The Pensioneer Trustee Company (Guernsey) Limited
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Dubai: It’s common practice among companies to grant a severance pay to a worker at the end of the employment. The compensation is usually a lump sum based on the employee’s length of service and, in this part of the world, it is a welcome alternative to the lack of a state-mandated pension for expatriates.
Most employers in the UAE stick to the standard benefits required by law, but a growing number of organisations are enhancing their end-of-service packages to incentivise their staff.
In the latest survey by Towers Watson released this month, nearly half of companies (44 per cent) with operations in the UAE indicated that they provide enhancements to the standard end-of-service benefits (ESBs) of their staff.
Nearly all (92 per cent) of companies provide ESB in the UAE, while the majority of those who don’t have put in place retirement or other benefits in lieu of the ESB.
Across the Middle East, the study noted a notable shift in the reason for providing supplemental benefits. Whereas in the previous survey companies said they were often driven by local or industry best practice, organisations now said they need to make their benefits offering more attractive in order to retain key talent within the organization.
When calculating an employee’s gratuity, companies follow a standard formula and take into account the employee’s period of service. There are certain restrictions, however, that can negatively affect an employee’s payout, such as the number of days when the employee was absent from work without pay, which is often left out in the calculation.