A new DIFC employment law was enacted on May 30, to ensure that employers are giving at least 50 percent basic salary. This is a policy that has been based on workers’ experiences. Employers can no longer issue employment contracts with a basic salary of 50 percent and the rest as ‘allowances’ which has been causing employees to lose a big portion of their end-of-service gratuity.
Lawyer Shiraz Sethi, who has helped draft the law, said he had dealt with many cases at a pro-bono clinic where low-income workers were being given Dh500 as basic salary and a large proportion as allowance.
Since the law didn’t clarify how much of the total salary package should be categorised as ‘basic’ it has allowed some employers to “manipulate” the system.
Regional managing partner and head of employment at DWF Middle East, Sethi 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.”
Employers are given 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.