For fifty years the arrangement was simple. You worked, an end-of-service entitlement accrued on paper as a liability of your employer, and you were paid it when you left. Nothing was set aside, nothing was invested, and the money existed only as a promise on a balance sheet.
Since 2023 there has been an alternative. It is voluntary for employers, it is not widely understood, and if your employer joins it, the change to how your end-of-service money is held is substantial.
Cabinet Resolution No. 96 of 2023 created a voluntary savings scheme for mainland employers. A participating employer pays a monthly contribution into a licensed fund in your name — 5.83% of basic salary for service under five years, 8.33% for five years and above — instead of accruing a liability. Your gratuity earned before joining is preserved separately. You choose between capital-guarantee, risk-based and Sharia-compliant funds, and you can add voluntary contributions of up to 25% of total wage. On leaving, you are paid within 14 days.
What actually changes
Under the statutory system, your entitlement is a claim on your employer. It is calculated when you leave, it does not grow, and it depends on the employer being able to pay when the time comes.
Under the scheme, money leaves the employer monthly and is contributed into a fund held in your name. Three things follow from that.
It is invested rather than static. Under the old arrangement a fifteen-year entitlement is calculated on your final basic salary and nothing more. Under the scheme, contributions made in year one have had fourteen years of investment returns by the time you leave.
It is separated from the employer. The contributions sit with a licensed fund manager rather than on the employer's books.
You make a choice you did not previously have. Fund selection is yours, which means the outcome depends partly on a decision you now have to make.
The mechanics
| Position | |
|---|---|
| Legal basis | Cabinet Resolution No. 96 of 2023, issued 10 October 2023 |
| Employer participation | Voluntary, with a minimum commitment of one year; an employer may opt out after that |
| Employee participation | Once your employer enrols you, participation applies to you — there is no mechanism to revert individually to the statutory system |
| Employer contribution | 5.83% of basic salary for service under five years; 8.33% for five years and above |
| Prior service | Gratuity accrued before enrolment is preserved, calculated on basic salary at the enrolment date. Employers are not required to make retrospective contributions |
| Voluntary contributions | Employees may add up to 25% of total wage, where contributions are made monthly |
| Fund options | Capital-guarantee, risk-based, and Sharia-compliant |
| On leaving | Accumulated contributions and investment returns paid within 14 days |
| Voluntary contributions access | Withdrawable in part or full at any time |
Licensed providers have included Ghaf Benefits, Daman Investments and National Bonds, with First Abu Dhabi Bank acting as fund administrator. The list can change — MoHRE's own site is the authority on who is currently approved.
5.83% and 8.33% of basic salary are not arbitrary. They are the monthly equivalents of the statutory accrual — 21 days of basic pay per year for the first five years of service, and 30 days per year thereafter. The scheme is designed to deliver at least what the statutory system would, with investment returns on top. Our UAE gratuity guide sets out the underlying calculation.
The fund choice, which is the part that matters to you
Three categories are offered, and the difference between them compounds over a long tenure.
Capital-guarantee funds protect the contributed amount. Returns are correspondingly modest. This is closest in character to the statutory system — a known outcome with no market risk — and it suits someone with a short expected tenure or no appetite for variation in a pot they regard as safety money.
Risk-based funds take market exposure, typically across a range of risk levels. Over a long career the difference against a capital-guaranteed option can be substantial, and so can the variation year to year.
Sharia-compliant funds apply screening and are available at differing risk levels.
The useful framing is horizon. Money that will sit for fifteen years is long-term money and behaves like it. Money you expect to draw in two years is not. The choice most people make by default — whichever option requires no decision — is unlikely to be the one matched to their actual timeline.
What to establish before assuming this is settled
- Whether your employer participates at all. Most mainland employers still operate the statutory system. Ask rather than assume.
- Which fund you are in. If you were enrolled without making an active selection, you are somewhere by default.
- What happened to your prior accrual. It is preserved and calculated at the enrolment date on basic salary at that time — confirm the figure in writing.
- Whether voluntary contributions make sense for you. Up to 25% of salary can be added, and unlike the employer portion these are withdrawable at any time. Compare the fund's cost and options against what you could achieve in your own account before committing — the arithmetic in robo-advisor or DIY ETF portfolio is the relevant comparison.
- DIFC employees are elsewhere. DIFC operates DEWS, a separate arrangement. See UAE DEWS explained.
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The design addresses a real structural weakness. An entitlement that exists only as an employer liability, does not grow, and is calculated on final basic salary is a poor way to hold what is often an expatriate's single largest pot of long-term capital. Contributing monthly into a fund in the employee's name is a straightforwardly better mechanism.
Two observations for anyone enrolled.
The first is that fund selection now matters and most people have not made one. Over a fifteen-year tenure the difference between a capital-guarantee option and a risk-based one is not marginal, and defaulting into whichever required no action is a decision, just not a considered one.
The second concerns the voluntary contribution facility. Up to 25% of salary is a meaningful allowance, and it is worth evaluating on its merits — the fund's costs and options against what the same money would do elsewhere — rather than assuming that a scheme-based route is automatically preferable, or automatically not.
The broader point is that end-of-service money has stopped being something that happens to you and started being something you have decisions about. That is an improvement, and it only pays off if the decisions actually get made.
Our guide to investing a UAE gratuity covers the frameworks for deploying it.
Common questions
Participation is voluntary for mainland employers, with a minimum commitment of one year. Once an employer enrols an employee, that employee participates — there is no individual mechanism to revert to the statutory system.
5.83% of basic salary monthly for employees with under five years of service, and 8.33% for five years and above. These mirror the statutory accrual of 21 and 30 days of basic pay per year.
It is preserved, calculated as at the enrolment date on your basic salary at that time. Employers are not required to make retrospective contributions for earlier service.
Yes, up to 25% of total wage where contributions are made monthly. Unlike the employer portion, voluntary contributions and their returns can be withdrawn in part or in full at any time.
DEWS applies to DIFC employers under the DIFC's own framework. This scheme was created by Cabinet Resolution No. 96 of 2023 for mainland employers. They are separate arrangements with separate rules.
Next steps
- Ask HR whether your employer participates, and from what date.
- If enrolled, find out which fund you are in and whether you chose it.
- Get your preserved prior-service entitlement confirmed in writing.
- Match the fund's risk level to how long the money will actually sit.
- Evaluate the voluntary contribution facility against what the same money would do in your own account.
Further reading on ExpatWealthPlus
Official sources
Every figure in this article is checked against the primary source. These are the places to verify the current position for yourself, since rates, rules and product terms change.
- MoHRE — Savings Scheme →Registered fund managers and the current scheme rules
