UAE firms face penalties, permit suspensions for delayed contributions to ‘Voluntary Savings Scheme’

Abu Dhabi: The Ministry of Human Resources and Emiratisation (MOHRE) has reiterated that employers are required to pay the basic contribution amounts for all employees registered in the Voluntary Savings Scheme on a monthly basis. The Ministry also outlined four progressive measures that will be applied in cases of non-payment.

According to MOHRE's official website, if an employer fails to make the required payment, the system will issue an electronic written warning within 30 days of the due date, instructing the employer to pay the contribution within five working days of receiving the notice. If the employer does not comply within 15 days of the warning, the Fund Manager will notify MOHRE of the violation.

MOHRE explained that if the contribution remains unpaid for two months, the issuance of new work permits to the employer will be suspended until all dues are settled or alternative administrative measures are taken, in accordance with applicable regulations. After four months of non-payment, an administrative fine of Dh1,000 per month per employee will be imposed.

The Ministry further clarified that employers enrolling in the Voluntary Savings Scheme must designate a number or category of employees, register their details through an administrative services intermediary, and commit to paying the basic contributions without deducting them from employee salaries.

Employers must transfer monthly contributions to the Investment Fund’s account within 15 days from the start of each Gregorian month.

Employers may request to withdraw from the scheme after one year of participation, subject to MOHRE approval and the following conditions:

If withdrawal is approved, employers cannot reclaim the contributed amounts. Employees retain the right to withdraw their entitlements upon termination or continue investing in the fund without further contributions. Post-withdrawal, end-of-service benefits will revert to the method outlined in the Labour Law and its executive regulations.

The Voluntary Savings Scheme serves as an alternative to the traditional end-of-service gratuity system. Under the scheme, employers contribute monthly to an Investment Fund. Upon termination of employment, employees receive their basic contributions along with accrued investment returns, replacing the traditional gratuity payout.

MOHRE has encouraged private companies to participate in the scheme, citing its advantages, including the ability to grow end-of-service funds through investment. The scheme currently utilizes four approved funds: First Abu Dhabi Bank Fund, Lunate Fund, Daman Investment Fund, and National Bonds Fund.