UAE has unveiled a new alternative end-of-service benefits scheme for its workforce. Companies can now register for the initiative with the Ministry of Human Resources and Emiratisation (Mohre) or the Securities and Commodities Authority (SCA).
Key Highlights:
- Participation: The scheme is voluntary for both employers and employees. It caters to employees from both public and private sectors, including those in free zones.
- Subscription Process: Employers can register by selecting an approved investment fund, then pay the subscription fees for the desired employees.
- Licensing: SCA will license investment service providers to manage activities under this scheme. Financial free zones authorities will create legislation for its implementation.
- Employee Benefits: Workers can choose to either withdraw financial benefits post-employment or continue investing until maturity. They will retain gratuities earned prior to joining the scheme.
Two Subscription Types:
- Basic: Targeted at non-skilled workers and invested in low-risk funds.
- Voluntary: For skilled workers who can opt for medium to high-risk investments. Default is low-risk if no choice is made.
Salary Deductions:
- Less than 5 years of employment: 5.83% of basic salaries.
- Over 5 years of employment: 8.33% of basic salaries.
- Option to boost contributions up to 25% of the annual salary.
Employer Withdrawal: With Mohre’s approval, employers can exit the scheme if they fulfill specific criteria.
The primary aim of the scheme is to ensure workers receive their due benefits irrespective of their employer’s financial status. It offers a safety net by ensuring that end-of-service dues are invested securely.
To register, employers must select an investment fund and specify the employees they wish to enroll. Contributions can be made monthly or as a lump sum.
Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, emphasized in a Khaleej Times report that this scheme reinforces the UAE’s commitment to enhancing its labour market, ensuring ease of business, and safeguarding end-of-service benefits. Meanwhile, Mohammed Al Shorafa Al Hammadi, chairman of the SCA, regarded the scheme as a significant step to protect worker rights and boost the UAE financial sector.