Voluntary Alternative to End-of-Service Gratuity

UAE Cabinet passed a “New Resolution”, Resolution 96 of 2023 and Ministerial Resolution 668 of 2023, and this new resolution introduces the Voluntary Alternative to “End of Service Gratuity”. This is for employees and employers working or belonging to the private sector in the United Arab Emirates. It also applies to employers and employees working or belonging to the Free Zone. The initiative is to serve well, the employers and employees belonging to the private sector well. If the articles do not help you a lot then please contact our Labour and Empployment Lawyers for the comprehensive details.

This new plan is made to offer maximum protection to employees. This way, they can enjoy more of the savings. This way, employers can also plan better than before. Employers receive flexibility to plan better opportunities for employees. This was, our employees can enjoy the maximum and highest returns. Maximum risks can be covered for the employees. Employees can also be saved from bankruptcy if filed by companies. It provides the option to employers, who can choose a licensed investment fund. For employers, this is not obligatory like for employees.

• The employers who choose to get enrolled will have to compute ESG, which is payable to employees, till the date of switchover from the already existing involvement in this system. This was the amount will be computed from the switchover date, and will be added to the employer’s side, and it has to be paid at the end when an employee is terminated or he resigns. The computation will be like before on the basic salary system.

As far as the time duration is required then the minimum level (time duration), is a minimum of one year, and the subscription is paid on a monthly basis to the investment funds. The employees who are, permanent full-time employees, have to pay a per month subscription of 5.83% of the basic salary if the total duration of service is not more than 5 years and 8.33% of the basic salary if the service exceeds 5 years.

If the subscriptions are on volunteer grounds by the employees, then they have to right to withdraw the subscriptions partially or fully. Employers can also represent the employees and employees can also make volunteer subscriptions. There are a couple of schemes available for the employee. Our Lawyers can throw the light on details and all the types in a meeting. This meeting can be booked by giving a direct call to our Law Firm.

There is no doubt or risk involved because the entire scheme is monitored and managed by MOHRE and SCA together. MOHRE means Ministry of Human Resource and Emiratization and SCA stands for Securities and Commodities Authority.

There are several new concepts like these introduced in the Revised UAE Labour and Employment Law which came into force in February 2022. Several new laws are introduced and many old laws are revised. Therefore, this is necessary to consult the Labour and Employment Lawyers, who must be UAE National Advocates and Legal Consultants, to have a better and complete understanding of such Laws. Our Law Firm can be consulted. We have UAE’s Top Advocates and Legal Consultants.

Read More: Alternative End-of-Service Gratuity Scheme in UAE