The Ministry of Human Resources and Emiratisation (MoHRE) has called on all private-sector employees to enroll in the Voluntary Savings Scheme, an alternative end-of-service benefits system.
According to the Ministry, the scheme allows workers to protect their financial entitlements and save through investment returns. Private sector companies can also strengthen their corporate reputation and attract and retain talent through this scheme.
The Voluntary Saving Scheme provides a lower medium-term cost for employers than paying end-of-service gratuities. This is because the scheme is based on the employee’s basic salary at the time of payment rather than their basic salary at the end of service, which is typically higher.
Private-sector employees can keep the gratuity they earned before their employer enrolls them in the scheme. Once the employee is registered in the new system, the existing end-of-service gratuity system will be suspended, as specified in the Federal Decree Law regarding the Regulation of Employment Relationship.
With the new scheme, gratuity is calculated starting from the employee’s registration date, with all the earnings (before and after the new system) disbursed at the end of the employer’s contract.
Private-sector employees have the option to contribute an additional 25 percent of their annual salary to boost their savings and investment returns. They can also withdraw part or all of their contributions and any returns, subject to the system’s terms and conditions.
This Voluntary Savings Scheme is backed by reliable, accredited investment funds in the country approved by MoHRE and the Securities and Commodities Authority (SCA).
Companies can join this Voluntary Savings Scheme by visiting mohre.gov.ae and selecting ‘Voluntary End-of-Service Benefits Scheme’ from the homepage.
