MoHRE Issues New Guidance on the Alternative End-of-Service Benefits Scheme for UAE Employers

CVML

Published on February 05 , 2026

On 11 January 2026, the UAE Ministry of Human Resources and Emiratisation (MoHRE) issued official guidance clarifying employer obligations under the Alternative End-of-Service Benefits Scheme (the “Scheme”).

The guidance provides practical direction on eligibility, employer contribution rates, treatment of existing gratuity entitlements and termination payments.  While the Scheme has been in force since October 2023, this guidance addresses a number of operational questions that employers have raised since implementation. 

The Scheme applies to private sector employers registered with MoHRE.  It does not apply to employers operating in the DIFC or ADGM, which remain subject to their own end-of-service regimes.

This update provides a summary of the changes, the predicted impact, and what organizations should consider following this development.

WHAT EMPLOYERS NEED TO DO

Participation and scope

  • Employer participation is voluntary
  • Once an employer opts in, participation becomes mandatory for covered employees
  • A minimum commitment period of one year applies after enrolment

Employer contributions

Monthly contributions are calculated on an employee’s basic salary:

  • 5.83% for employees with less than 5 years’ service
  • 8.33% for employees with 5 or more years’ service

Contributions must be paid within the first 15 days of each month.  Employees may also make voluntary contributions of up to 25% of salary, which are tracked separately.

Existing gratuity entitlements

  • Gratuity accrued before enrolment remains protected under UAE Labour Law
  • This amount is frozen at the enrolment date and must be paid separately on termination
  • Only service after enrolment is covered by the Scheme

KEY RISKS AND COMMERCIAL CONSIDERATIONS

If the Scheme is ignored or mismanaged

  • Late or inaccurate contributions may expose employers to compliance risk
  • Poor record-keeping can create termination payment disputes
  • Exiting the Scheme after the first year requires MoHRE approval and may involve financial and liquidity assessments

Commercial impact

  • The Scheme can improve cash-flow predictability by replacing large lump-sum gratuity payments with fixed monthly contributions
  • Investment returns are not guaranteed, and risk ultimately sits with the beneficiary
  • Payroll, HR systems and employment documentation may need updating to reflect Scheme participation

Areas where guidance is still evolving

  • Practical expectations around exiting the Scheme
  • Treatment of certain employee categories and benefit structures
  • Provider-specific withdrawal and investment terms

NEXT STEPS

  • Confirm whether your workforce falls within MoHRE jurisdiction
  • Assess the financial and operational impact of opting in
  • Review HR policies, payroll processes and employment contracts
  • Seek advice on Scheme enrolment, provider selection and compliance

If you have any questions or would like to discuss how this development may impact your organization in more detail, please don’t hesitate to contact us.

Authored by: Hisham Oweiss (Partner) and Kwan Lung Wong (Andrew) (Associate)