The long awaited laws setting out the end of the unfunded End of Service Gratuity and the introduction of the obligation to provide eligible employees with the funded replacement known as the Dubai Employee Workplace Savings Scheme (DEWS) have finally been issued by the DIFCA for consultation for a period running until 18 November 2019 confirming the intent of the DIFCA to commence the new arrangements effective from 1 January 2020.
Key points to note include:
- The new DEWS arrangement will require participating employers to make compulsory contributions for eligible employees. However participation in DEWS can be avoided if the employer participates in another another “Qualifying Scheme” arrangement approved by the DIFCA before the commencent date of 1 January 2020. The alternative scheme would have to have met stringent requirements including providing the same level of contributions to employees as under DEWS and receive a “Certificate of Compliance” from DIFCA. Employers will need to be very sure any alternative arrangement has this accreditation as failure to take part in DEWS will otherwise attract a financial penalty.
- An annual window of opportunity will be provided of 30 days before each anniversary of the introduction of DEWS for employers to opt out of DEWS and into a Qualifying Scheme with a Certificate of Compliance so if employers don’t have a Qualifying Scheme as an alternative in place on 1 January 2020 they will have a further opportunity to opt out of DEWS later in 2020. We have details of providers who intend to offer such Qualifying Schemes so please contact us if you need assistance.
- The accrued End of Service Gratuity to 31 December 2019 will remain an obligation of the employers who have had the legal obligation to provide it for eligible employees and it is clear that that obligation will be linked to the employees’ salary at termination of employment (as opposed to 31 December 2019) but there will be an option for the employer to make a payment of the accrued liability into the DEWS arrangement or a qualifying alternative scheme to extinguish that obligation with the employee’s consent.