End of Service Benefits (EOSB) remain a core obligation for employers across the GCC. In the UAE, for example, all eligible employees are entitled to gratuity payments under Federal Decree Law No. 33 of 2021, with payments due upon termination of employment.
Failure to meet these obligations can result in financial penalties, operational disruption and reputational damage, particularly in competitive labour markets where trust and reliability are key to attracting and retaining talent.
For many employers, however, the challenge is not the understanding the obligation, but managing the financial and operational impact of it.
The Challenge: Managing EOSB Liabilities
EOSB is typically calculated based on an employee’s length of service and basic salary, with liabilities building over time.
While this may appear manageable in theory, in practice it can create significant pressure:
- Large, unexpected payouts if multiple employees leave at the same time
- Growing liabilities sitting on the balance sheet
- Cash flow strain, particularly for expanding businesses
- Increased risk if liabilities are not regularly monitored or provisioned
This has led many employers to move away from a purely reactive approach towards more structured and proactive solutions.
A Shift Towards Funded and Structured Solutions
Recent developments, such as the UAE’s Voluntary End of Service Benefits Savings Scheme introduced in 2023, reflect a broader shift in the region.
Employers are increasingly looking at ways to:
- Pre-fund EOSB liabilities over time
- Reduce exposure to large lump-sum payments
- Improve financial planning and predictability
- Enhance their overall employee benefits offering
Within this context, international pension and savings plans are becoming a practical solution, allowing employers to manage EOSB alongside wider employee benefit strategies.
What Employers Should Consider
When reviewing how to structure EOSB and employee benefits, there are several key factors to consider.
1. Managing and Pre-Funding EOSB Liabilities
For many employers, this is the starting point.
Pre-funding EOSB through a structured arrangement can help to:
- Spread costs over time rather than facing large one-off payments
- Improve cash flow management
- Reduce financial risk
- Benefit from investment growth, $ cost averaging and time.
- Ensure obligations to employees are consistently met
This approach can also provide greater visibility over liabilities as they build.
2. Supporting Employee Retention and Attraction
In a competitive GCC employment market, benefits play a key role in attracting and retaining talent.
While EOSB is a statutory requirement, additional structured savings or pension benefits can help employers:
- Differentiate themselves from competitors
- Attract skilled and specialist employees
- Encourage longer-term retention
Employers may also choose to enhance benefits for senior leadership or critical roles as part of a broader talent strategy.
3. Simplicity Across Multiple Countries
Similar to Sovereign many GCC-based businesses operate across multiple jurisdictions or employ internationally mobile staff.
Managing separate benefit structures in each location can be complex and inefficient.
An international plan can help by:
- Consolidating benefits into a single structure
- Providing consistency across regions
- Reducing administrative complexity
- Allowing employees to remain in the same plan when moving within the organisation in order to build their careers and provide the employer flexibility to move resources as a company grows.
- Gain economies of scale.
4. Flexibility to Support Different Employee Groups
Workforces in the GCC are often diverse, with varying roles, seniority levels and employment structures.
A flexible solution allows employers to:
- Offer different contribution levels based on role or seniority
- Provide additional benefits for key employees
- Enable voluntary savings options for the wider workforce
This ensures that benefits remain aligned with both employee needs and business priorities.
5. Ease of Administration
Administrative efficiency is essential, particularly for larger organisations.
A well-designed solution should:
- Be straightforward to implement
- Require minimal ongoing input from employers
- Allow employees to self-service online and manage their own details and investments
In many cases, employers only need to manage joiners, leavers and monthly contributions, keeping the ongoing time commitment low.
6. A Scalable, Long-Term Solution
As businesses grow, benefit structures should be able to evolve alongside them.
A single, adaptable plan can:
- Support expansion into new markets
- Accommodate changes in workforce size
- Allow adjustments to contribution structures over time
This avoids the need to introduce new schemes each time the business evolves.
7. Investment and Long-Term Savings Opportunities
Beyond EOSB, as people are staying in the region for longer, employees increasingly expect opportunities to build long-term financial security.
Providing access to international investment options allows employees to:
- Build savings over time
- Invest according to their risk profile
- Maintain savings even if they relocate
This can form an important part of a broader employee value proposition.
8. Financial Wellbeing and Employee Engagement
Ensuring employees understand and engage with their benefits is key to delivering value.
Access to educational resources and financial planning tools can help employees:
- Make informed financial decisions
- Better understand their long-term savings
- Feel more confident about their financial future
How Sovereign Supports GCC Employers
Sovereign’s international retirement and savings plan provides a structured way to manage EOSB liabilities while enhancing overall employee benefits.
Employers can choose to pre-fund EOSB through tailored arrangements, while also offering additional savings and pension benefits within the same plan.
This approach helps to reduce financial risk, improve cash flow planning and create a more competitive and sustainable benefits offering.
By taking a structured approach that combines liability management with broader employee benefits, employers can reduce risk, improve efficiency and strengthen their overall offering in an increasingly competitive market.
To speak to an expert about setting up an international pension and savings plan that works for your business contact Jo Smeed below.
