An end-of-service benefit (EOSB) scheme run by Emirates Airline has been singled out as a good model for all companies that are required to pay such benefits to employees.
A report from the research firm Insight Discovery highlights the carrier's scheme as it warns GCC employers about the burden of mounting employee gratuity bills.
Under UAE law, an end-of-service gratuity is calculated on basic salary for 21 days per annum for the first five years of service and then 30 days' basic salary per annum for each year of service beyond five years of service.
But Emirates has a different scheme for senior workers, called Provident, that operates more like a western company's pension plan.
Under the Provident scheme, which started in 1991, Emirates contributes 12 per cent of an employee's basic salary and the employee must contribute 5 per cent, which is then invested - just as with a pension scheme.
Senior workers are entitled to either the Provident scheme or EOSB, whichever is higher.
If the sum accumulated in the Provident scheme is less than the EOSB entitlement, "perhaps as the result of bad investment performance, Emirates will pay the EOSB", Robert Boston, a manager of human resources at Emirates Group, said in the report.
The Provident scheme, meanwhile, part-finances Emirates' EOSB obligations.
"I believe it has helped with the retention of staff, although there are certain areas where we probably need to further educate people," Mr Boston said.
The Emirates Provident scheme "is transparent and its assets are ring-fenced from those of the company via an offshore trust structure", said Nigel Sillitoe, chief executive at Insight Discovery.
