UAE End of Service Gratuity Investment Option

UAE End of Service Gratuity Investment OptionThe new UAE end-of-service gratuity investment option lets eligible employees gain returns on their monthly end-of-service gratuity earnings, previously paid out as a lump sum at the end of their employment. This scheme is effective immediately and is called the ‘Voluntary Alternative End-of-Service Benefits Scheme.’ It is available to employees selected by private sector employers operating in the UAE mainland and in select free zones overseen by federal employment regulations. Employees currently working in the public sector are also eligible to opt into this new scheme voluntarily.

Employers may voluntarily register with the new scheme while ensuring their employees’ accrued entitlements from the previous end-of-service gratuity scheme are preserved by applying to the Ministry of Human Resources and Emiratization. Upon the Ministry’s approval, the employer must enter into a contractual agreement with an approved investment fund licensed by the Securities and Commodities Authority, which will assign the company a ‘Fund Manager’ to oversee the respective investments.

Employers must then select, subject to their discretion, the employees they would like to allow to participate in the new scheme.

Employers who fail to pay the basic contribution fee on time will face penalties.

This new scheme with monthly contributions gives employees an additional layer of security since previously lump sum payments made at the end of an employee’s employment could be at risk if the company went bankrupt or fell into other financial difficulties.


This article about the new UAE End of Service Gratuity Investment Option is provided by Nexus, Asinta’s employee benefits consulting Partner in the Middle East. If you need support with your benefits in the region, contact Asinta, and we will put you in touch with the local experts at Nexus.