A DFSA- or FSRA-approved defined-contribution workplace savings plan that replaces traditional end-of-service gratuity for employees in DIFC and ADGM — with monthly employer contributions calculated on basic salary and invested for the employee's benefit through approved master trustees.
A Qualifying Scheme is the DFSA-approved (for DIFC) or FSRA-approved (for ADGM) defined-contribution workplace savings plan that replaces traditional end-of-service gratuity for employees in the UAE's two financial free zones. Where MoHRE-jurisdiction employees accrue Article 51 gratuity as a long-running employer liability, DIFC and ADGM employees instead receive monthly employer contributions to an externally-managed savings plan that vests immediately and grows through investment returns. Understanding the qualifying-scheme framework is essential for any HR or finance team operating DIFC or ADGM entities.
**Why qualifying schemes exist.** The legacy gratuity model has well-documented limitations: employer liability grows as a balance-sheet provision over time; funding is unsecured (employees are unsecured creditors if the employer becomes insolvent); benefits are not portable across employers; and investment growth is captured by the employer rather than flowing to employees. Qualifying schemes address each of these by pre-funding contributions monthly into externally-administered funds, providing creditor protection through trust segregation, enabling portability across approved schemes, and giving employees direct exposure to investment returns.
**DIFC framework.** DIFC implemented the qualifying-scheme framework in February 2020, replacing traditional EOS gratuity for new and continuing DIFC employees. Every DIFC employer must enrol eligible employees in DEWS (the default DIFC Employee Workplace Savings plan) or an alternative DFSA-approved qualifying scheme. DEWS is administered by Equiom Master Trust with investment management originally through Zurich International, offering a curated set of investment funds across risk levels and including Sharia-compliant options. Alternative qualifying schemes can be proposed to the DFSA for approval — particularly relevant for international groups wanting to align with parent-company pension structures.
**ADGM framework.** ADGM operates a similar mandatory framework with FSRA-approved providers. The most commonly used ADGM scheme is Mercer Global Investment Manager (GIM), with other approved providers also available. Functionally similar to DEWS — employer monthly contributions, master-trust administration, employee fund choices, immediate vesting, portability — but operating under ADGM's regulatory regime.
**Contribution rates.** Both DIFC and ADGM qualifying schemes typically use rates calibrated to mirror the historical Article 51 gratuity accrual: 5.83% of basic salary per month for employees with up to 5 years of service (equivalent to 21 days of basic per year) and 8.33% per month for employees with 6+ years (equivalent to 30 days of basic per year). Some employers contribute above the statutory minimum as a benefits enhancement. Contributions are paid monthly through the corporate banking portal to the master trustee's collection account, with reconciliation back to the employee-level allocations.
**Vesting and portability.** A defining feature of qualifying schemes is immediate vesting — every contribution is unconditionally the employee's property from the moment it is paid. This contrasts with the legacy gratuity 12-month qualifying threshold. On separation, employees can withdraw the balance, transfer to another approved qualifying scheme (relevant if moving between DIFC and ADGM employers, or between DIFC employers using different schemes), or transfer to an internationally-recognised pension arrangement (subject to receiving-jurisdiction rules). Portability eliminates the 'gratuity reset' that plagued employees changing UAE jobs under the legacy framework.
**Investment options.** Qualifying schemes offer curated investment fund options covering different risk levels — capital-preservation funds for employees nearing withdrawal, balanced funds for typical employees, growth-oriented equity funds for younger employees with longer time horizons. Sharia-compliant fund options are typically available alongside conventional options. Employees can change fund allocations periodically (typically quarterly or annually) within the scheme's framework. The investment risk and return belong to the employee — the employer is not liable for fund performance.
**Master trust structure.** Qualifying scheme funds flow into a master trust administered by an approved trustee. The trust structure provides genuine creditor protection: the funds are segregated from both the employer's general assets and the trustee's general assets. If the employer becomes insolvent, the qualifying-scheme balance is protected from creditor claims. If the trustee becomes insolvent, the trust assets are protected from the trustee's creditors. This is materially better than the unsecured-creditor position employees occupied under the legacy gratuity framework.
**Transition from legacy gratuity.** DIFC employees employed before February 2020 typically have a hybrid arrangement: pre-2020 service generates legacy gratuity (paid out at separation in lump sum) and post-2020 service generates DEWS or alternative qualifying-scheme contributions. The all-in end-of-service benefit is the legacy gratuity for pre-2020 years plus the accumulated qualifying-scheme balance for post-2020 years. Some employers chose to convert pre-2020 accrued gratuity into an opening qualifying-scheme contribution at the transition, simplifying ongoing administration; this was permitted but not required.
**Tax treatment.** DIFC and ADGM both have no personal income tax, so qualifying-scheme contributions and withdrawals are not subject to local tax. Employer contributions are deductible business expenses under the new UAE corporate tax framework. International tax treatment depends on the employee's tax residency at the time of withdrawal — employees moving to home countries should consider local tax rules on pension transfers.
**Reporting and audit.** Employers must (1) submit monthly contribution data to the qualifying-scheme administrator, (2) issue annual statements to employees showing contribution history and current balance, (3) maintain accurate salary data so contributions are calculated correctly, (4) update the scheme on salary changes, transfers, or departures, (5) cooperate with employee withdrawal or transfer requests on separation, (6) include qualifying-scheme contributions in financial-statement disclosures and audit working papers. The scheme administrators handle the investment-side reporting (fund values, returns, allocations) so the employer's burden is primarily contribution accuracy and timeliness.
**Common compliance traps.** First, treating the qualifying-scheme as optional — it's mandatory for DIFC and ADGM employees with limited exceptions. Second, accruing both qualifying-scheme contributions and Article 51 gratuity for the same employee — incorrect; the qualifying scheme replaces gratuity for DIFC/ADGM service. Third, missing monthly contribution deadlines, triggering DFSA/FSRA enforcement and possible employee labour-court claims. Fourth, calculating contributions on inconsistent basic-salary figures (e.g., contract basic vs payslip basic). Fifth, failing to update the scheme when salaries change, leading to systematic under-contribution.
**Automation through Peoplifi.** Peoplifi calculates qualifying-scheme contributions per DIFC or ADGM employee on the correct basic-salary base, applies the 5.83%/8.33% tier transition automatically at the 5-year service mark, generates monthly contribution files in the format required by the master trustee, integrates with provider portals where API access is available, supports hybrid pre-2020/post-2020 service tracking for long-tenured DIFC staff, and produces audit-ready records for DIFC Authority and ADGM Registration Authority inspections.
Our DIFC office uses DEWS as the qualifying scheme, contributing 8.33% of basic on each employee with 6+ years of service.
Peoplifi handles UAE payroll (WPS, end-of-service gratuity, Emiratisation, GPSSA), ZKTeco / Suprema biometric attendance, and IBFT bank-sheet export in one platform — so concepts like Qualifying Scheme (DIFC / ADGM) stay handled, not stuck in spreadsheets.
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