MoHRE has announced a new system for end-of-service benefits in the UAE for employees in the private sector and free zones. The system, which was announced by Vice President and Prime Minister Sheikh Mohammed bin Rashid Al Maktoum, will be optional for employers to join.
Under the new system, employees’ end-of-service benefits will be invested in a savings and investment fund that will be overseen by the Securities and Commodities Authority (SCA) in coordination with the Ministry of Human Resources and Emiratisation (MoHRE). Employees will have the option to choose from three investment options:
- A risk-free investment that maintains capital.
- A risk-based investment with low, medium, or high risk.
- A Sharia-compliant investment.
The new system is expected to give employees more control over their end-of-service benefits and help them grow their savings over time. It is also expected to attract and retain talent in the UAE, as it will provide employees with a more secure financial future.
The new system is part of a series of reforms that the UAE government has been implementing to improve the working conditions for employees in the private sector. In recent years, the government has raised the minimum wage, introduced a new labor law that protects employees’ rights, and made it easier for employees to change jobs.
The new end-of-service benefits system is a further step in the government’s efforts to make the UAE a more attractive place to work. It is a welcome move that is likely to benefit both employees and employers.
How the new system for End-of-Service Benefits in the UAE works ?
The new end-of-service benefits system will work as follows:
- Employees will choose one of the three investment options.
- Their employer will make monthly contributions to the savings and investment fund.
- The SCA and MoHRE will oversee the fund and ensure that it is invested in a safe and secure manner.
- Employees will be able to track the performance of their investments and withdraw their funds at any time.
Benefits of the new End-of-Service Benefits system
The new end-of-service benefits system offers a number of benefits for both employees and employers.
For employees, the new system provides more control over their end-of-service benefits and the opportunity to grow their savings over time. It also gives them peace of mind knowing that their benefits are being invested in a safe and secure manner.
For employers, the new system can help to attract and retain talent. It can also help to reduce the administrative burden of managing end-of-service benefits.
How to get started with the End-of-Service Benefits in the UAE
Employers who want to participate in the new end-of-service benefits system will need to register with the SCA and MoHRE. They will also need to choose an investment manager for the fund.
Employees will need to choose one of the three investment options and provide their employer with the necessary information. They will also need to sign a consent form.
The new end-of-service benefits system is expected to be implemented in the coming months.
The new end-of-service benefits system is a positive development for employees in the UAE. It provides them with more control over their benefits and the opportunity to grow their savings over time. It is also a welcome move by the UAE government, which is committed to making the country a more attractive place to work.