The Savings scheme – a voluntary and alternative end-of-service benefits scheme

The Savings scheme is an alternative and optional scheme to the existing end of service benefits system. Under this scheme, employees could invest their end of service benefits in reputable funds, enabling them to receive returns upon completion of their service.

Employers choosing to participate in the scheme will need to contribute monthly to an investment fund. These contributions will entitle beneficiaries (employees) to receive the allocated basic subscription amount, along with any investment returns generated, in place of their end of service benefits.

Objectives of the scheme

The Savings scheme aims to protect employees from inflation, default and bankruptcy. It also aims employees to benefit from investing in various economic activities in the UAE.

Investment options

The scheme offers a variety of investment options, which include:

• Sharia-compliant funds
• a capital guarantee portfolio option that offers a risk-free investment, for unskilled workers
• and various other investment portfolios that carry varying levels of financial risk based on expected return.

Daman Investments End of Service Programme is approved as one of the investment funds under the Savings scheme. Learn more about Daman Investments End of Service Programme (PDF, 1.63 MB).

Scope

The scheme applies to employers and employees in the private sector and the free zones.

Participation in the scheme

Employers who wish to participate in this alternative system must submit a request to MoHRE.

Employers must select and contract with one of the investment funds licensed by Securities and Commodities Authority (SCA) to provide these services. They must also determine which employee categories and levels should be included in the scheme.

Companies must discontinue the use of the current end of service benefits system for employees who are selected to participate in this scheme.

Once the employees are chosen, participation in the fund becomes mandatory, and employers must ensure that the employees' entitlements from the previous period are preserved.

Basic subscription fee

Employers’ contribution to the investment fund for full-time employees is as follows:

• 5.83 per cent of their employees’ monthly basic salary if the employee has not completed five years of service
• 8.33 per cent if the employee has served more than five years.

Subscriptions must be transferred into the investment fund within 15 days of the beginning of each calendar month.

Additional voluntary subscription

In addition to the basic subscription made by the employers, subscribed employees may contribute voluntarily a percentage of their salary or an additional amount, either in instalments or as lump sum.

The voluntary contribution will be deducted from their salaries, provided it does not exceed 25 per cent of the total annual salary.

For more information about subscription in the Savings scheme and fees for other work patterns, refer to Ministerial Resolution No. 668 of 2023 Regarding Subscription under the Alternative End of Service Benefits System – (PDF, 140 KB).

Entitlements of the employee

The employee is entitled to all basic subscription amounts paid by the employer and any returns resulting from it during the subscription period, within 14 days after the termination of employment. He also has the option to continue investing in the scheme.

Employees can withdraw part or all of the voluntary contributions or their investment returns at any time during their employment, in accordance with terms set forth by the fund manager.

Supervision of the scheme

MoHRE and SCA monitor, supervise and inspect the alternative system in accordance with the applicable legislations.

MoHRE is responsible for receiving labour complaints related to this alternative system and investigating complaints and violations discovered during inspections.

SCA will address complaints regarding the performance of the service providers of the investment funds.

Financial free zones authorities are responsible for supervising and resolving complaints regarding the alternative end of service benefits system under their jurisdiction.

For more information about the Savings scheme, refer to:

• Introductory to the Optional Alternative End-of-Service Benefits Scheme (Savings Scheme) – (PDF, 8522 KB)
• Cabinet Resolution No. 96 of 2023 Regarding an Alternative End of Service Benefits System– (PDF, 283 KB).

End of service benefits under full time contracts

• UAE nationals

End of service benefits for Emiratis working in the private sector will be in accordance with the legislation regulating the pensions and social securities in the UAE.

As per Article 51 of the UAE Labour Law, end of service benefits for foreign workers working in the private sector will be as follows:

• The worker is entitled to a gratuity for the served fraction of a year, provided that he completes one year of continuous service.
• The end of service gratuity is calculated on basis of last wage which the worker was entitled to, namely the basic salary. Hence, it will not include allowances such as housing, conveyance, utilities, furniture etc.
• If the worker owes any money to the employer, the employer may deduct the amount from the worker's gratuity.
• All end of service entitlements must be paid within 14 days from the contract’s end date.

Calculations for gratuity pay

A worker who has spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service and the gratuity shall be calculated as follows:

• If a worker has served for less than 1 year, he is not entitled to any gratuity pay.
• If a worker has served for more than 1 year but less than 5 years, he is entitled to full gratuity pay based on 21 days' salary for each year of work.
• If a worker has served more than 5 years, he is entitled to full gratuity of 30 days' salary for each year of work following the first five years.
  
  

In all cases, the total gratuity shall not exceed the wage of two years.