|19 June, 2019

DIFC employees to get 50% of salary as basic

Employers have 90 days from May 30 to correct all employment contracts.

Image used for illustrative purpose. A view of DIFC gate building.

Image used for illustrative purpose. A view of DIFC gate building.

DIFC/Handout via Thomson Reuters Zawya

Employers at the Dubai International Financial Centre (DIFC) can no longer issue job contracts with less than 50 per cent of pay as 'basic salary' and indicating the rest as 'allowances' - a wage structure that has been causing employees to lose a significant portion of their end-of-service gratuity.

Enacted on May 30, the DIFC's new employment law ensures that employers are giving at least 50 per cent basic salary. It is a rule that has been based on workers' experiences.

Lawyer Shiraz Sethi, who has helped draft the law, told Khaleej Times that he had dealt with many cases at a pro-bono clinic where low-income workers, such as delivery drivers and waiters, were being given Dh500 as basic salary and a large proportion as allowance.

End-of-service gratuity is calculated based on an employee's basic pay, however, the law didn't clarify how much of the total salary package should be categorised as 'basic'. This has allowed some employers to "manipulate" the system, the lawyer said.

"Now, the employment law has set a minimum threshold of 50 per cent of basic salary, so you cannot go under 50 per cent, but you can go higher," said Sethi, regional managing partner and head of employment at DWF Middle East.

"A delivery driver who earns, for example, a total remuneration of Dh10,000 cannot be given Dh1,000 as basic salary and Dh9,000 as allowances. It has to be the other way round, or at least Dh5,000 basic salary and Dh5,000 allowances."

Employers have 90 days from May 30 to correct all employment contracts or they can be held accountable at DIFC courts, with heavy penalties waiting for them.

Ali Al Assaad, senior associate at DWF, said they always advise people to have a split of 60 per cent basic salary and 40 per cent allowances, at the least.

"If there is such a law at the DIFC, it might be just a matter of time until the UAE mainland follows the same or something similar," Al Assaad said.

'No to discrimination and underage interns'

Companies are finding new ways to discriminate against job-seekers: And one of them is by listing "a specific language or a degree from a specific university", lawyers have said.

In the UAE, it is illegal discriminate against individuals based on their nationality or religion. However, Ali Al Assaad, senior associate at DWF, said employers have "found a way around the law".

"Instead of saying 'I don't need this nationality', you will put conditions that say 'a specific language is required'. They also put conditions where a degree from a specific university is required," he said.

The DIFC also has a discrimination law, and their new policies add that "you cannot discriminate against someone for their age, if they're pregnant, or if they're on maternity leave", said lawyer Shiraz Sethi.

The 'victimisation' point under the law helps protect the employee who has filed a claim for discrimination. Previously, the employer could "retaliate" by terminating the employee for filing a claim, but now, that employee has more protection.

'Illegal to get young interns'

When it comes to age requirements, the DIFC Employment Law stipulates that employers cannot hire people younger than 16 years old. Violators shall be fined Dh10,000.

Sethi said some companies at the DIFC were hiring youngsters as interns, which is illegal.

"The DIFC stipulates that if you are going to take an intern on, they must be with an establishment, meaning a university or a school doing A-levels, and they must be above the age of 16," he said.


 

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