Understanding the issues that surround the EOSB system and its future evolution is of vast importance to all employers in the region.
It has been estimated that the combined EOSB liability of employers in the UAE alone exceeds $4 billion.
Most expatriate employees in the GCC receive a one-off lump sum payment in the form of EOSB or gratuity as opposed to the occupational pension schemes of many other countries," Nigel Sillitoe, chief executive officer, Insight Discovery, said.
Balance sheets could be "adversely" affected if large EOSB payments are not allocated and planned properly, particularly in situations such as high numbers of employees departing at the same time, it said.
It found that EOSB payments and allocations are seen to be used by many companies for other business purposes and not to safeguard the employees' legal entitlement.
The EOSB system may be looked upon by some as the GCC version of pension schemes in other countries, but it lacks the sophistication and transparency of provident and pension programmes of other countries, and more needs to be done in this context, the report added.
The customer has signed a waiver as well to use his EOSB
in case if he resigns, goes delinquent or defaults on his payment while availing the loan from UAB.
We expect a shift in the retirement ages of GCC nationals and changes to be made to the EOSB
schemes to make them more relevant to the actual retirement needs of expats.
Balance sheets could be adversely affected if large EOSB payments are not allocated and planned properly, particularly in situations such as high numbers of employees departing at the same time;
EOSB payments and allocations are seen to be used by many companies for other business purposes, and not to safeguard the employees legal entitlement;
In spite of EOSB being legally binding, increasingly the number of issues and problems are rising and more legal cases are seen to be filed;
The dangers of this system became apparent during the recent economic slowdown, when some companies in the region faced financial difficulties and were unable to pay EOSBs