UAE Alternative End-of-Service Benefits Savings Scheme
How the voluntary savings model compares with traditional gratuity · 8 min read ·
The short answer
The UAE alternative end-of-service benefits scheme lets subscribed employers replace future traditional gratuity accrual with monthly contributions into approved investment funds.
The scheme is voluntary for employers. Employees keep gratuity earned before the employer joins the scheme, while future benefits are built through fund contributions overseen by MOHRE and the Securities and Commodities Authority.
Why this topic matters in 2026
Search demand around UAE gratuity is no longer only about “how much will I get?” Employees and HR teams are also asking whether the traditional unfunded gratuity model will shift toward savings-style benefits, especially after DIFC DEWS and the federal voluntary scheme.
Employee concerns
- Will existing gratuity be protected?
- Can investment returns increase or reduce the benefit?
- When can funds be withdrawn?
Employer concerns
- How to budget monthly contributions.
- How to communicate the switch.
- How the scheme changes final settlement workflows.
Traditional gratuity vs savings scheme
| Factor | Traditional gratuity | Alternative savings scheme |
|---|---|---|
| Funding model | Employer pays lump sum at exit | Employer contributes to approved funds |
| Employee's prior gratuity | Accrues under Article 51 | Preserved up to subscription date |
| Investment returns | No investment growth | Potential returns based on selected fund |
| Employer cash flow | Large liability at termination | Regular contribution rhythm |
| Risk | Employer payment risk at exit | Investment risk and fund performance risk |
Questions to ask HR if your company joins
- What date does the company subscription start?
- What is my accrued gratuity balance up to that date?
- Which fund options are available and what are their fees?
- Can I make voluntary employee contributions?
- What happens when I resign, transfer employer, or leave the UAE?