DEWS is here, is your company compliant?
By: Daniel Mackay
In 2019, the Dubai International Financial Centre (DIFC) started the transition on replacing the current end of service gratuity (EOSG) to a new scheme called the DIFC Employee Workplace Savings (DEWS). The aim is to reform the existing scheme to a model that can compete with global best practices and to augment UAE’s drive in becoming a global stage for attracting and retaining talented workforce.
By August of the same year, DIFC appointed a Master trustee, a Plan Administrator and an Investment adviser to oversee the DEWS Plan.
Employers are allowed to use a 3rd party scheme provided that it offers a DIFC qualified and accredited alternative scheme. The alternative scheme should meet the stringent requirement, including providing employees with the same level of contributions as DEWS and obtaining a “Certificate of Compliance” from DIFC. Failure to participate in DEWS will result in financial penalties.
The program will take effect by February 1, 2020, placing all existing defined benefit arrangement on halt and contributors commencing to the trust scheme.
Changes will allow employers to clearly identify their liabilities to employees and relieve them through the chosen system and allow these payments to be made throughout the year rather than a lump sum upon termination of employment, which in turn brings cash flow benefits brings. It is a big step, as organizations now have to change their provision models from a provision-based system to actual cash accruals and have to offer employees greater certainty that they will receive their entitlements at the end of their employment.
If you would like to discuss any aspects of DEWS and/or require any assistance with compliance, we’d love to hear from you. Call Daniel Mackay, Head of Business Development at: Daniel.firstname.lastname@example.org or 04 295 8770.