From 1 Feb 2020, employers based at the Dubai International Financial Centre (DIFC) will be required to make mandatory contributions to a funded and professionally-managed defined contribution (DC) savings plan on behalf of employees. Under the newly enacted DIFC Employment Law Amendment Law No. 4 of 2020, this replaces the end-of-service gratuity payment regime that has been in place since the inception of the DIFC in 2004. As part of these changes, DIFC-based employers have until 31 March 2020 to enroll in a “Qualifying Scheme,” which includes the default new scheme — the DIFC Employee Workplace Savings Plan (DEWS). A consultation on the proposed changes occurred in late 2019, and details of the final DEWS scheme were released on 21 Jan 2020. “The launch of DEWS is part of our efforts to put in place a supportive environment for talent by creating greater financial security for employees of DIFC-based companies,” said the DIFC President.
The DIFC is a special economic zone in the United Arab Emirates (UAE) that has an independent regulatory and legal system. The current end-of-service gratuity arrangement is an unfunded defined benefit (DB) scheme originally designed to attract talented employees to work in the UAE. That scheme doesn’t reflect best practices in comparable global locations and is no longer needed, according to the DIFC.
Here are key features of the DEWS plan:
According to the DIFC, employers will need to make the necessary changes to their existing human resource information systems in order to:
Employers and employees will be able to log into the DEWS system to track contributions, investments, portfolio valuations and request withdrawals.
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