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Ensuring Compliance with the UAE’s New End-of-Service Benefits Scheme

The MoHRE and the SCA established an alternative programme for end-of-service benefits, in which companies and employees could participate.

The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) and the Securities and Commodities Authority (SCA) introduced an alternative scheme for end-of-service benefits, offering employers and employees the option to participate. 

Under the new scheme, employers must register and pay monthly to an investment fund.

Monthly Subscription Payments and Penalties:

Employers participating in the alternative end-of-service benefits scheme must pay a monthly subscription to an investment fund to ensure employees receive their entitlements upon completing their employment. 

Failure to make timely pay will result in penalties. If an employer neglects to pay the basic subscription amount for two consecutive months, the Ministry may halt the issuance of new work permits and take other administrative actions.

Administrative Actions by the Ministry:

In cases where employers fail to make overdue subscription payments for two months, the Ministry may take administrative actions by applicable regulations. 

This measure is designed to enforce compliance with the subscription requirements and ensure the timely fulfillment of end-of-service benefits.

Penalties for Delayed Payments:

The Cabinet Resolution outlines penalties for employers who do not pay subscription amounts promptly. The Ministry will impose a penalty of Dh1,000 per beneficiary per month if subscription amounts remain unpaid four months after the due date. 

These penalties aim to incentivize employers to adhere to the payment schedule and fulfill their financial obligations to employees participating in the alternative scheme.

Notification Requirements for Fund Managers:

The fund manager overseeing the alternative end-of-service benefits scheme must notify employers in writing 30 days before the payment due date. 

Additionally, the fund manager must promptly inform the Ministry of any non-payment of the basic subscription within 15 days of sending the payment notification.

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