Proposals from the Dubai International Finance Centre (DIFC) to introduce an employee workplace savings (DEWS) scheme to replace the current defined benefit (DB) end-of-service gratuity arrangement feature in a new consultation. The DIFC will take comments on the DEWS proposals until 18 Nov 2019. Comments on a separate consultation to regulate persons conducting two new financial services related to the DEWS scheme are due to the Dubai Financial Services Authority (DFSA) by 28 Nov 2019.
The DIFC is a special economic zone in the United Arab Emirates (UAE) that has an independent regulatory and legal system. The current end-of-service gratuity arrangement is an unfunded DB scheme originally designed to attract talented employees to work in the UAE. That scheme doesn’t reflect best practices in comparable global locations and is no longer needed, according to the DIFC.
Here are key features of the DEWS proposals that will replace the gratuity scheme under current employment law:
Under proposals first published in April 2019, the DEWS scheme is slated to take effect 1 Jan 2020. The DIFC will publish for the president’s signature a revised rulebook with the final DEWS effective date. Employers will need to adjust their HR and payroll systems accordingly.