sought as required.