Penalty for employer failing to pay a subscription fee for the alternative scheme for end-of-service benefits

Once they have enrolled in the recently introduced alternative plan for end-of-service benefits, employers will be liable to penalties and fines for failing to pay subscription costs. The UAE's Ministry of Human Resources and Emiratization (MoHRE) and the Securities and Commodities Authority (SCA) introduced the optional plan earlier this month, requesting that employers register with the Ministry. Employers have the option to select workers, register them with the programme, and cover the monthly membership cost.

Employers will contribute a monthly amount to an investment fund by Cabinet Resolution No. (96) of 2023 Regarding an Alternative End-of-Service Benefits System. This will allow beneficiaries to receive their entitlement from the basic subscription amount allotted to them upon completion of their employment.

However, the employer will be subject to fines if it doesn't pay the basic subscription by the deadline. Furthermore, the Cabinet Resolution stipulated that the Ministry would impose a penalty of Dh1,000 per beneficiary each month on the employer if the subscription amounts were not paid within 4 months of the employer's failure to pay them.

The fund management will have to give written notice to the employer within 30 days of the payment date under the Cabinet Resolution, requiring the employer to pay the basic subscription five business days after the notice is received. lIf the basic subscription is not paid within 15 days of the payment notification being sent; the fund manager is also required to alert the Ministry.