Situation:
A worker with a basic salary of AED 10,000 who has worked for a company for 4 years wishes to participate in a savings scheme. What is the formula for calculating the basic subscription amount for Alternative End-Of-Service Benefits Scheme (Savings Scheme)?
What actions are required?
1. Understand the contribution rate
Under the Savings Scheme, the employer must contribute monthly as a replacement for the traditional gratuity:
| Years of Service | Monthly Contribution Rate |
| 0 to 5 years | 5.83% of basic salary |
Since the employee has 4 years of service, the applicable rate is 5.83%.
2. Apply the Formula
Monthly Subscription Amount = Basic Salary × Contribution Rate = AED10,000 × 5.83% =AED 583.00
Result: Monthly Subscription Amount = AED 583.00. This is the amount the employer contributes each month into the savings scheme on behalf of the employee.
Basis:
- Cabinet Decision No. 96 of 2023 Regarding an Alternative End-of-Service Benefits system
- Ministerial Decision No. 668 of 2023 Regarding Subscription under...