Today's Edition
SAMI ABDEL RAOUF (DUBAI) - The Ministry of Human Resources and Emiratisation (MoHRE) allows for the acceptance of other voluntary subscriptions in the alternative savings system for end-of-service rewards, including natural persons for investment purposes, such as independent business owners and those with a freelance work permit.
It also includes non-citizen employees working in governmental bodies, institutions, and their affiliated establishments and companies, as well as citizens working in the government and private sectors, with the employer continuing to pay contributions for those citizens in the General Pension and Social Security Authority (GPSSA), according to the current state legislation.
The Ministry announced that the minimum duration of employer participation in the system must be at least one year, and the Ministry and the Securities and Commodities Authority (SCA) may extend that period to ensure the system’s success. The alternative savings system for end-of-service rewards is an optional system for the employer; however, it is mandatory for the workforce selected by the employer to participate in the system.
The Ministry announced that if a beneficiary moves from the current employer to a new one, the new employer may replace the previous one in completing the payment of the basic subscription in the alternative system. The SCA is responsible for licensing investment fund service providers, according to the standards and obligations the MoHRE has approved for them to practise their activities.
The regulatory authorities of the financial free zones in the country are responsible for establishing and approving the provisions of the alternative system to the end-of-service reward system that applies to establishments within their jurisdiction, and they must obtain the approval of the MoHRE and the SCA.
The Ministry emphasised the prohibition of withdrawing the basic subscription amount, profits, and returns earned on it in the alternative system before the termination of the employment relationship between the employer and the beneficiary.
However, the employer has the right to recover the basic subscription amounts paid due to judicial execution procedures, or imposed sequestration, liquidation, or bankruptcy.
The passage you provided discusses the optional nature of a new end-of-service benefit savings system for employees in the private sector in the UAE, as well as procedures for enrollment and transfer of funds within the system. Enrolment in the system is done through the employer submitting a subscription request to the Ministry, choosing one of the licenced investment funds, and paying the subscription for the workforce it wishes to register in the system, with the possibility of retaining their entitlements for the previous period in accordance with the labour relations regulation law.
Skilled labour can increase the end-of-service gratuity if the skilled worker chooses investment portfolios with a high return, or through paying an additional subscription if the citizen or resident worker wishes to subscribe voluntarily.
The employer has to choose the investment fund and sign the institution’s subscription contract in the system with the determination of the administrative services broker, then engage and register the institution’s employees in the system with the administrative services broker, in addition to opening a savings account for the beneficiaries.
The employer must transfer the voluntary or additional monthly subscription deducted from the beneficiary’s wage according to their wishes, while for the beneficiary employee, the additional subscription is transferred in a lump sum directly to the system.
The disbursement of the worker’s legal entitlements, in the event of termination of the contractual relationship, through the procedures of cancelling the work permit in the MoHRE, the worker is given the choice of either receiving the financial entitlements or continuing the investment in the system.
