Dubai International Financial Centre (DIFC) Authority will amend its employment law that deals with payments to terminated employees.
“A new employment law amending the Article 18 in Law no.4 of 2005 will soon come out for public consultation,” DIFC’s legal team told Arabian Business. No other details were shared.
According to Article 18, an employer must pay all wages and other amounts owing to its employee within 14 days of termination of employment.
Failure to do so will result in the employer being liable to pay the employee a penalty equivalent to the last daily wage for each day the employer is in arrears, the article reads.
In a recent report, UAE-based Clyde & Co highlighted the case of Frontline Development Partners Limited v Asif Hakim Adil  in which the article 18 was applied.
Though the Court of First Instance (CFI) did not quantify the exact amount of the Article 18 penalty [in the case], Clyde & Co estimated the total sum to be nearly $1.63m, an amount far in excess of the amounts initially owed by the appellant company.
Ben Brown, senior associate, Clyde & Co, told Arabian Business that the law firm was not involved in Adil v Frontline case, but is currently advising numerous DIFC employers on issues arising from Article 18.
In the report, Clyde & Co said employers need to ensure that an employee’s contractual and statutory entitlements (including end of service gratuity) are correctly calculated in accordance with the DIFC Employment Law and, if in doubt, they should overpay rather than underpay.
It suggested companies to ensure that an employee receives their contractual and statutory entitlements within 14 days of the termination of their employment regardless of the reason for termination and to clearly document the payment.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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