Dubai Ruler Announces New Gratuity System for Employees

Sheikh Mohammed Announces New End-of-Service Benefits System for Employees

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Sheikh Mohammed Announces New End-of-Service Benefits System for Employees

“The objective is to enhance workers’ savings and ensure their secure investment,” stated the Vice-President as well as Prime Minister of the United Arab Emirates and Dubai’s Ruler.  

The United Arab Emirates Cabinet has introduced a new system allowing employees in the free zones and private sector to utilize their end-of-service benefits, with employer participation being optional.

The Securities and Commodities Authority (SCA), in conjunction with the Ministry of Human Resources and Emiratisation (MOHRE), will supervise the establishment of a savings and investment fund. The fund will offer various investment options and be used to invest employees’ end-of-service benefits.

A Cabinet meeting was held on Monday with the presence of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President, who also serves as the Prime Minister of UAE as well as Dubai’s Ruler, who chaired the meeting.

Sheikh Mohammed stated, “Our aim is to safeguard the savings of workers and ensure their secure investment. This will guarantee their rights and provide stability for their families.”

The United Arab Emirates Vice-President also mentioned that government employees are eligible to participate in the program. Employees within the United Arab Emirates are eligible for an end-of-service gratuity upon retirement, granted to those with one year or more of continuous service.

How It Works

Irrespective of their level of expertise, employers are free to enroll their staff in the newly introduced scheme while paying a monthly contribution. Employees are provided with a choice of 3 investment options.

  • Capital guarantee with no risk.
  • Investments with varying levels of risk, ranging from low to medium to high.
  • Investments compliant with Sharia principles.

Employees will receive their end-of-service benefits and returns upon finishing their employment relationship with the employer.

In the long run, the scheme will prove to be more cost-effective for employers compared to the traditional system. Furthermore, it will enhance talent retention among employees as the alternative end-of-service scheme presents more enticing terms.

Experts have frequently emphasized UAE residents’ reliance on their gratuity as their retirement fund.

According to the annual index released by National Bonds, a savings and investment company, last month, it was revealed that 82% of workers are willing to have their gratuity invested on their behalf.

Dubai made an announcement in 2022 regarding the implementation of a savings program specifically designed for expatriates employed in government departments. This comprehensive scheme provides employees with a variety of saving options across different financial portfolios, ultimately enhancing their benefits and enabling them to save more effectively.


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