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UAE end-of-service benefits (EoSB) are evolving, providing employers and employees with greater choice than ever before.
End-of-service benefits are an important part of an employee’s total rewards package in the UAE. They provide a financial cushion when moving on from your job, whether for a new opportunity, retirement, or another stage in life. Understanding how end-of-service benefits work and how an Alternative EoSB Scheme, such as the Ghaf Benefits enhanced alternative end-of-service benefits plan, can provide better outcomes and help you make informed decisions about your financial future.
What are end-of-service benefits?
EoSB are a legal entitlement for employees in the UAE who have completed at least one year of continuous service. It is a way of recognising your contribution to your employer and ensuring you have financial support at the end of your service.
Traditionally, these benefits are calculated based on your basic salary and years of service and paid to you in a lump sum when you leave the company.
How the traditional UAE gratuity scheme works
In the traditional gratuity scheme, for the first five years, you are entitled to 21 days of basic salary for each year worked. After five years, the entitlement increases to 30 days for each additional year. The total amount is paid to you in one lump sum at the end of your employment.
While straightforward, this scheme means your benefit does not grow during your time with the company. Even though salary increases can, in theory, compensate for inflation, the value of the gratuity can still be impacted by inflation, and the exact amount is only revealed when you leave.
The Alternative End-of-Service Benefits Scheme: a modern approach
The Ministry of Human Resources and Emiratisation (MOHRE) introduced the Cabinet Resolution No. (96) in October 2023, which governs the Alternative EoSB Scheme, as an additional option to the traditional scheme. With the new scheme, your employer contributes to a regulated investment fund for you every month. While the contributions come from your employer, you are in control of how they are allocated. Through tailored and personalised investment options, you can choose the allocation strategy that best suits your needs and financial goals.
The funds are managed by licensed providers, kept separate from the company’s accounts and are fully secure. This means your benefit is protected no matter what happens to your employer’s finances.
How you benefit
The alternative EoSB solution is designed to give you more control, transparency, and growth potential.
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Transparency: You can track your benefits and see contributions and investment performance in real time through an online dashboard.
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Growth Potential: Because the money is invested, your benefits could grow faster than under the traditional model, helping offset inflation.
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Security: Funds are held in your name and cannot be used for anything other than your benefit payout.
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Portability: If you move to another employer that also uses the Alternative EoSB Scheme, you may be able to transfer your balance easily.
If your employer partners with Ghaf Benefits, you gain access to a plan built for clarity and confidence. You’ll be able to log in to the user-friendly Ghaf Benefits portal any time to see your balance, track growth and understand how your benefits are calculated.
Ghaf Benefits also provides educational resources and support to help you make the most of your EoSB, whether you’re planning a career move or thinking about your long-term financial goals – making it a powerful tool for your financial wellbeing.
To learn more about what Ghaf Benefits can do for you, please contact our client services team at +800-0-444-5068 or email eosbenquiries@ghafbenefits.com.
Disclaimer
The Lunate End of Service Benefits Fund (“Lunate EoSB”), known as the Ghaf Benefits Plan, is managed by Lunate Capital LLC and its affiliates. The material provided is for informational and educational purposes only, not investment, legal, tax, accounting, or professional advice, nor an offer to buy or sell any securities or products. Recipients should seek independent professional advice before making decisions. Past performance or historical data are illustrative only and not indicative of future results, and forward-looking statements involve risks and uncertainties. Lunate does not guarantee the accuracy, completeness, or reliability of the material and disclaims liability for any losses, damages, or errors arising from its use. Redistribution is prohibited without prior written consent. While the Lunate EoSB is authorised by the UAE Securities and Commodities Authority (SCA), such authorisation does not represent endorsement or guarantee.
