For decades, the UAE end-of-service gratuity worked the same way: you accrued an unfunded promise, and your employer paid it as a lump sum when you left. In November 2025, the Ministry of Human Resources and Emiratisation (MoHRE) issued further guidance on the Voluntary Alternative End-of-Service Benefits (EOSB) scheme – building on Cabinet Resolution 96 of 2023 and the July 2024 authorisation of the first fund managers. The shift is quietly historic: for the first time, expats can convert what was once a static lump sum into regulated, professionally managed investment funds that grow over time. It is one of the most significant Gulf wealth-building developments of 2025–2026.
Whether you are an employee weighing up your retirement pot or an HR leader designing a competitive mobility package, here are seven things to know before you opt in.
1. The Scheme Replaces an Unfunded Promise With Real, Invested Money
Under the traditional system, your gratuity was a liability sitting on your employer’s books. If the company hit financial trouble, your accrued benefit was exposed. The Voluntary Alternative EOSB scheme changes that fundamentally: instead of waiting for a future lump sum, your employer makes monthly contributions into a regulated fund held in your name with an approved manager.
The money is ring-fenced from the employer, professionally invested, and – depending on the fund you choose – has the potential to grow well beyond what a static gratuity calculation would ever deliver. For mobile professionals who may move on after a few years, that is a meaningful upgrade in both security and growth potential.
2. Know Your Contribution Rate: 5.83% vs 8.33%
The scheme uses two headline contribution rates, mirroring the existing gratuity formula in UAE labour law:
- 5.83% of basic salary – applied for the first five years of service, equivalent to 21 days of basic pay per year.
- 8.33% of basic salary – applied after five years of service, equivalent to 30 days of basic pay per year.
Crucially, these are minimum contribution rates that employers pay on the employee’s behalf – they replace the gratuity accrual, not your salary. Employers can also choose to contribute more as an enhanced benefit, and employees may make voluntary additional contributions to build a larger pot.
How the two rates compare
| Length of service | Contribution rate (of basic salary) | Equivalent days of pay per year |
|---|---|---|
| First 5 years | 5.83% | 21 days |
| After 5 years | 8.33% | 30 days |
3. You Choose an Investment Track That Matches Your Risk Appetite
One of the scheme’s biggest advantages is choice. Contributions are directed into one of several fund types offered by approved managers, broadly falling into:
- Capital-guarantee (risk-free) funds – your principal is protected, with modest returns. This is the mandatory option for unskilled-category workers, and a sensible default for the risk-averse.
- Risk-based investment funds – ranging from conservative to growth-oriented portfolios that invest in diversified assets, offering higher potential returns in exchange for market exposure.
- Sharia-compliant funds – for employees who require their savings to be invested in line with Islamic finance principles.
You can typically switch tracks as your circumstances change – moving to a capital-guarantee fund as you approach the end of an assignment, for example, to lock in gains.
4. The Approved Fund Managers Are Regulated and Vetted
This is not a free-for-all. Fund managers must be authorised under the framework and overseen by the Securities and Commodities Authority (SCA), with the scheme administered in coordination with MoHRE. The first managers were authorised from July 2024, and the November 2025 guidance further clarified how employers enrol, how contributions are remitted, and how employees access their accounts.
The practical takeaway: you are dealing with regulated, supervised entities – not an offshore product sold by a commission-driven adviser. If you have ever heard a cautionary tale about expat savings gone wrong, the contrast matters. Our piece on how an expat lost 70,000 GBP on his pension pot is a sobering reminder of why a regulated, transparent structure is so valuable.
5. Your Money Keeps Growing Even After You Stop Contributing
Here is a feature that suits internationally mobile employees especially well. When you leave your employer, you do not have to cash out immediately. You can:
- Withdraw the full balance, or
- Keep your investment in the fund and let it continue to grow, even after your UAE employment ends.
For an expat who relocates onward to another country, this means your end-of-service savings can keep compounding rather than being spent in transit. It effectively turns a one-off gratuity into a portable, long-term retirement asset – a genuine shift in how Gulf-based professionals can build wealth.
