Abu Dhabi: The much-awaited United Arab Emirates (UAE) voluntary alternative end-of-service scheme for private sector and free zone employees came into force on Wednesday, November 1.
Taking to X, Ministry of Human Resources and Emiratisation (Mohre) wrote, “Based on a Cabinet Resolution, and in coordination with the Securities and Commodities Authority, we are pleased to announce that the Voluntary Alternative End-of-Service Benefits Scheme – Savings Scheme, for private sector employees, comes into force.”
The scheme was announced by the UAE government on September 4, is optional to join requires employers to register with the ministry if they choose to subscribe.
Through this scheme, 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.
How does savings scheme work in UAE?
- Employers interested in subscribing to the scheme can submit a request to MOHRE
- The employer contracts with an approved, well-proven investment fund, selects the workforce to be enrolled in the scheme and pays their subscriptions
- Employees’ benefits earned prior to the new scheme are safeguarded – the current gratuity system in this case will be replaced with the alternative scheme
- Employees’ benefits will be calculated based on their years of experience up to the date they join the Savings Scheme
- All benefits, both old and new, will be disbursed upon the end of the contractual relationship with the employer
- Employees are given the choice to contribute additional funds to enhance their savings and returns
- At approximately 25 percent of their total annual salary.
Who can register for the scheme?
- Private sector workers selected by the employer
- UAE citizens employed in both the government and private sectors can voluntarily register in the scheme
- The scheme is available on a voluntary basis for non-citizen employees in the public sector, self-employed individuals, and those with freelance work permits.
Monthly subscription fee
- 5.83 percent of the employee’s monthly basic salary if their service duration is less than 5 years
- 8.33 percent of the employee’s monthly basic salary if their service duration exceeds 5 years
