More companies in the Middle East are providing <a href="https://www.thenationalnews.com/business/money/2021/09/25/are-end-of-service-benefits-based-on-an-employees-current-salary/" target="_blank">end-of-service benefits</a> (ESB) to employees as countries move to make the gratuity payment model mandatory, according to a new survey by global advisory company WTW and professional services provider Equiom. About 78 per cent of companies polled in the survey now pay ESB to staff, saying it was required by law in their countries of operation. Companies that do not yet provide ESB said it was either not mandatory or they provided <a href="https://www.thenationalnews.com/business/money/2022/06/13/dubai-governments-pension-plan-for-foreign-workers-to-begin-on-july-1/" target="_blank">retirement and savings </a>benefits in lieu of the payment. “Ninety per cent of companies <a href="https://www.thenationalnews.com/business/money/2021/08/07/will-my-end-of-service-benefits-include-pay-for-my-notice-period/" target="_blank">provide employees with ESB upon termination</a>, while 10 per cent said they provide the benefit at more frequent intervals, for instance, annually,” WTW said. The survey polled 121 multinational and domestic organisations in the oil and gas, banking and finance, manufacturing, and pharmaceuticals sectors. <a href="https://www.thenationalnews.com/business/money/2022/01/23/can-i-enforce-a-court-order-against-my-former-employer-for-unpaid-benefits/" target="_blank">End-of-service gratuities</a> are lump-sum payments that all employed residents are entitled to after completing at least one year of service. Gratuity payments are covered by <a href="https://www.thenationalnews.com/uae/2022/01/30/uae-labour-laws-all-you-need-to-know-about-the-changes-in-february/">UAE labour law</a> and the sum depends on an employee’s length of service and basic salary. Sheikh Hamdan bin Mohammed, Crown Prince of Dubai, launched a <a href="https://www.thenationalnews.com/uae/government/2022/03/02/sheikh-hamdan-announces-new-end-of-service-savings-fund-for-foreign-employees/">new savings pension plan</a> for non-Emirati employees working in the Dubai government, which took effect on July 1, with the scope of expanding it into the private sector at a later date. Foreign employees working in Dubai’s public sector are enrolled in the pension scheme by default. The employer will contribute the total end-of-service gratuity to the plan from the date of joining, without including the financial dues for previous years of service. On average, 45 per cent of companies in the Middle East expect employees to stay for five to 10 years, while 23 per cent expect them to stay for 10 years or longer, the WTW survey found. “The implications of longer expected future service combined with higher inflation and rising salary costs is likely to signify a sharp increase in future ESB liabilities,” according to WTW. About 66 per cent of companies in the region provide enhanced ESB to all employees, WTW said. A minority of companies only offer enhanced ESB to specific categories of employees, such as local non-nationals, international assignees and top management. Forty-seven per cent of companies cited “industry best practice” as the most common reason for enhancing benefits this year, followed by 44 per cent that chose “retention of key talent” and 38 per cent that highlighted “local best practice”. Companies provide enhanced ESB in a variety of situations: 84 per cent offer it when an employee retires, 81 per cent when staff are made redundant or when a worker dies, 63 per cent for resignations and 44 per cent during termination, the survey said. Companies that provide enhanced ESB through the defined benefit formula most commonly use an employee’s length of service to determine the pay out, according to the survey. Other factors include job grade, equalisation of benefits between countries and early retirement. Offering a separate defined contribution (DC) pension or long-term savings plan remains the most popular way of enhancing ESB. About 24 per cent of companies in the region offer a DC retirement or long-term savings plan to their employees. Long-term savings or retirement plans are most frequently offered in Egypt, Qatar, Kuwait, the UAE and Turkey, according to WTW. The Dubai International Financial Centre was the first entity in the UAE to set up a new gratuity system when it introduced the <a href="https://www.thenationalnews.com/business/money/difc-employees-confident-of-receiving-gratuity-after-signing-up-for-dews-savings-plan-1.1236290">DIFC Employee Workplace Savings (Dews) plan</a> in February 2020, offering ESB to people working within the financial centre. The scheme allows participants to choose a plan that is in line with the type of investment risk they are willing to take.