This is a Workplace Savings Plan that is implemented in line with UAE’s new labor law. The scheme helps employers transition from the Defined Benefits (cash payment at the end of employment) to a more sustainable Defined Contribution (monthly payments to a separate gratuity fund).
Under the new labor law effective on 2nd of February 2022, employers are required to pay the gratuity amount to the departing employee within 14 days of leaving or risk paying a fine up to AED 1 million. This puts a lot of pressure on company’s cash flow. FinFlx makes it easier for employers to forecast and cover this liability on monthly basis during the employee’s tenure of service.
The new labor law also allows employers to utilize approved schemes (such as FinFlx) as an alternative to the existing gratuity model. FinFlx makes that transition smooth for both employers and employees.
The short answer is BOTH. Our mission at FinFlx is to enable the growth of the SME sector, we do so by offering 2 consistent models to help every business transition into full compliance with labor laws. Businesses can choose to cover their future gratuity liability by making monthly contribution to the gratuity fund. Or, they can choose to cover both the existing (Already accrued gratuity) plus the future ones. This is facilitated by a smart simulation analysis offered to all our clients to help them offset their existing gratuity liability in a way that maintains a healthy cash flow to for the business.
Employers who enroll in the Gratuity Scheme, will make monthly transfers to a segregated and audited Client Money Account. This account is separated from FinFlx’s own operation accounts and is fully compliant under “client money” rules. Contributions are then utilized in savings scheme in line with each client’s explicit will. FinFlx offers multiple savings schemes with multiple risk profiles including a capital protection scheme where the principal amount is guaranteed.