Picture a finance director at a 60-person logistics contractor in Mussafah, Abu Dhabi. Her firm carries about AED 1.1 million of accrued gratuity under its standard employment contracts, and a DIFC client has just shown her how DEWS funds that cost monthly. The UAE gratuity vs savings scheme question follows naturally: should she copy it?
The short answer is that mainland employers can already choose a DEWS-style route. The voluntary Savings Scheme runs alongside the standard gratuity rules in Article 51 of Federal Decree-Law No. 33 of 2021, so no law forces a switch. The real decision is about cash flow, risk and administration.
This guide compares both systems side by side, works through a numerical example, and sets out when switching helps. It also flags the grey areas, because the rules for enrolled staff are less flexible than many employers expect.
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Quick Answer The mainland Savings Scheme is optional and uses the same 5.83% and 8.33% employer rates as DIFC's mandatory DEWS. It suits growing employers who want predictable monthly costs. It is a poor fit if you need flexibility, because enrolled employees cannot return to gratuity. |
How UAE Gratuity Works for Mainland Employers Today
Under Article 51 of Federal Decree-Law No. 33 of 2021, full-time employees with one year of continuous service earn 21 days of basic wage per year for the first five years, then 30 days per year thereafter. The total is capped at two years' wage, as the UAE Government portal explains. Allowances are normally excluded.
Gratuity is a defined-benefit promise calculated on the final basic salary. An employee promoted twice by 2031 therefore costs more than the salary history suggests. The liability also sits unfunded until exit, so a wave of resignations can create a sudden cash demand. Our note on the 2026 amendments employers missed covers recent changes.
Employers must settle gratuity and other final dues within 14 days of the contract ending. Emirati employees fall under pension legislation instead, so this comparison concerns expatriate staff.
What a DEWS-Style Savings Scheme Actually Is
DEWS is the DIFC Employee Workplace Savings Plan. Since 1 February 2020, it has replaced gratuity for eligible DIFC staff, with employers paying 5.83% of basic salary monthly during the first five years and 8.33% afterwards. Zurich Workplace Solutions administers it, and the DIFC legal database holds the Employment Law.
Mainland employers now have a close cousin. Cabinet Resolution No. 96 of 2023 created the voluntary Savings Scheme, overseen jointly by MOHRE and the Securities and Commodities Authority. Employers pay the same two rates into an approved fund. Our guide to how DEWS replaces gratuity covers the DIFC side in detail.
MOHRE's November 2025 guidance lists Ghaf Benefits, Daman Investments, National Bonds and First Abu Dhabi Bank as approved providers. DIFC and ADGM entities are outside the scheme. Check the current provider list on the MOHRE website, because it may change.
UAE Gratuity vs Savings Scheme: Side-by-Side Comparison
|
Feature |
Gratuity (Article 51) |
Mainland Savings Scheme |
DIFC DEWS |
|
Status |
Default for mainland |
Voluntary for employers |
Mandatory in DIFC |
|
Employer cost |
21 or 30 days of basic wage per year |
5.83% or 8.33% of basic salary monthly |
Same two rates |
|
Funding |
Unfunded until exit |
Paid monthly to an approved fund |
Paid monthly to the plan |
|
Salary basis |
Final basic salary |
Salary paid each month |
Salary paid each month |
|
Payout |
Within 14 days of exit |
Within 14 days, or stay invested |
On leaving DIFC service |
|
Oversight |
MOHRE |
MOHRE and SCA |
DIFC Authority |
The rates match because they were designed to replicate accrual under the old formula. What differs is the timing. Under the scheme, the employer's obligation is the monthly contribution, while investment returns, which are not guaranteed, accrue to the employee.
What Changes for Cash Flow: A Worked Example
Take an employee on an AED 10,000 basic salary with eight years of service and no pay rises. Gratuity comes to AED 65,000. Monthly contributions total about AED 64,968 before returns, so the headline cost is almost identical.
|
Service period |
Gratuity (AED) |
Savings Scheme (AED) |
|
Years 1 to 5 |
35,000 |
34,980 |
|
Years 6 to 8 |
30,000 |
29,988 |
|
Total before returns |
65,000 |
64,968 |
The gap opens when salaries rise. Gratuity applies the final basic salary to every year, whereas contributions use the pay of each month. MOHRE presents this as a medium-term saving for employers. Use salary benchmarking data to model your own pay progression first.
