UAE End-of-Service Scheme: No new Work Permits, Dh1,000 Fine for Non-Payment
The newly launched alternative scheme for end-of-service benefits in the UAE comes with a clear message: non-payment of subscription fees by employers will lead to penalties and fines. Let's delve into the details of this important development.
A voluntary scheme
The Securities and Commodities Authority (SCA) and the Ministry of Human Resources and Emiratization (MoHRE) of the UAE introduced the scheme, which is optional for both employers and employees. It allows employers to register with the Ministry, choose their employees, and pay the monthly subscription fee as part of the alternative scheme for end-of-service benefits.
The Importance of Timely Payments
A monthly contribution from enterprises is required by Cabinet Resolution No. (96) of 2023 Concerning an Alternative End-of-Service Benefits System. The intention here is to ensure that persons who are due benefits receive them upon the termination of their employment, making use of the initial subscription amount that was established.
Consequences of Delayed Payments
However, the resolution makes it clear that delayed payments by employers will result in penalties. If an employer fails to make a payment of the overdue subscription amount for a period of two months, the Ministry will take actions such as ceasing the issuance of new work permits and may implement other administrative measures in line with applicable regulations.
Penalties for Extended Non-Payment
Employers who still haven't paid their subscriptions four months after the due date face the penalties outlined in the resolution. A monthly fine of Dh1,000 per recipient is levied in such circumstances by the Ministry.
The fund manager plays a vital role in this process. The Cabinet Resolution mandates that the fund manager must inform the employer in writing within 30 days of the payment due date. Employers will then have five business days to make the basic subscription payment after receiving this notification.
Furthermore, the fund manager is obligated to inform the Ministry of any non-payment of the basic subscription within 15 days of sending the payment notification. This ensures transparency and timely enforcement of penalties if necessary.
This scheme is a significant step toward ensuring that employees receive their end-of-service benefits as promised. It also serves as a reminder to employers about the importance of fulfilling their financial obligations within the specified timeframes.