UAE employers face penalties for delayed pension payments to GCC nationals

The General Pension and Social Security Authority (GPSSA) has warned private sector employers that additional fines will be imposed on employers, companies, and private institutions if they continue to delay the payment of due contributions for their Gulf national employees.

In a media statement issued today, the GPSSA urged employers to comply with the timely payment of contributions for GCC nationals working in the UAE, who are covered under the Unified System for Extending Insurance Protection. This system ensures that civilian citizens from GCC countries working in any member state receive the same insurance coverage available to citizens in their home country.

The Authority clarified that, starting from July 2025, additional fines will be imposed on employers who delay contributions for their GCC employees working in the UAE. These penalties will be applied in accordance with the timelines stipulated by the federal pension laws in the UAE. The fines are considered the rightful dues of the pension authority in the employee’s home country.

According to the Pension and Social Security Law, contribution payments are due from the first day of the month following the month for which they are owed, and may be paid up until the 15th of that month. For example, contributions for July 2025 may be paid between August 1 and August 15, 2025. In case of delay, a fine of 0.1% per day will be imposed starting from the 16th of the month, without the need for a prior warning or notification.

Implementation of a GCC decision

This decision comes in implementation of Article (12) of the Unified Insurance Protection System, and in line with the outcomes of the 23rd meeting of the Committee of Heads of Civil Retirement and Social Insurance Authorities in the GCC. The outcomes require the pension authority in the country of employment to follow up with employers who delay contributions and take legal action to collect the dues and any additional amounts resulting from the delay, on behalf of the pension authority in the employee’s home country.

The system is mandatory, requiring employers in both the public and private sectors to register their GCC national employees and pay their contributions in accordance with the insurance system of the employee’s home country. The employer is obligated to pay an amount not exceeding the contribution share applicable in the UAE, while the Gulf national employee is responsible for any difference in contribution, if applicable.

It is worth noting that the system was established under Cabinet Resolution No. 18 of 2007, which regulates the extension of insurance protection to GCC nationals working outside their home countries in any of the GCC states. The GPSSA is the supervising authority responsible for implementing this system in the UAE.

Employers obligations 

According to the aforementioned law, the Extension of Social Insurance Coverage System applies to citizens of the Gulf Cooperation Council (GCC) countries who are employed outside their home countries in any of the GCC member states. Under this system, employers in the United Arab Emirates are required to register and make mandatory contributions on behalf of GCC nationals working for them, in accordance with the social insurance regulations applicable in the employees’ respective home countries. Employers are responsible for paying the contributions due on behalf of these employees, up to the amount equivalent to the employer’s share for UAE nationals. Any difference in contribution amounts, if applicable, shall be borne by the GCC employee.

Employers are also obligated to provide end-of-service benefits to GCC employees for periods of employment prior to the implementation of the Extension of Social Insurance Coverage System, in accordance with applicable civil service regulations or labor laws. This obligation does not affect any additional rights or benefits granted under other systems binding on the employer. It should be noted that insured individuals or contributors from GCC countries working in the UAE are subject to the retirement and social insurance systems of their respective home countries with regard to post-service benefits.