Returns are the wild card. Employees can choose capital-guaranteed, risk-based, or Sharia-compliant options, so review each fund's performance reports and charges before signing up.
Who Should Switch, and Who Should Wait
When the switch makes sense
Growing firms with fast pay progression, employers who want gratuity cash set aside, and companies competing against DIFC or ADGM packages gain most. MOHRE also positions the scheme as protection for employee savings against inflation and employer insolvency.
A practical test is your pay progression. The faster basic salaries rise, the more the final-salary effect inflates gratuity, and the more a month-by-month contribution basis helps your budget.
When staying with gratuity is wiser
Stay put if headcount is volatile, margins are thin, or finance cannot absorb new monthly outflows. Law-firm summaries say participation must last at least one year, and an enrolled employee cannot return to gratuity. Late contributions can also trigger administrative action, so payroll discipline matters.
How to Evaluate a Switch Step by Step
Start with an end-of-service liability audit that totals accrued gratuity per employee. Then model 12 months of contributions at 5.83% and 8.33%, and compare the result with your expected exits.
Next, decide which groups to enrol. The employer chooses, but enrolment is compulsory for those selected, so many firms consult staff first. Update your employee handbook and contract templates to explain the change.
Finally, submit a request through MOHRE, pick one approved fund, and register staff through its administrator. Contributions must reach the fund within 15 days of each month's start, so build the transfer into payroll.
Keep clean records afterwards. MOHRE receives complaints and carries out inspections, while the SCA handles complaints about fund performance, so retain enrolment confirmations and proof of every monthly transfer.
Conclusion
For most mainland employers, the real choice is timing, not DEWS or gratuity. The Savings Scheme is optional, mirrors DEWS rates, and turns an unfunded promise into a monthly cost. MOHRE completed a stakeholder evaluation in early 2026 and expects further enhancements, so the rules may keep evolving.
Treat any switch as a joint HR and finance project rather than a payroll tweak. Model the numbers, confirm the grey areas in writing, and brief your people clearly. This article is general guidance, not legal advice.
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Need help modelling a switch? ReapHR's HR advisory team can audit your end-of-service liabilities and update contracts and policies. |
Employers can start at the ReapHR company hub to request support, whether that means a one-off liability audit or a full review of contracts and policies ahead of enrolment.
Frequently Asked Questions
Is the UAE savings scheme mandatory for mainland employers?
No. The Savings Scheme under Cabinet Resolution No. 96 of 2023 is voluntary for mainland and most free zone employers, unlike DEWS in DIFC. MOHRE completed a stakeholder consultation in early 2026, but we found no announcement making it compulsory. Confirm the current position with MOHRE before planning.
Does the savings scheme pay more than gratuity?
It can, but this is not guaranteed. The 5.83% and 8.33% rates roughly match gratuity accrual at a flat salary, so any extra comes from investment returns. Gratuity uses the final basic salary, which can favour employees with fast pay growth. Outcomes depend on the chosen fund.
Can employers enrol only some employees?
Yes. Employers may enrol all staff, specific groups or selected professional categories. Once enrolled, participation is compulsory for that employee, and current guidance offers no route back to gratuity. Employers must also stop applying traditional gratuity to enrolled staff, so consulting employees first is sensible.
What happens to gratuity accrued before enrolment?
Service before enrolment is preserved under the existing gratuity rules, and employers do not make retroactive contributions. The u.ae portal says it must be calculated and settled under the law, while law-firm summaries say it is fixed at the enrolment-date basic salary. Request written confirmation from MOHRE.
Does the mainland scheme apply to DIFC and ADGM employers?
No. DIFC and ADGM run their own end-of-service regimes. DIFC employers contribute to DEWS or an approved alternative qualifying scheme. Private sector and other free zone employers can opt into the Savings Scheme by applying through MOHRE and contracting with one approved fund provider.
