Employers who join the newly introduced alternative end-of-service benefits scheme but fail to pay subscription fees will face penalties and fines.

This optional scheme, initiated by the UAE’s Ministry of Human Resources and Emiratisation (MoHRE) and the Securities and Commodities Authority (SCA) this month, requires employers to register with the Ministry. They can then select employees, enroll them in the scheme, and cover the monthly subscription fee. According to Cabinet Resolution No. (96) of 2023 on an Alternative End-of-Service Benefits System, employers are to make monthly contributions to an investment fund, securing employees' entitlements upon the completion of their service from the allocated subscription amount.

However, if employers miss the payment deadline for the subscription, there are repercussions. The Ministry will withhold the issuance of new work permits and can take other administrative measures as per its regulations if an employer doesn’t pay the overdue subscription for two months.

The Resolution also specifies a penalty of Dh1,000 per beneficiary per month imposed by the Ministry on the employer if subscription amounts remain unpaid four months after the due date.

As per the Resolution, the fund manager must formally notify the employer in writing within 30 days after the payment date, specifying that the basic subscription is due within five business days.

The fund manager is also mandated to inform the Ministry within 15 days if the employer fails to pay the basic subscription after receiving the payment notification.