UAE's End-of-Service Benefits Scheme: Employers Face Penalties for Non-Payment of Subscription Fees

Penalties and fines will be imposed if the employer fails to pay a subscription fee for the alternative scheme for end-of-service benefits

Employers will be subject to penalties and fines for non-payment of subscription fees after they have joined the newly-launched alternative scheme for end-of-service benefits.

The scheme, which is optional for employers and employees, was launched by the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) and the Securities and Commodities Authority (SCA) earlier this month, asking employers to register with the Ministry. The employers can choose employees, register them with the scheme and pay the monthly subscription fee.

Under the Cabinet Resolution No. (96) of 2023 Regarding an Alternative End-of-Service Benefits System, employers will pay a monthly subscription to an investment fund for the purpose of enabling beneficiaries to receive their entitlement upon completion of their employment from the basic subscription amount allocated to them.

However, if the employer fails to make the basic subscription payment by the due date, it will face certain penalties.

“If an employer fails to make a payment of the overdue subscription amount for a period of 2 months, the Ministry will cease issuing new work permits and may take other administrative actions in accordance with its applicable regulations,”

it said.

In addition, the Cabinet Resolution pointed out a penalty of Dh1,000 per beneficiary per month by the Ministry on the employer if the subscription amounts are not paid after 4 months from the date the employer failed to pay the subscription amounts.

Under the Cabinet Resolution, the fund manager must notify the employer in writing within 30 days of the payment date that he/she will be required to pay the basic subscription 5 business days after receiving the notification.

The fund manager shall also notify the Ministry of any non-payment of the basic subscription within 15 days of sending the payment notification.