Abu Dhabi: The United Arab Emirates (UAE) announced a new system for end-of-service benefits for employees in the private sector and free zones. It will be optional for employers to join.
The system will establish a savings and investment fund that will be overseen by the Securities and Commodities Authority in collaboration with the Ministry of Human Resources and Emiratisation (MoHRE).
The decision was among eleven new federal laws announced during the Cabinet chaired by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai on Monday, September 4.
“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,” Sheikh Mohammed wrote on X, formerly Twitter.
“This system will be optional for employers to join and will involve the establishment of savings and investment funds from the private sector, overseen by the Securities and Commodities Authority in coordination with the Ministry of Human Resources and Emiratisation.
“Through this system, employees can save and invest their end-of-service benefits in various investment options. 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.”
Sheikh Mohammed said that government employees will also be able to participate in the end-of-service system for savings and investment purposes.
The scheme is made up of three investment options
- Risk-free capital guarantee
- Investments, where risks vary between low, medium, and high
- Sharia-compliant investments
Participating companies are required to pay a monthly contribution under the scheme.
At the end of service, employees receive the savings they have accumulated and the returns from their subscription to investment funds.
