The DWF Employment team consider the key legal and practical implications of the Directive and provide meaningful guidance for employers operating within the DIFC.
The Impact of COVID-19
The impact of the COVID-19 pandemic has been far reaching and has forced companies to implement stringent business continuity measures and world leaders to issue legislative emergency measures to provide relief and guidance to the business community. The DIFCA is no exception.
Scope and Rationale of the Directive
The new Directive was issued by the President in an effort to limit the impact of the COVID-19 pandemic on employers and employees in the DIFC. The Directive is binding on all entities registered within the DIFC and came into force on 21 April 2020 (the "Effective Date") and continue to have effect until 31 July 2020 (the "Emergency Period"), unless the Directive is added to or amended at any time by the President.
The DIFC has put in place a number of emergency employment measures that employers can adopt, without the employees' consent, during the Emergency Period. Pursuant to the Directive, employers are now able to:
– impose reduced working hours;
– impose annual leave, with or without pay;
– reduce remuneration on a temporary basis;
– restrict workplace access; and
– impose remote working conditions and means to measure employee engagement and productivity.
Any employers wishing to implement any or all of the above emergency measures must provide employees with five (5) days' notice in writing.
COVID-19 Related Sick Leave
The Directive also introduces special sick leave provisions for any DIFC employee who has:
(a) contracted COVID-19 and this has been confirmed by a valid sick certificate; and/or
(b) been quarantined by the local authorities in order to limit the spread of COVID-19.
The COVID-19 related sick leave shall not be taken in accordance with the ordinary sick leave provisions under DIFC Law No. 2 of 2019, as amended (the "DIFC Employment Law"), which essentially means that such employees will be on full remuneration for the entire period of the COVID-19 related sick leave. An employee who takes sick leave in accordance with the provisions of the Directive may not be subjected to any Emergency Measure that did not apply to them prior to taking such sick leave.
Employers may defer the residency visa cancellation process in respect of any employee terminated between 1 March 2020 and 31 July 2020 (the "Terminated Employee") provided that:
(a) the Employer continues to provide basic medical insurance cover for the Terminated Employee; and
(b) where the Employer is in the retail, service or hospitality sector and has provided company accommodation, the Employer shall continue to provide accommodation to the Terminated Employee,
until the cancellation of the Terminated Employee's residency visa. Apart from above mentioned exceptions, a Terminated Employee will not accrue any rights and benefits beyond their effective termination date under the
DIFC Employment Law.
DIFC Employee Available Database
Employers are required to maintain a list with the Government Services Office of:
(a) Terminated Employees; and
(b) surplus employees.
The employee's written consent must be obtained prior to their profile being uploaded onto the online portal or submitted to the email address stipulated by the Government Services Office.
During the Emergency Period, employers wishing to appoint new employees may search the DIFC Employee Available Database for suitable candidates and inform the Government Services Office if an employer wishes to hire any listed candidates.
Gratuity Payment Protection
The DIFC has implemented measures to protect an employee's accrued end of service gratuity during the Emergency Period. Where an employee's basic salary has been reduced after 1 March 2020 (due to the emergency measures or otherwise), the employee's end of service gratuity will be calculated using the basic salary as at 29 February 2020. This end of service gratuity protection is also applicable for the calculation of any end of service gratuity amount which will be transferred into the newly implemented DIFC Employee Workplace Savings Scheme or into a qualifying alternative issued with a certificate of compliance approved by the DIFC Authority.
In the event that payment in respect of end of service gratuity has already been made to a Terminated Employee prior to the Effective Date of the Directive, the employer shall have a top-up obligation.
The Board of Directors of the DIFC Authority may during the Emergency Period issue workforce directions as to restrict employers' workplace attendance in the DIFC, specifying vital roles for employers or key sectors of employment that require a presence in the DIFC during or after working hours. Further, the Board can issue directions as to which permits need to be applied for and which directives of the local authorities need to be adhered to during the Emergency Period.
Any employers who act in contravention to the above workforce restrictions shall be liable to a fine not exceeding USD 50,000.
Further, any employees that fail to follow the workforce restrictions as required by their employer are at risk of immediate dismissal.
Operations and Privacy
Employers must ensure that the cybersecurity measures in place for remote working are sufficient, acceptable and in accordance with industry standards for the type of work being performed remotely. If employers engage in any form of monitoring of employees, they must demonstrate that such monitoring outweighs privacy considerations.
Employers may collect, process and share personal data of employees (including information regarding their health, travel and COVID-19 related symptoms) or any reasonable purpose related to the health and safety of their employees provided it does not go further than disclosing more information than necessary.
Wrongful Trading Rules Suspension
The Directive suspends the wrongful trading rules under the DIFC Insolvency Law, DIFC Law No. 1 of 2019, in respect of directors. The suspension ensures that directors of DIFC companies in the current uncertain environment are able to continue to trade, incur new credit and make decisions that may otherwise cause directors concern about the potential for personal liability under the wrongful trading regime.
The Way Forward
What is clear from the Directive is that due to the COVID-19 pandemic, employers can take drastic temporary measures during the Emergency Period in order to sustain the business and preserve continuity of employment. Employers are still encouraged to engage in meaningful consultations with employees and undertake detailed internal risk assessment measures to consider the best options available for the Emergency Period, as this will differ from industry to industry. Decisions that employers take during the Emergency Period will undoubtedly affect the morale of the general workforce and impact the overall corporate image and reputation of the company. Employers must use the flexibility granted by this Directive carefully and find a way to strike a balance between the short term and long term business objectives.