Plan for your End of Service Gratuity Requirements in the UAE
Planning for your End of Service Gratuity(EOSG) liabilities for all your UAE employees is essential.
In the United Arab Emirates (UAE), companies are required to pay employees End of Service Gratuity (EOSG) at the end of their employment. The gratuity requirement is based on the individual’s salary and length of service and is payable as a lump sum. It is important to forward plan as you may be liable for large sums of money at unexpected times.
The gratuity is based on the employee's monthly basic as per the employment contract (usually 60% basic) X 12 /365 (to get the daily rate) X 21 days for the first 5 years and for every year after that, it is 30 days.
The calculation is based on the last day of employment, meaning one full year of employment would be based on 365 days. However, the final year calculation will be based on the number of days completed in that year I.e., instead of 365 days, it could be only 157 days.
Case Study Example:
Years of employment: 3 years and 157 days
Total basic salary: AED10,000
Gratuity requirement: AED 24,013
How can you forward plan for your companys EOSG requirements?
Sovereign and PRO Partner Group provides bespoke solutions that enables employers to build funds against their EOSG liabilities within an employee benefit trust plan. Placing EOSG provision into trust provides enhanced risk management and reduced EOSG costs through early investment. We can also incorporate a savings element within the same structure to help you attract and retain employees.
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You can ringfence these requirements by taking the cash and liability off the employer’s balance sheet and placing it into trust. This money can then be invested and allowed to accumulate, while EOSG payments can be withdrawn as and when required.
It also gives you peace of mind that you have protected your cashflow and can meet your liabilities.
Employee Savings Plans
You want to hold on to your best talent.? So by incorporating a savings element within the same structure is a simple way to help you attract and retain employees and stand out in the crowd
This also delivers a duty of care so that your employees can save easily for life goals such as marriage, house purchase or an amazing holiday!
The benefits speak for themselves:
If you need assistance planning for your end of service gratuity liabilities in the UAE, Sovereign and PPG would be happy to speak with you on a solution that works best for your company and employee requirements. Contact us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi?or simply reply to this email and we would be delighted to assist.
*Investment services provided by PPG & Sovereign Corporate Services are executed by our Guernsey office.