How popular are workplace savings schemes in the GCC?
Workplace savings schemes aren’t very prevalent in the GCC for expatriate workers. While there are existing labour laws that require employers to pay an end-of-service-gratuity to employees, as companies are not legally obliged to provide this in the form of a pension or workplace savings scheme, a large number of them choose not to put one in place.
How exactly do they work and how do they benefit businesses?
In many countries in the GCC, it is mandatory for companies to pay employees an end of service gratuity when they leave employment. This is therefore an ongoing liability for employers, and companies are required to account for this in their books. In a 2019 survey done by Willis Towers Watson, 96 per cent of respondents indicated that they account for end of service benefits (EoSBs) in local books.
However, since there is no legal obligation to fund this liability, a majority (88 per cent) of the organisations indicated that they do not set money aside to pay for EoSBs but settle employees’ benefits as they become due from company assets. This approach can result in:
1. The company being exposed to an unfunded, open-ended liability
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