The Dubai International Financial Centre is looking into replacing the end of service gratuity with a funded workplace savings plan for its expatriate workforce.
In a letter sent to all DIFC companies and signed by its governor Essa Kazim, the centre is proposing phasing out the gratuity payment and introducing "a trust-based savings vehicle to handle contributions, invest monies and pay benefits".
"Rather than being paid by their employer when leaving, the plan requires employers to contribute funds into the plan on an on-going basis," a DIFC spokesperson told The National, when asked about the letter. "The contribution rate will be the same as the current gratuity accrual rate. However, employees will be allowed to contribute additional funds out of their salary, if they so choose."
DIFC said the letter titled ‘Rethinking End of Service Benefits: DIFC survey’ is a key part of its consultation phase and dependent on feedback it aims "to go live on January 1, 2020".
"The DIFC established a Working Group over two years ago to examine the various options available for reform of the end-of-service-gratuity. Implementation is on-going and will incorporate feedback from our partners in the centre," the spokesperson added.
[The DIFC proposal] is a significant move towards off balance sheet funding of end of service liabilities.
At the Workers Incentives and End of Service Benefits Conference in Dubai last month, the government announced plans to "enhance and improve" the gratuity payment - a defined benefit decided by an employee's length of service and final basic salary at the time of leaving.
Abdulrahman Al Awar, director general of the Federal Authority for Government Human Resources, said studies are being carried out “to establish investment funds to manage retirement and end-of-service benefits”, to help companies attract and retain talent and ensure they can adequately fund the liability.
DIFC said under its current proposal, the reform would only affect future benefits and gratuities earned. This means, from the date of implementation "all new accruals will be paid in cash into employee accounts, administered externally to the employer under a DIFC master trust," the spokesperson said. "Pre-existing benefits leading up to the implementation date will remain untouched."
The free zone said under the current plan, there will be an enabling DIFC law establishing the overall architecture and requirements of the scheme.
"The Dubai Financial Services Authority, our independent regulator, will regulate the fund administrator. The master trust housing the scheme will be domiciled in the DIFC," the spokesperson added.
DIFC “has recognised the need to reform its labour law" in line with the wider corporate world, which is migrating towards defined contribution plans, Mr Kazim wrote in the letter. “Employers will be required to use this vehicle except where they already provide a trust-based defined-contribution savings plan whose employer contribution rates at least equal the minimum proposed by these reforms.”
Martin McGuigan, partner at Aon Retirement Solutions and McLagan in Dubai, said the DIFC proposal “is a significant move towards off balance sheet funding of end of service liabilities".
The retirement specialist said the move has three purposes: “To protect DIFC employees against unexpected business failures by putting their contributions into a trust-based structure; cleverly establishing DIFC as the regional hub for the embryonic pension industry; demonstrating to FAHR that a viable alternative to the current end of service regime can work on a large scale.”
According to the DIFC letter, by keeping employee contributions similar to the existing gratuity scheme, it will keep the new system "cost neutral" for employers.
Employees enrolled in the scheme will be able to pick how their contributions are invested, choosing between low-, medium- and high-risk options. Then when they leave the DIFC, they would receive both the end of service gratuity for service earned up to the date of the change, in addition to the contributory fund. According to the letter, employees can choose whether to cash out the fund or to hold it without any new contributions.
When it comes to the charges, the DIFC spokesperson said the fund administration and fund management costs will be borne by the employee via a small management fee.
"We believe the fee represents excellent value because the plan removes the risk of employees not receiving what is due to them when they leave should their employer be unable or unwilling to pay what is legally owed to them," said the spokesperson. "It also allows their retirement savings to be responsibly and professionally managed where the fees concerned will typically be much lower than if they were to pay for it themselves individually."
Mr McGuigan said a new plan would make the free zone “a regional centre of excellence and over time it would provide a boost to a number of industries including asset managers, trustees and bundled providers”.
“Access to a well-run and well-regulated system will prevent employees having to run the gauntlet of badly designed high-commission saving schemes, which put the adviser’s interests ahead of the saver,” Mr McGuigan added.
First set up by the government more than 40 years ago, experts say the gratuity no longer serves the needs of modern-day employees in the Emirates. With expatriates now staying between five to 10 years, according to a 2018 study by Willis Towers Watson, this creates a cash risk for employers.
“If a lot of people leave at the same time, you have to find a lot of money and that could prove difficult especially for distressed companies. That then exposes employees to a benefit risk – are they certain they will receive the benefit in full or at all?” Philip Wheeler, senior manager and pensions actuary at Ernst and Young, told delegates at last month's conference.
DIFC said recipients had until March 28 to respond with their thoughts. The current proposal may still be subject to change depending on feedback received during the consultation phase, the spokesperson said.
Learn more about Qasr Al Hosn
In 2013, The National's History Project went beyond the walls to see what life was like living in Abu Dhabi's fabled fort:
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
All you need to know about Formula E in Saudi Arabia
What The Saudia Ad Diriyah E-Prix
When Saturday
Where Diriyah in Saudi Arabia
What time Qualifying takes place from 11.50am UAE time through until the Super Pole session, which is due to end at 12.55pm. The race, which will last for 45 minutes, starts at 4.05pm.
