UAE Introduces New End-of-Service Savings Initiative for Workers

The UAE has launched a new end-of-service savings initiative to motivate workers to invest in their futures and help bring in more overseas talent to the country. Prime Minister Sheikh Mohammed bin Rashid said the benefits system is aimed at the private sector and free zones. It will safeguard the savings of employees and encourage financial stability for families. 

Overseen by the Securities and Commodities Authority with the Ministry of Human Resources and Emiratisation, the newly launched system will be optional for employees to join. It will involve the establishment of savings and investment funds from the private sector. 

PM Sheikh Mohammed said employees through this system can save and invest their end-of-service benefits in various investment options. “The goal is to safeguard the savings of employees, which represent their end-of-service benefits in the companies they work for, ensuring their rights and providing stability for their families.” He believes public sector workers will be able to participate in the initiative for savings and investments. 

Dr Hassan Elhais, legal consultant at Al Rowaad Advocates in Dubai, says the alternative end-of-service benefits system for private sector employees and free zone workers in the United Arab Emirates would provide an extra layer of financial security for workers. “This alternative is flexible and enables employees to actively grow their end-of-service benefits through a range of investment options.” 

It safeguards employees’ rights, increases their savings, and contributes to long-term financial stability. Moreover, the optional nature of the benefits system provides employers the freedom to opt in. This means a win-win for all parties involved. Elhais said government sector employees can also participate, amplifying the system’s reach and impact. It fosters a culture of savings and investment across various layers of the workforce. 

Ruth Stephen, a specialist employment lawyer at Pinsent Masons, says the new initiative would support the UAE’s growth as a global hub for skilled professionals. She believes the ability for employees to invest and protect their accrued end-of-service gratuity is a significant development in the United Arab Emirates’ Labor Law. 

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Those who spend one year or more in continuous service can reap the benefits of the end-of-service system.