Sheikh Mohammed introduces New End-of-Service Incentives Scheme for Workers
The Sheikh of Dubai announces new end-of-service benefits system for employees. As a Vice-President and Prime Minister of the UAE, Sheikh stated that “the main goal is to focus on improving worker savings while providing secure investment opportunities.”
The United Arab Emirates Cabinet established a new system for free zone and private sector employees to access their end-of-service benefits through optional employer participation.
The savings and investment fund will be monitored by the MOHRE and the SCA. This fund will provide multiple investment choices for the purpose of investing end-of-service benefits received by employees.
Sheikh of Dubai led the Cabinet session on Monday. Sheikh declared that the program makes sure workers receive their rights and offers stability which also benefits their families.
During the meeting, the United Arab Emirates Vice-President declared that government workers can also join the program. All UAE workers who maintain a minimum continuous service period of one year qualify for retirement benefits in the form of end-of-service gratuity.
How It Works
Employers can freely enroll their staff in the new scheme under any expertise level by making monthly payments. The program offers three different investment paths:
- Capital guarantee with no risk.
- The available investment choices span from low-risk to medium-risk and high-risk.
- Investments compliant with Sharia principles.
Employees will receive their end-of-service benefits together with their returns after completing the contract with their employer.
In the long run, employers will find this scheme less expensive than their traditional system. Moreover, this new alternative end-of-service benefits scheme creates more attractive conditions which lead to better employee retention rates.
Studies show that UAE residents depend on their gratuity payments to secure their retirement funds.
The annual index from National Bonds shows that 82% of employees would prefer their gratuity being invested by the company.
In 2022 Dubai established a savings program targeting government department expatriates through its official declaration. The extensive plan extends multiple saving possibilities through different financial investments which improve worker benefits as well as effectiveness of their savings.
