UAE Announces New End-Of-Service Scheme For Private Sector

September 5, 2023

The United Arab Emirates (UAE) has adopted a new end-of-service scheme for both private sectors and free zone workers which gives them the option to join.

“We approved an Optional System for End-Of-Service Gratuities for private sector and free zones Employees… The system is optional for employers to join, and includes establishing private sector investments and savings funds supervised by Securities and Commodities Authority in coordination with the Ministry of Human Resources and Emiratisation,” said Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai in a statement after his decision on Monday.

The funds will allow employees to invest and save their end-of-service gratuities according to various investment options. These investment options include: risk-free investment that maintains capital; risk-based investment where the risk varies between low, medium and high; and the sharia-compliant investment.

“The aim is to safeguard workers’ savings, which constitute the end of service gratuities, and to ensure that they are safely invested in order to guarantee their rights and to achieve the stability of their families…Also, government sector employees can participate in the System, for savings and investment purposes,” he added in his statement.

This new scheme is the latest initiative the UAE has announced to boost gratuity benefits for workers. The UAE, unlike other GCC countries, does not have a system that provides state and employer contributions pension like scheme. Therefore, this scheme can help attract more talent to the country.

The UAE have also approved a new system to provide rewards and incentives for federal government employees.

“The rewards and financial and in-kind incentives are for three categories… for the outstanding annual performance of the employee … or for the exceptional achievements at the level of the entity… or for the national achievements that the employee may achieve for the state,” Sheikh Mohammad explained in a tweet on X.com.

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