What is the Alternative End-of-Service Benefits (ESOB) Scheme?

Introduced in 2023, this is a voluntary scheme where end-of-service benefits are invested in proven, high-performing Investment Funds.

Which one is better – Alternative ESOB or traditional gratuity?

Deciding which path is better depends on your financial goals. Here is how they compare:

Traditional gratuity: This is a fixed lump sum based on your basic salary. It only increases if your salary rises and is paid out only when you leave your job.

The Alternative ESOB: Under this plan, employers pay monthly contributions (5.83 per cent – 8.33 per cent of basic salary) into professionally managed funds.

The scheme works if you prefer investment growth instead of a fixed payout, but this depends on whether your employer or company signs up. If that happens, you will be able to track and modify contributions through one of the fund’s online platforms.

How to sign up for the savings scheme

The employer submits a request to MOHRE, then chooses an approved investment fund. They need to select the employees they wish to register in the scheme while ensuring their employees’ entitlements from the previous period, as per the Labour Law, are preserved.

Accredited investment funds available to employees

• Ghaf Benefits
• Daman Investments
• National Bonds
• First Abu Dhabi Bank

Grow your gratuity: Voluntary contributions

You can grow your savings even faster by contributing voluntarily. You have the option to contribute up to 25 per cent of your total annual salary to an approved scheme.

These voluntary contributions earn investment returns just like employer payments and offer total flexibility, they can be withdrawn at any time, either partially or in full.

What happens when you leave your job?

At the end of your employment, you are entitled to 100 per cent of employer-paid contributions and all investment returns earned during your tenure.

You then have a choice: withdraw the funds immediately or keep them invested to continue growing. If you move to a new job, you can keep the same fund or transfer your savings to the one selected by your next employer.