JobXDubai

As of late, the United Arab Emirates has implemented an innovative alternative end-of-service benefits scheme. This optional program equips employers with a compelling tool to attract and retain top talent. Companies can now decide which of their workforce members to enrol in a plan that sets their end-of-service gratuity into designated investment funds, significantly amplifying their earnings upon leaving the company.

In accordance with the UAE Cabinet’s resolution, the scheme is not compulsory for all but becomes obligatory for employees chosen by their companies to take part. As clarified by the Ministry of Human Resources and Emiratisation (MoHRE) during a recent media briefing, employees will preserve the gratuity accrued before entering the new arrangement. However, the traditional gratuity system ceases to apply from the moment they integrate into the innovative program, with financial entitlements being established based on the service tenure until that point.

Post-registration, the end-of-service gratuity is computed following the rules of the new scheme, assuring workers that all entitlements, earned both previously and subsequently, are dispensed upon concluding their employment contract.

The scheme also permits employees to make additional voluntary contributions, up to roughly 25% of their annual salary, to amplify the return on their investment. Moreover, they are afforded the flexibility to withdraw a portion or the entirety of their contributions and corresponding returns as needed.

The MoHRE, in collaboration with the Securities and Commodities Authority (SCA), regulates the implementation of this scheme. Companies interested in participating can sign up through the joint committee or MoHRE’s service platforms. Upon joining, a subscription contract with an identified fund administrator is concluded, and investment accounts are then created on behalf of enrolled employees.

To guarantee returns on their investment, it is imperative for employers to fulfil their commitment to regular monthly contributions based on their employees’ basic salary.

Employers are allowed to disengage from the scheme with the MoHRE’s sanction, provided they satisfy certain prerequisites, such as a minimum one-year subscription, no pending administrative fines or unresolved labor disputes, and sufficiently safeguarding their employees’ rights and accumulated gratuities upon withdrawal.

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