UAE compliance · Cabinet Resolution 96/2023

What opting in actually costs.

Since 2023 a UAE employer may stop accruing end-of-service gratuity and instead pay a monthly contribution into a regulated fund — 5.83% of basic wage below five years of service, 8.33% at five and beyond. The rates were set to reproduce the statutory bands, so the totals are close. The decision is decided by where they are not.

Last reviewed 15 August 2026

One employee

Basic monthly wage (AED)Basic wage only. Housing, transport and other allowances are excluded from both the statutory calculation and the contribution base.

Service at join (years)Completed service on the day the employer subscribes.

Project forward (years)How far ahead the comparison runs.

Annual basic wage increase (%)The single largest driver here. Statutory gratuity is computed at exit on the final basic wage, so a raise restates years already worked. A contribution never is.

No fund return field, deliberately. Investment returns in the Savings Scheme accrue to the employee, not the employer. Including them would flatter the scheme against a question nobody asked: this compares what the employer pays.

Contribution rates. 5.8% of basic wage below five years of service, 8.3% at five and beyond — the two statutory bands restated monthly. The band switches on this employee’s own five-year mark, which is why a projection that crosses it is priced month by month.

Subscribing costs less

−AED 12,991.79

Over 5 years, on one employee. That is 14.9% of what the statutory path would have accrued over the same period.

Position at the join date

Gratuity already accruedAED 31,500.00

Frozen on subscribing, still owedAED 31,500.00

Over the projection

Statutory accrual, staying outAED 87,011.86

Contributions, subscribingAED 74,020.06

Difference−AED 12,991.79

Statutory liability at the endAED 118,511.86

Year by year
Year	Basic wage	Statutory	Scheme
1	15,000	10,500	10,494
2	15,750	13,125	11,412
3	16,538	19,294	16,531
4	17,364	21,085	17,357
5	18,233	23,008	18,225

Assumptions applied

Contributions are modelled from the first month. Whether they are due during an employee’s first year of service is not settled by the published sources.
Accrued gratuity is treated as freezing on the basic wage at the join date and staying with the employer. That mechanic is not independently verified against the decree text.
The statutory path restates the whole accrued liability at each new salary, because gratuity is computed at exit on the final basic wage. That is what makes salary growth the largest driver here.
Both totals are undiscounted. The scheme pays cash monthly, the statutory liability settles at exit.

An estimate for planning, not a legal determination or advice on whether to subscribe. Cabinet Resolution No. 96 of 2023; Article 51, Federal Decree-Law No. 33 of 2021.

A projection for planning, not advice on whether to subscribe. It prices one employee; an employer decision is the sum of a workforce, and the shape of that workforce — tenure spread, salary growth, how many people are near the cap — is what decides it.

Why the rates look familiar

5.83% and 8.33% are the statutory bands, restated monthly.

Twenty-one days of basic wage a year is 21 ÷ 360, which is 5.83% a month. Thirty days is 30 ÷ 360, which is 8.33%. The two contribution rates are the two accrual bands expressed as a percentage of monthly pay, which is why a subscribing employer pays approximately what it would otherwise have accrued.

That equivalence is exact only under conditions that rarely hold: a flat salary, service below the twenty-four month ceiling, and no legacy provision. Change any one of them and the paths separate — which is what the projection above is for.

The full reference: what the scheme requires →

Deliberately not modelled

Investment returns in the fund, which accrue to the employee rather than to the employer.
Voluntary employee contributions, capped at 25% of total wage — employee money, not employer cost.
The time value of money. Both totals are undiscounted.
DIFC and ADGM, which sit outside MoHRE’s remit and outside the scheme entirely.
Emirati nationals, who fall under the pension and social security regime rather than Article 51.

Each of these would change the answer. None of them is an employer cost, and including them would answer a different question than the one an employer subscribing has.

What decides it

Four things a flat-salary comparison cannot show you.

A raise reaches backwards on one path and not the other

Statutory gratuity is computed at exit on the final basic wage, for every year of service. A ten per cent raise in year seven therefore restates the accrual for years one to six as well. A scheme contribution is fixed at the wage of the month it was paid and is never revisited. On any rising salary this is the largest single difference between the two paths, and it is invisible in a flat-salary comparison.

The cap stops one path and not the other

Statutory gratuity may not exceed twenty-four months of basic wage however long the service runs. An employee at the ceiling accrues nothing further. Contributions carry on regardless, so for a long-tenured workforce every riyal contributed is additional cost against a liability that had stopped growing.

The legacy provision does not go anywhere

Subscribing does not discharge accrued gratuity, transfer it into the fund, or convert it to units. It stays with the employer, frozen on the basic wage at the implementation date. The balance sheet carries a fixed legacy provision alongside a new monthly expense, and the two have to be tracked separately for as long as the affected employees remain.

Cash timing changes even where the totals agree

The two contribution rates reproduce the statutory bands almost exactly, so on a flat wage the totals land within a rounding of each other. What changes is when the money leaves: monthly into a regulated fund rather than as a lump sum within fourteen days of an exit nobody scheduled. Neither figure on this page is discounted, so the comparison understates that difference rather than overstating it.

Under consultation. MoHRE ran a public consultation on the scheme which closed on 28 February 2026. Two mechanics this projection depends on — that contributions run from the first month, and that prior accrual freezes on the wage at the implementation date — are not settled by the published sources and are flagged in every result. Treat the framework as current rather than settled.

Sources

Cabinet Resolution No. 96 of 2023 — voluntary alternative end-of-service benefits scheme — UAE Legislation
Ministerial Resolution No. 668 of 2023 — subscription under the alternative scheme — UAE Ministry of Human Resources and Emiratisation
Alternative End-of-Service Benefits System — guidance portal — UAE Ministry of Human Resources and Emiratisation
End of service benefits for workers in the private sector — contribution rates and fund options — The Official Platform of the UAE Government
Federal Decree-Law No. 33 of 2021 — Article 51, the bands and the twenty-four month cap — UAE Legislation
Public consultation on the voluntary alternative end-of-service system (closed 28 February 2026) — Sharik.ae — UAE Digital Participation Platform

Subscribing changes the accounting shape, not just the cash.

A growing balance-sheet provision becomes a fixed monthly expense, the frozen legacy sits alongside it, and payroll has to switch each employee's band on their own five-year mark. That is three changes to the ledger, and they arrive together.

Calculate gratuity itself Book a scoping call