A guide to the UAE's new end-of-service option, including everything that's been revealed so far
5 September 2023| Last updated on 7 September 2023
The new end-of-service investment scheme has not been implemented yet.
The UAE has announced a new end-of-service programme for UAE residents (both Emiratis and expats), which offers an alternative but non-mandatory option to the current gratuity scheme.
Officials have not released a date on when the new alternative system will be available.
Who can take part in the new system?
Full-time workers under private companies, government and semi-public entities, or free zones are eligible to apply.
According to the UAE Media Office, employees of any "occupational levels and work patterns" can join in the new system.
Difference between the new end-of-service scheme and the existing gratuity system
What is the UAE's existing end-of-service system?
As per UAE Labour Law, the current end-of-service system includes a gratuity sum that must be paid to the employee when they leave the company. It is eligible to employees who have served at least one year of continuous service as well as other legal conditions.
The gratuity is calculated based on the worker's basic salary and years of service to their employer.
How does the new UAE end-of-service scheme work?
The new end-of-service scheme is a federal investments and savings fund under the Securities and Commodities Authority, in coordination with the UAE Ministry of Human Resources and Emiratisation.
It is completely optional for employers, and requires the employer to pay a monthly contribution upon signing up.
What are the types of investments and savings options?
The new scheme has three main investment options:
- Risk-free investments - This option maintains the capital amount.
- Sharia-compliant investments - For an option that adheres to the Islamic Sharia law in the UAE.
- Low, medium, and high risk investment options.
How can employees avail their end-of-service benefits?
End-of-service benefits, along with the accrued returns from the investment funds, will be paid to the beneficiaries after the employment relationship is terminated. If the employee dies, his/her nominee will get the benefits.
"During today’s Cabinet session, we approved an alternative end-of-service benefits system for private sector employees and free zone workers in the country," read in a tweet from H.H Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.
"The goal is to safeguard the savings of employees, which represent their end-of-service benefits in the companies they work for, ensuring their rights and providing stability for their families," it was added.