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Mandatory Participation For Selected Employees in UAE’s New End-of-Service Scheme

The UAE government unveiled a new alternative end-of-service benefits scheme for employees this Wednesday. While the scheme is optional for employers, once an employee is chosen for it, their participation becomes mandatory.

Key points of the scheme include:

  • The primary aim is to attract and retain talented employees.

  • Employers can decide which employees to enroll in the new scheme.

  • Employees’ end-of-service gratuity will be invested in approved funds, potentially increasing their savings.

  • Any gratuity earned by workers before joining the new system will be retained.

  • The current end-of-service gratuity system will halt for those enrolled in the new plan.

  • Gratuity calculations will be based on the new system from the date of joining.

  • At the end of their contract, employees will receive all earnings before and after entering the new scheme.

  • Employees can opt to contribute an additional 25% of their annual salary to boost their investment returns and can withdraw some or all of their contributions and investment profits.

  • Skilled workers can select their investment options, whereas unskilled workers will be part of a capital-guaranteed portfolio.

The Ministry of Human Resources and Emiratisation (MoHRE) and the Securities and Commodities Authority (SCA) are spearheading the scheme’s implementation. Companies keen to join can register via a committee established by these entities or through the ministry’s service channels.

The process involves the employer choosing the investment fund, identifying the fund administrator, and then opening savings accounts for the employees they enlist.

For the scheme to be effective, employers must pay the monthly subscription based on the basic salary, allowing employees to earn investment returns.

Employers can also opt out of the program, given they meet specific criteria. This includes a minimum participation of one year, no unresolved administrative fines or labor disputes, and ens


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