Jahangir Aka, head of SEI Investments Middle East, provides fiduciary management services to companies in the region. Here he talks about how to calculate a gratuity and why it is so important.
How should employees calculate their gratuity, or more correctly, end of service benefits (EoSB)?
In the UAE, it is calculated on basic salary and on 21 days per year of service up to five years. Over five years it becomes 30 days a year. It is based on basic salary plus commission, not on allowances. The precedent through some recent cases has been set that the commission must be a commission for the core work of the employee, ie, formulaic sales commission for a salesperson, and this should not be confused with a bonus.
What are the maximum and minimum payments?
According to the law, you must complete a year of service and up to 24 years of service for the payment. Most companies we have met remove the 24-year cap as a loyalty bonus for any, normally not many, employees who have stayed that long.
With people changing jobs every three to five years, how is that affecting the benefits?
EoSB was conceived as a mechanism to help people save. Historically people used to work for the same company for long periods, and when they left it would give them large sums of money when they went back to their home countries. Now the concern is that people change jobs every two, three, four years and they see it as a cash bonus when they leave companies and they spend that on consumer items here. So, you have wasted the lump sum. Moreover, it is not as big a chunk of money every two or three years. As adults we should be responsible and use it as a savings pot for their future.
SEI Investments started its fiduciary services in Dubai last year. How do you see companies managing their EoSB?
Still almost 90 per cent of the companies in the UAE manage their EoSB as they go.
What's the best way to ensure an employee receives their benefits?
The best companies are partitioning EoSB from the assets and the employee can ask for it. Dubai is seeing another period of growth and the chief financial officers need to realise that a pay rise would increase EoSB. For instance, a 4 per cent pay rise would actually lift the EoSB by 16 per cent. We are helping CFOs to model that payment.
Why should companies listen to such a request?
Leading companies listen and care for their employees as part of their HR policy. In many cases the company directors are themselves expatriates, and they recognise the comfort derived from knowing their EoSB is secure. Also, an increasing number of Emirati sponsors want the assets separated so they know that the companies they are sponsoring are able to meet their company liabilities in the event of financial difficulties and the burden is not on the Emirati sponsor.
ssahoo@thenational.ae
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
Company profile
Name: Tratok Portal
Founded: 2017
Based: UAE
Sector: Travel & tourism
Size: 36 employees
Funding: Privately funded
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Shubh Mangal Saavdhan
Directed by: RS Prasanna
Starring: Ayushmann Khurrana, Bhumi Pednekar
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
ENGLAND SQUAD
Goalkeepers Pickford (Everton), Pope (Burnley), Henderson (Manchester United)
Defenders Alexander-Arnold (Liverpool), Chilwell (Chelsea), Coady (Wolves), Dier (Tottenham), Gomez (Liverpool), James (Chelsea), Keane (Everton), Maguire (Manchester United), Maitland-Niles (Arsenal), Mings (Aston Villa), Saka (Arsenal), Trippier (Atletico Madrid), Walker (Manchester City)
Midfielders: Foden (Manchester City), Henderson (Liverpool), Grealish (Aston Villa), Mount (Chelsea), Rice (West Ham), Ward-Prowse (Southampton), Winks (Tottenham)
Forwards: Abraham (Chelsea), Calvert-Lewin (Everton), Kane (Tottenham), Rashford (Manchester United), Sancho (Borussia Dortmund), Sterling (Manchester City)
Opening day UAE Premiership fixtures, Friday, September 22:
- Dubai Sports City Eagles v Dubai Exiles
- Dubai Hurricanes v Abu Dhabi Saracens
- Jebel Ali Dragons v Abu Dhabi Harlequins
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
