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The DIFC scrapped end-of-service gratuity in 2020 and replaced it with a funded savings plan. Here is what that means for your money.
Last reviewed: · General information, not legal advice
Before February 2020, DIFC employees received an end-of-service gratuity much like the rest of the UAE: a lump sum calculated on final salary and length of service, paid when they left. The problem with that model is that it is an unfunded promise — the money sits on the employer's balance sheet until the day it is owed, and if the employer fails, the employee is an unsecured creditor.
The DIFC Employment Law No. 2 of 2019 replaced it with DEWS — the DIFC Employee Workplace Savings plan. Employers now make monthly contributions into a trust-based, professionally managed plan held entirely outside the company.
| Length of service | Monthly employer contribution |
|---|---|
| First 5 years | 5.83% of monthly basic salary |
| After 5 years | 8.33% of monthly basic salary |
Those percentages are not arbitrary. They are the old gratuity formula expressed as a monthly rate: 21 days a year is 21 ÷ 360 = 5.83%, and 30 days a year is 30 ÷ 360 = 8.33%. The intent was to reproduce the same economic value, just funded as you go.
You can also make voluntary employee contributions on top, which is what turns DEWS from a severance substitute into an actual savings vehicle.
For a long-serving employee whose salary rose steeply, the old gratuity model could well have paid more. For most others — and for anyone whose employer might fail — DEWS is materially safer.
Service accrued before the switch did not disappear. Employers had to deal with the pre-2020 period in one of two ways: either pay the accrued gratuity as a lump sum into DEWS, or keep a record of the accrued entitlement to be paid on termination based on the old formula and the employee's salary at the transfer date.
If you joined a DIFC employer before February 2020, ask specifically how your pre-2020 service was treated — it is a separate pot from your ongoing DEWS contributions and it is easy to overlook in a final settlement.
DEWS covers the end-of-service benefit only. The rest of your final settlement is unchanged and still owed separately:
ADGM in Abu Dhabi is different: its Employment Regulations 2019 keep an end-of-service gratuity (21 days' basic wage a year for the first five years, 30 after, capped at two years' wage), although an employer may offer a pension scheme instead. Do not assume the DIFC position applies there.
Not as a traditional lump sum. Since 1 February 2020, DIFC employers contribute monthly to the DEWS workplace savings plan instead. The end-of-service benefit is the accumulated value of that account.
5.83% of monthly basic salary for the first five years of service, rising to 8.33% after five years. Those figures mirror the old 21-day and 30-day gratuity formulas expressed monthly.
For most employees yes, because it accrues from day one, is protected from employer insolvency and is invested. The trade-off is that it is funded on your salary as you earn it rather than your final salary, so a late large promotion is worth less than it would have been under the old system.
It was either paid into DEWS as a lump sum or recorded as an accrued entitlement calculated on the old formula and your salary at the transfer date. Ask your employer specifically, as it is a separate pot from your ongoing contributions.
Generally when you leave DIFC employment. It is a workplace savings plan rather than an instant-access account, though voluntary contributions may have different terms.
No. ADGM has its own Employment Regulations 2019, which keep a gratuity of 21 days' basic wage a year for the first five years and 30 after (capped at two years' wage), unless the employer offers a pension scheme instead.