The emirates issues a decision regarding participation in the alternative end-of-service reward system
According to the Ministry of Human Resources and Emiratization, any other contributions for end-of-service compensation may be accepted voluntarily in the alternative savings system, including natural persons for investment purposes, such as independent business owners and those with a self-employment permit.
Non-citizen employees working in government agencies and institutions, as well as their affiliated establishments and companies, are included, as are citizens working in the government and private sectors, with the employer continuing to pay contributions from those citizens to the General Authority for Pensions and Social Security in accordance with the country's legislation.
The Ministry declared that employers must participate in the system for at least one year, and that the Ministry and the Securities and Commodities Authority may prolong that period to ensure the system's success.
It emphasized that the savings system, as an alternative to end-of-service benefits, is an optional system for the employer, but participation in the system is essential for the worker who was chosen by the company.
The Ministry said that if the beneficiary transfers from his present employer to a new one, the new employer will take over payment of the basic subscription under the alternative system.
Investment fund services
The Securities and Commodities Authority is in charge of licensing investment fund service providers in compliance with the standards and duties authorized by it.
The authorities in charge of regulating the activities of the country's financial free zones are responsible for developing and approving the provisions of the alternative system for the end-of-service reward system that apply to establishments under their jurisdiction, and they must obtain approval from the Ministry and the Authority.
The Ministry acknowledged that it is illegal to withdraw the basic subscription amount, as well as the profits and returns gained on it, from the alternative system prior to the termination of the labor connection between the employer and the beneficiary. However, the employer has the right to collect the fundamental subscription amounts paid for the employer's legal enforcement processes, quarantine, liquidation, or bankruptcy.
It stated that after obtaining approval from the Ministry of Human Resources and Emiratisation and the Securities and Commodities Authority, the employer may change the fund manager and transfer all subscription amounts and returns to an alternative investment fund for reasons related to the level of service performance and in a way that supports the interests of the beneficiaries. Employers are not liable for... Or the recipients incur no costs as a result of the transfers.
The goal of the alternative savings system for end-of-service benefits
The alternative savings system for end-of-service gratuity is an optional system in which amounts allocated for end-of-service gratuity for employees working in private sector companies are invested in leading investment funds, growing employees' savings and allowing them to benefit from investment returns.
It was stated that participation in this system is accomplished by the employer submitting a subscription application to the Ministry, selecting one of the licensed investment funds, and paying the subscription for the workers he wishes to register in the system, with the option of retaining their entitlements for the previous period in accordance with labor relations law.
It was revealed that skilled workers can boost their end-of-service gratuity if they chose high-yielding investment portfolios, or by paying an additional subscription if the citizen or resident worker wants the optional subscription.
It discussed the mechanism of registration in the savings system, noting that the employer must select the investment fund and sign the establishment's subscription contract in the system, specifying the administrative services intermediary, before involving and registering the establishment's employees in the system with the administrative services intermediary and opening a savings account for the beneficiaries.
It addressed the way of paying the basic and voluntary optional payments, in which the employer must send the voluntary or additional monthly contribution collected from the beneficiary's paycheck in accordance with his wishes. The additional contribution is transferred in a lump sum immediately to the system for the benefiting employee.