Who is competing There are 22 drivers, from 11 teams, on the grid, with each vehicle run solely on electronic power.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Virtuzone GCC Sixes
Date and venue Friday and Saturday, ICC Academy, Dubai Sports City
Time Matches start at 9am
Groups
A Blighty Ducks, Darjeeling Colts, Darjeeling Social, Dubai Wombats; B Darjeeling Veterans, Kuwait Casuals, Loose Cannons, Savannah Lions; C Awali Taverners, Darjeeling, Dromedary, Darjeeling Good Eggs
THE POPE'S ITINERARY
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
Brief scores:
Toss: South Africa, chose to field
Pakistan: 177 & 294
South Africa: 431 & 43-1
Man of the Match: Faf du Plessis (South Africa)
Series: South Africa lead three-match series 2-0
Building boom turning to bust as Turkey's economy slows
Deep in a provincial region of northwestern Turkey, it looks like a mirage - hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.
Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairytale for their investors.
The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry - a key sector - as the country's economy heads towards what could be a hard landing in an intensifying downturn.
After a long period of solid growth, Turkey's economy contracted 1.1 per cent in the third quarter, and many economists expect it will enter into recession this year.
The country has been hit by high inflation and a currency crisis in August. The lira lost 28 per cent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.
The villas close to the town centre of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group's Burj Al Babas project.
But the development of 732 villas and a shopping centre - which began in 2014 - is now in limbo as Sarot Group has sought bankruptcy protection.
It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.
Super 30
Produced: Sajid Nadiadwala and Phantom Productions
Directed: Vikas Bahl
Cast: Hrithik Roshan, Pankaj Tripathi, Aditya Srivastav, Mrinal Thakur
Rating: 3.5 /5
LIST OF INVITEES
Shergo Kurdi (am)
Rayhan Thomas
Saud Al Sharee (am)
Min Woo Lee
Todd Clements
Matthew Jordan
AbdulRahman Al Mansour (am)
Matteo Manassero
Alfie Plant
Othman Al Mulla
Shaun Norris
What are the influencer academy modules?
- Mastery of audio-visual content creation.
- Cinematography, shots and movement.
- All aspects of post-production.
- Emerging technologies and VFX with AI and CGI.
- Understanding of marketing objectives and audience engagement.
- Tourism industry knowledge.
- Professional ethics.
In numbers
Number of Chinese tourists coming to UAE in 2017 was... 1.3m
Alibaba’s new ‘Tech Town’ in Dubai is worth... $600m
China’s investment in the MIddle East in 2016 was... $29.5bn
The world’s most valuable start-up in 2018, TikTok, is valued at... $75bn
Boost to the UAE economy of 5G connectivity will be... $269bn
Kibsons%20Cares
%3Cp%3E%3Cstrong%3ERecycling%3Cbr%3E%3C%2Fstrong%3EAny%20time%20you%20receive%20a%20Kibsons%20order%2C%20you%20can%20return%20your%20cardboard%20box%20to%20the%20drivers.%20They%E2%80%99ll%20be%20happy%20to%20take%20it%20off%20your%20hands%20and%20ensure%20it%20gets%20reused%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EKind%20to%20health%20and%20planet%3C%2Fstrong%3E%3Cbr%3ESolar%20%E2%80%93%2025-50%25%20of%20electricity%20saved%3Cbr%3EWater%20%E2%80%93%2075%25%20of%20water%20reused%3Cbr%3EBiofuel%20%E2%80%93%20Kibsons%20fleet%20to%20get%2020%25%20more%20mileage%20per%20litre%20with%20biofuel%20additives%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ESustainable%20grocery%20shopping%3C%2Fstrong%3E%3Cbr%3ENo%20antibiotics%3Cbr%3ENo%20added%20hormones%3Cbr%3ENo%20GMO%3Cbr%3ENo%20preservatives%3Cbr%3EMSG%20free%3Cbr%3E100%25%20natural%3C%2Fp%3E%0A
World Cup warm-up fixtures
Friday, May 24:
- Pakistan v Afghanistan (Bristol)
- Sri Lanka v South Africa (Cardiff)
Saturday, May 25
- England v Australia (Southampton)
- India v New Zealand (The Oval, London)
Sunday, May 26
- South Africa v West Indies (Bristol)
- Pakistan v Bangladesh (Cardiff)
Monday, May 27
- Australia v Sri Lanka (Southampton)
- England v Afghanistan (The Oval, London)
Tuesday, May 28
- West Indies v New Zealand (Bristol)
- Bangladesh v India (Cardiff)
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
BRAZIL%20SQUAD
%3Cp%3EGoalkeepers%3A%20Alisson%2C%20Ederson%2C%20Weverton%3Cbr%3E%3Cbr%3EDefenders%3A%20Dani%20Alves%2C%20Marquinhos%2C%20Thiago%20Silva%2C%20Eder%20Militao%20%2C%20Danilo%2C%20Alex%20Sandro%2C%20Alex%20Telles%2C%20Bremer.%3Cbr%3E%3Cbr%3EMidfielders%3A%20Casemiro%2C%20Fred%2C%20Fabinho%2C%20Bruno%20Guimaraes%2C%20Lucas%20Paqueta%2C%20Everton%20Ribeiro.%3Cbr%3E%3Cbr%3EForwards%3A%20Neymar%2C%20Vinicius%20Junior%2C%20Richarlison%2C%20Raphinha%2C%20Antony%2C%20Gabriel%20Jesus%2C%20Gabriel%20Martinelli%2C%20Pedro%2C%20Rodrygo%3C%2Fp%3E%0A
Brief scores:
Toss: Australia, chose to bat
Australia: 272-9 (50 ov)
Khawaja 100, Handscomb 52; Bhuvneshwar 3-48
India: 237 (50 ov)
Rohit 56, Bhuvneshwar 46; Zampa 3-46
Player of the Match: Usman Khawaja (Australia)
Player of the Series: Usman Khawaja (Australia)
