The end-of-service benefits scheme for UAE private sector and free zone workers has gone live.
As per the guidelines set for the voluntary scheme, firms must first register with the Ministry of Human Resources and Emiratisation.
They must then choose investment funds approved by the Securities and Commodities Authority and sign up those employees who want to participate in the scheme.
Addressing a media briefing on Wednesday, Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said the scheme will allow employees to either take home the financial benefits at the end of their service or continue investing in the scheme.
Approved by the UAE Cabinet in September, the scheme is not mandatory and is aimed at providing investment returns to employees at the end of their service and boosting the UAE economy.
The scheme gives skilled workers the freedom to choose the type of available investment options, according to their preferences. However, unskilled workers are only included in the capital-guaranteed portfolio.
The ministry added that the employees who have worked less than five years in a company can invest 5.83 per cent of their basic salary towards the funds, while those who've worked for more than five years, can contribute 8.33 per cent of their basic salary.
Workers also have the option to make additional contributions of approximately 25 per cent of their total annual salary to increase their investment returns.
Meanwhile, employers have the right to withdraw from the scheme, with the approval of the Ministry of Human Resources and Emiratisation, provided they meet certain criteria - including a minimum subscription period of one year, the absence of outstanding administrative fines or unresolved labour disputes, and having measures in place to ensure the withdrawal will have no impact on the rights and gratuities of employees.
According to the ministry, when a worker moves from their current employer to a new one, they may obtain their gratuity from the fund or opt to keep it in the fund until the investment matures. The new employer may take over from the previous one and continue paying the subscription to the same fund, after contracting with it.