The program, which is accessible to workers in both the public and private sectors as well as free zones, strives to safeguard end-of-service obligations.
A new end-of-service program for UAE citizens was unveiled on Monday, providing an alternative to the custom of tipping employees.
The scheme, which is available to workers in both the public and private sectors as well as free zones, aims to safeguard end-of-service dues and ensure that they are safely invested.
Here is what we know about the scheme:
Is the new system mandatory?
No, employers can choose whether or not to participate. It is a different end-of-service plan that employers could use.
How does the current end-of-service system work in the UAE?
Gratuity is a payment made to employees at the conclusion of their employment. It is determined using the employee's most recent basic salary. After one year or longer of continuous service, a worker is qualified for the end-of-service benefit.
How does the new system work?
A private sector investments and savings fund will be established, under the supervision of the Securities and Commodities Authority and in collaboration with the Ministry of Human Resources and Emiratization. Employees who qualify may invest their gratuities in a variety of savings plans.
What does the scheme mean for employers?
Employers can choose not to use it. They must make a monthly donation after joining. The kind of workers who can take advantage of the system are up to them.
Who can take part in the scheme?
The optional system is open to all employees in the private sector and free zones. According to a statement made by the UAE Government Media Office, employees of "all occupational levels and work patterns" are eligible. Employees in the public sector have the option to join the system for "savings and investment purposes."
What kind of investment options are available?
Three primary investing choices are offered by the system:
- A risk-free investment keeps the capital at the same level.
- Investment possibilities with low, medium, and high-risk levels.
- Investments that abide by Islamic Sharia law are referred to as "Sharia-compliant."
How and when will the benefits be paid?
After the work connection is over, the beneficiaries will be given end-of-service benefits and any accrued investment fund returns. The employee's nominee will get the benefits in the event of death.
When will the new system be implemented?
Since the relevant authorities have not disclosed any implementation dates or timelines, it is currently unclear.
Is this the first gratuity investment scheme in the UAE?
Yes, at the federal level. Dubai announced an end-of-service investment program for foreign nationals employed by government agencies last year.
National Bonds, a savings and investing organization, offers a Golden Pension program through which businesses can enroll and make one-time or recurring contributions on behalf of or on behalf of their employees. The deposits will be added to the pension plan, and any earnings or awards earned will be given to the employees.
News Source: Khaleej Times