The Savings Scheme — the other system

What it is

The Savings Scheme is a voluntary alternative to the traditional end-of-service gratuity. Instead of an entitlement that accrues on paper and is paid out of the employer’s own funds when you leave, the employer pays a monthly contribution into an approved investment fund, and what you receive at the end is that balance plus whatever it earned.

The point of it is protection. A gratuity is a promise from an employer, and a promise from an employer is worth what the employer is worth on the day you leave. Money already sitting in a regulated fund is not exposed to that.

The critical part: it replaces the gratuity

Once you are enrolled, the traditional gratuity stops accruing for you. Your employer must settle whatever had accrued up to the enrolment date under the ordinary rules, and from that point forward your end-of-service benefit is the fund.

Source: u.ae, on the alternative end-of-service benefits system under Cabinet Resolution No. 96 of 2023: after employees are enrolled, the employer must cease to apply the traditional end-of-service gratuity system for those employees, and must calculate and settle any gratuity accrued before enrolment in accordance with the law.

That sentence is why this site asks. A gratuity calculator handed to an enrolled employee produces a confident figure for a system they left, and nothing about the number looks wrong. Answer yes to the Savings Scheme question and the calculator stops instead.

What your employer pays in

Note the basis: BASIC salary, the same basis the traditional gratuity uses — so the split between basic pay and allowances matters just as much under this system as under the other one.

You may add your own money on top, up to 25% of your total wage. Your own contributions are voluntary and, unlike the employer’s, are measured against total wage rather than basic.

When you leave

You are entitled to everything your employer contributed plus the returns it generated during the subscription period, within 14 days of the end of your employment. You can also leave the money invested rather than withdrawing it.

What this site cannot tell you is the amount. The employer’s contribution is fixed as a percentage; the returns are not fixed by anything, and the fund you are in — capital- guaranteed, risk-based, or Sharia-compliant — changes what those returns look like. Any calculator that produces a Savings Scheme figure is producing an investment projection and calling it an entitlement.

How to tell which system you are on

• Enrolment is your employer’s decision, not yours. They apply to MOHRE and choose whom to enrol — all staff, particular groups, or particular job categories. Two people at the same company can be on different systems.
• Ask HR directly, in writing. The question is whether you have been subscribed to the alternative end-of-service benefits system, and from what date. The date is what determines how much traditional gratuity you are still owed.
• The scheme covers free zones too, so being employed in one does not by itself tell you which system applies.

If you were enrolled part-way through

Your service splits in two. Everything before the enrolment date is a traditional gratuity, settled under the ordinary rules; everything after it is fund contributions. To work out the first part, use the calculator with your service up to the enrolment date and answer “no” to the Savings Scheme question — that period really was under the traditional system, and it is the part a formula can still tell you about.

For the second part, ask your fund for a statement. And if any of this is disputed, the settlement deadlines and the complaint route are here.