6. For HR and Global-Mobility Teams, It Is a Retention and Risk Tool
If you design relocation and reward packages, the scheme deserves a serious look. Three reasons stand out:
- Balance-sheet relief. Replacing an unfunded EOSB liability with funded monthly contributions improves financial predictability and removes a growing future obligation from your books.
- Talent attraction. Offering an investment-backed, growth-oriented benefit – potentially with employer top-ups – is a tangible differentiator when competing for senior expat talent across the MENA region.
- Cleaner offboarding. A funded, individually held account simplifies departures. Pair it with a structured exit process – see our guidance on navigating end-of-service relocations with care – and you reduce friction for both the company and the departing employee.
Participation is voluntary for private-sector employers as of 2026, so designing your enrolment approach thoughtfully – including which employee categories opt in and what fund defaults you set – is worth doing with proper advice.
7. Should You Opt In? It Depends on Three Factors
There is no universal answer, but the decision usually comes down to:
- Your time horizon. The longer you expect to stay (or leave the money invested after leaving), the more compounding works in your favour. Short-stay employees who plan to withdraw immediately gain less.
- Your risk tolerance. If market volatility keeps you up at night, the capital-guarantee track removes that worry while still beating an unfunded promise on security. If you are comfortable with risk and have years ahead, a growth fund may significantly outperform a flat gratuity.
- Your wider financial picture. Your gratuity is one piece of a bigger plan that may include property, pensions and savings elsewhere. If you are also weighing a UAE home purchase, read our guide on how much cash you need to buy a home in Dubai in 2026 to see how the pieces fit together.
For most career expats with a multi-year horizon, the ability to convert a static lump sum into a regulated, growing, portable asset is a clear win – provided you choose a fund that matches your goals.
Frequently Asked Questions
What is the UAE Voluntary Alternative End-of-Service Benefits scheme?
It is an optional system, introduced under Cabinet Resolution 96 of 2023 and clarified by further MoHRE guidance in November 2025, that lets employers contribute monthly into regulated investment funds held in an employee’s name instead of accruing a traditional lump-sum gratuity. The money is professionally managed, ring-fenced from the employer, and can keep growing even after employment ends.
What are the 5.83% and 8.33% contribution rates?
They mirror the existing gratuity formula. Employers contribute 5.83% of basic salary (21 days of pay per year) for the first five years of service, rising to 8.33% (30 days of pay per year) after five years. These are minimum rates paid on the employee’s behalf, and employers or employees can choose to add voluntary top-up contributions.
Is my gratuity safe under the new scheme?
The contributions are invested through fund managers authorised under the framework and supervised by the Securities and Commodities Authority. Capital-guarantee funds protect your principal, while risk-based funds carry market exposure in exchange for higher potential returns. Because the money is held in your name and separated from the employer, it is more secure than an unfunded gratuity promise.
Can I keep my money invested after I leave the UAE?
Yes. When you leave your employer you can either withdraw the balance or leave it invested in the fund, where it can continue to grow. This makes the scheme particularly useful for internationally mobile professionals who want their end-of-service savings to keep compounding after they relocate onward.
Is the scheme mandatory for employers?
As of 2026 the Voluntary Alternative EOSB scheme is optional for private-sector employers. Companies can choose to enrol some or all eligible employees and set fund defaults, so HR teams should design their enrolment approach carefully and take advice on structuring it.
Plan Your Gratuity and Your Move With Confidence
Decisions about your end-of-service savings rarely happen in isolation – they sit alongside a relocation, a contract negotiation or a corporate restructuring. Relocate MENA supports both individual expats and corporate HR and global-mobility teams across the region, from structured departure and repatriation services to full corporate relocation and assignment management. If you are reviewing your benefits package, planning a move, or designing mobility policy around the new EOSB landscape, talk to us. Email [email protected] or visit relocatemena.com to start the conversation.