After years of practicing in Al Ain, Yas Marina Circuit and Dubai Autodrome, Al Jaeedi decided to take another hobby into action
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A new end-of-service scheme for UAE residents announced Monday offers an alternative system to the existing gratuity payment practice.
Open to employees across public and private sectors and free zones, the scheme aims to protect end-of-service dues, while ensuring they are invested safely.
Here is what we know about the scheme:
Is the new system mandatory?
No, it’s optional for employers to join. It’s an alternative end-of-service scheme for employers to adopt.
How does the current end-of-service system work in the UAE?
Gratuity is a sum paid to employees at the end of their work relationship. It is calculated on the basis of the employee’s last basic salary. A worker becomes eligible for the end-of-service benefit upon spending one year or more in continuous service.
How does the new system work?
Supervised by the Securities and Commodities Authority in coordination with the Ministry of Human Resources and Emiratisation, a private sector investments and savings fund will be set up. Eligible employees can invest their gratuity in multiple savings schemes.
What does the scheme mean for employers?
It’s optional for employers. If they sign up, they have to pay a monthly contribution. They can choose the categories of employees that can benefit from the system.
Who can take part in the scheme?
All employees in the private sector and free zones can take part in the optional system. Workers of “all occupational levels and work patterns” are eligible, according to a statement issued by the UAE Government Media Office. Government sector employees are entitled to join the system for “savings and investment purposes”.
What kind of investment options are available?
The system includes three main investment options:
– Risk-free investment: This maintains the capital amount.
– Investment options with risks ranging between low, medium and high.
– Sharia-compliant investments: These would be options that adhere to the Islamic Sharia law.
How and when will the benefits be paid?
End-of-service benefits, along with the accrued returns from the investment funds, will be paid to the beneficiaries after the employment relationship is terminated. If the employee dies, his/her nominee will get the benefits.
When will the new system be implemented?
It’s not immediately clear as the authorities concerned have not announced any dates or timeline for implementation.
Is this the first gratuity investment scheme in the UAE?
At the federal level, yes. Last year, Dubai announced an end-of-service investment scheme for expatriates working in government departments.
Savings and investment company National Bonds offers a Golden Pension scheme, where firms can sign up and contribute a lump sum or monthly deposits either from or on behalf of their employees. The deposits will be placed in the pension scheme, with applicable profits and rewards distributed to the employees.
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