MoHRE Warns Companies: Non-Payment of Voluntary Savings Contributions to Face Legal Action
Abu Dhabi: The Ministry of Human Resources and Emiratisation (MoHRE) has issued a stern warning to companies that fail to pay the monthly contributions for employees enrolled in the Voluntary Savings System. Employers who neglect these payments will face gradual disciplinary actions, ultimately leading to the suspension of new work permits and hefty fines.
Four-Stage Enforcement Process
To ensure compliance, MoHRE has outlined a four-step penalty system for defaulters:
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Electronic Warning: If an employer misses a payment, they will receive an electronic warning within 30 days. They must clear the due amount within five business days of receiving the notice.
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Notification to MoHRE: If the employer fails to pay within 15 days after the warning, the fund manager will formally report the case to MoHRE for further action.
- Work permit suspension: If the company does not pay for two months, it will not be able to obtain new work permits until all outstanding debts are paid.
- Financial penalty: MoHRE will impose a Dh1,000 fine on each employee registered in the savings scheme following four months of non-payment.
- These measures are aimed at ensuring that workers receive the benefits they are entitled to under the scheme and to enforce business accountability.
Employers’ obligations in the voluntary savings scheme
When businesses register workers in the voluntary savings scheme, they:
It is recommended that employees be classified and included in the investment fund through an approved management service provider.
- Make sure the employer pays the entire contribution amount without deducting anything from the paychecks of the employees.
- Within 15 days of the beginning of each calendar month, transfer the monthly contributions.
The choice to leave the scheme - Although joining the Voluntary Savings System requires a long-term commitment, MoHRE permits enterprises to leave the program after a year, if they are approved.
The company must have been subscribed for at least one year, except in exceptional cases approved by the Minister of Human Resources and Emiratisation.
- The employer must have no outstanding fines or unresolved labor disputes.
- A credit report proving the company’s financial solvency to cover end-of-service benefits must be provided.
- The withdrawal should not negatively impact employees’ rights.
No Refunds Upon Withdrawal
If MoHRE approves a company’s withdrawal from the system, the employer will not receive any refund on contributions already paid. However, employees will have the choice to withdraw their savings when they leave the company or continue their investment without further contributions.
For employees who remain with the company, end-of-service benefits will be calculated based on UAE labor laws and its executive regulations.
Ensuring Compliance and Financial Security
MoHRE seeks to ensure that firms meet their obligations while safeguarding the financial security of employees by enforcing stringent enforcement procedures. In accordance with UAE rules, companies are encouraged to follow the standards in order to boost employee savings and end-of-service benefits and to avoid penalties.