UAE firms now offering better end-of-service benefits

Organisations in the Middle East, including the UAE, are offering enhanced end of service benefits (ESB) to retain key talent.

This is according to a survey carried out by Towers Watson’s, human resource consulting firm. The study reveals that more companies are now offering enhancements, not just as standard company practices and as a result of intra-company transfers, but also to encourage key talent.

According to the findings, almost half (46 per cent) of participants indicated that enhanced ESBs (that is, ESBs in excess of the mandatory minimum) are available to some employees.  The most common reasons given for providing an enhancement are to retain key talent, or because it is industry best practice.

Other key reasons given were that enhanced benefits are local best practice or are offered due to competitive pressures. Compared to the 2013 survey, a greater number of organizations are expecting their employees to stay with them for longer — for 5 to 10 years on average.

“This year, by far the most popular way of enhancing ESBs is to offer a separate Defined Contribution (DC) pensions or savings plan. The number of respondents that offer a separate plan as an enhancement has increased compared to last year.  In the past, applying continuous service has been the most popular method of enhancement and it remains the second most popular this year.  This is a clear indication of a continued shift of emphasis towards retaining talent,” said Michael Brough, Towers Watson’s Middle East benefits specialist.

The proportion of companies offering a supplemental DC plan to all employees has increased from 34 to 48 per cent between 2010 and 2014, while other companies make a retirement or savings plan available only to certain employee groups.

The study also revealed that over 60 per cent of the organisations that provide enhanced ESBs do so for all their employees. Just over a third of respondents (37 per cent) provide enhanced ESBs for specific job categories only, such as local non-nationals and top management. Enhanced ESBs are most common in UAE, Qatar, Oman, Kuwait and Bahrain, while Egypt has also seen an increase.

Over 90 per cent of respondents provide enhanced ESBs if an employee is made redundant or their contract is terminated, while just over 70 per cent also enhanced ESBs on employee resignation. Approximately 84 per cent of respondents who provide enhanced ESBs also do so at retirement.

Close to 30 per cent of respondents indicated that they offer a retirement or long-term savings plan to their employees, half of which offer membership to all employees. The remaining offer membership of such plans to specific categories of employees, including top management, general management, professional as well as clerical and manual workers.

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