Unveiling the UAE's Revamped End-of-Service Benefits: The Complete Guide on Eligibility, Investments, and More!
A freshly minted end-of-service scheme was rolled out in the UAE on Monday, providing an enticing alternative to the traditional gratuity payments for employees. Aimed at both public and private sectors, including free zones, this initiative safeguards end-of-service entitlements while offering secure investment avenues.
Is Participation in the New Scheme Mandatory?
The new plan is optional for employers, serving as a flexible substitute to the existing end-of-service gratuity system.
The Existing System: How Gratuity Works in the UAE
Traditionally, UAE gratuity is a lump-sum amount given to employees when they conclude their work tenure. It is determined based on the individual's final basic salary. An employee becomes qualified for this benefit after completing at least one continuous year of service.
Unpacking the New End-of-Service Scheme
Operated under the vigilant eyes of the Securities and Commodities Authority, in alliance with the Ministry of Human Resources and Emiratisation, a special private sector investment and savings fund will be inaugurated. Workers who qualify can diversify their gratuity by investing in a variety of savings plans.
What Does It Mean for Employers?
For employers, participation is optional. Upon enrolling, they're obliged to make a monthly financial contribution. Furthermore, employers can handpick the classes of employees who are entitled to leverage this system.
Who Can Opt into the New System?
The scheme is accessible to all private sector and free zone employees. According to an official press release from the UAE Government Media Office, individuals of "all occupational tiers and employment models" can participate. Even government sector employees have the green light to join, primarily for "savings and investment objectives."
Investment Choices: What's on the Table?
The program offers a trifecta of main investment opportunities:
Risk-averse Investment: Perfect for those looking to preserve their principal amount.
Tiered Risk Investments: These include a range of low, medium, and high-risk options.
Sharia-Compliant Investments: For those adhering to Islamic financial principles, Sharia-compliant options are available.
Disbursement of Benefits: The How and When
Upon terminating the employment relationship, participants will receive their end-of-service benefits in addition to any returns earned from their investments. In the unfortunate event of an employee's demise, the nominated beneficiary will be awarded the accumulated benefits.
Whether you're an employer or employee in the UAE, this newly launched end-of-service scheme opens up a world of opportunities for secure and fruitful investments. Time to make your move!