The UAE Ministry of Human Resources and Emiratisation (MOHRE) is putting the screws on firms late with payments to the Voluntary End-of-Service Savings Scheme, implementing a four-stage gradual penalty system that would eventually freeze wrongdoers’ power to appoint new employees. This is the government’s most severe enforcement move to safeguard employees’ gratuity entitlements.
The penalty escalator starts with:
1️⃣ First offense: Official warning
2️⃣ Second delay: Financial penalties (reportedly beginning at AED 5,000 per case)
3️⃣ Repeat violations: Public naming of non-compliant firms
4️⃣ Chronic offenders: Suspension of new work permits
The program, operated by Dubai Insurance Company and ADNIC enables workers to increase their end-of-service benefits by Sharia-compliant investments. Employers’ participation is optional, yet the ones who choose to do so are subject to strict payment schedules or suffer penalties.
Industry Impact:
– Construction and hospitality companies worst hit
– SMEs encouraged to automate payroll integrations
– 78% of UAE workers now covered by either mandatory or voluntary schemes
What’s Next:
MOHRE targets quarterly compliance checks, with the first wave falling on firms employing 500+ staff. Pundits think the fines might encourage more firms to sign up for the mandatory unemployment insurance scheme as an additional cover layer.
