December 5th, 2023 Legal Updates

UAE Labor Law Update – End of Service New Scheme

The UAE Cabinet has recently issued Decree No. 96 of 2023, introducing a new framework to regulate the alternative End of Service (EoS) payment scheme. This decree applies to both employees and employers in the private sector and free zones. Its aim is to ensure that employees receive their EoS payments regardless of potential obstacles, such as an employer’s bankruptcy. It enhances the labor market’s attractiveness and flexibility, and allows for the strategic investment of EoS payments.

Eligibility for the Alternative EoS Payment Scheme

Employers are responsible for subscribing to this scheme and selecting the employee categories to be included. The scheme is applicable to:

  • Private sector employees
  • Free zone company employees. Free zone authorities wishing to extend this scheme beyond their jurisdiction must obtain approval from the Ministry of Human Resources and Emiratisation (MoHRE) and the Securities and Commodities Authority (SCA).

Fund Managers may also accept voluntary subscriptions from:

  • Natural persons for investment purposes
  • Expat employees in government agencies and related businesses
  • Citizens in public and private sectors, provided their employers continue pension and social security contributions as per legislation

Employer Obligations:  Employers opting for the alternative scheme must:

  • Register with MoHRE
  • Select a licensed investment fund
  • Choose eligible employee categories and levels
  • Discontinue the current EoS payment scheme for participating employees

The basic subscription amount and its returns cannot be withdrawn before employment termination, except if termination occurs within one year from the start date.

Calculation Mechanism of the Basic Subscription
  • 5.83% of the monthly basic salary for under five years of service
  • 8.33% of the monthly basic salary for over five years of service

Voluntary Subscription

  • Employees may contribute voluntarily either as a percentage of their salary or a lump sum, subject to a 25% cap of the monthly salary. These can be withdrawn at any time during employment, per fund manager terms.
Investment Options
  • A capital guarantee portfolio for unskilled workers
  • Risk-based investment portfolios
  • Sharia-compliant funds
Employee Entitlements

Employees or their heirs are entitled to receive basic subscription amounts and returns within a set period post-termination.

Supervision and Control

MoHRE and SCA will monitor and supervise the scheme, with specific roles for free zone authorities.

Consequences of Non-Payment of the Basic Subscription Fee

Employers failing to make timely payments face penalties and restrictions on issuing new work permits.

Withdrawal Requirements for Employers

Employers can withdraw from the scheme under certain conditions, ensuring unaffected employee rights and entitlements.

Standards and Obligations of Investment Fund Service Providers

The decree outlines minimum obligations for Fund Managers, Investment Fund Management Service Providers, and Custodians, including financial requirements and experience prerequisites.

In conclusion, Decree No. 96 of 2023 establishes a robust framework for an alternative EoS payment scheme, balancing employee rights with investment opportunities.

In addition to the outlined provisions, it is important to note the specialized capabilities of GLA & Co in navigating the complexities of this new decree. GLA boasts a team of experienced legal professionals who are adept in corporate law, labor regulations, and financial compliance. Our expertise ensures a thorough understanding of the decree’s nuances and its implications for your business. We are equipped to provide comprehensive guidance, from strategic planning to implementation of the alternative EoS payment scheme, ensuring your organization’s compliance and optimization of benefits under this new framework. We encourage you to reach out to us for any assistance or clarification needed in this regard. Our team is dedicated to providing tailored solutions that align with your specific business needs and objectives.

Authors: Yousef Alamly, Partner, and Habiba Wahdan, Associate.

For further information, please contact Alex Saleh ( and Yousef Alamly (

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