Sheikh Mohammed with Sheikh Mansour during the UAE Cabinet meeting at Qasr Al Watan, Abu Dhabi, on Monday. WAM

Gulf Today, Staff Reporter

His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, chaired the UAE Cabinet meeting at Qasr Al Watan, Abu Dhabi, in the presence of His Highness Sheikh Mansour Bin Zayed Al Nahyan, Vice President, Deputy Prime Minister and Minister of the Presidential Court; Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance; and Lt. General Sheikh Saif Bin Zayed Al Nahyan, Deputy Prime Minister and Minister of the Interior.

Sheikh Mohammed said: "During the meeting, we approved an Optional System for End-Of-Service Gratuities for private sector and free zones employees… The system is optional for employers to join, and includes establishing private sector investments and savings funds supervised by Securities and Commodities Authority in coordination with the Ministry of Human Resources and Emiratisation.”

He added that through these funds, employees can invest and save their end-of-service gratuities according to various investment options.

"The aim is to safeguard workers' savings, which constitute the end of service gratuities, and to ensure that they are safely invested in order to guarantee their rights and to achieve the stability of their families...Also, government sector employees can participate in the System, for savings and investment purposes.”

The UAE Cabinet approved a new Optional System for end-of-service gratuities substituting the existing End of service system for workers in the country.

The Optional System allows all employees in the private sector and free zones to participate in it, and is considered optional for employers.

As per the law, all employment of different occupational levels and working patterns can benefit from the new Optional System.

Also, government sector’s employees are entitled to join the system, for savings and investment purposes.

The Ministry of Human Resources and Emiratisation in coordination with the Securities and Commodities Authority will be supervising the system and its funds all over the Emirates.

The system includes three main investment options: Risk-free investment that maintains capital; risk-based investment where the risk varies between low, medium and high; and the sharia-compliant investment.

The system sets mechanisms for each option to contribute to the achievement of the associated objectives and to enhance the competitiveness and stability of the UAE’S labour market.

Employers participating in the System, have the right to choose the employments’ categories to benefit from the system, and are asked to pay a monthly contribution. Upon termination of service, the beneficiary (employee) receives his savings under this system.

Legal financial benefits will be paid to the beneficiaries, including accrued returns on participation in the system's investment funds, after the termination of the employment relationship. If an employee dies, financial benefits will be given to the eligible person.