UAE pension rules clarified as 24% miss out on payment benefits
The UAE’s pension rules say hundreds of workers – up to 24% – are missing out on pension payments because of the employment regulations.
The UAE’s General Pension and Social Security Authority (GPSSA), a total of 1,461 out of 6,138 eligible Emiratis were not entitled to receive their end-of-service benefits due to terminating their employment contracts in less than one year.
Insured Emiratis must complete a minimum 11 months and one day in their jobs, given that the one day is considered ‘a month’ as per the UAE law, to be entitled to receive their end-of-service payment.
The pension authority explained that the longer the employment duration, the more benefits for an insured individual accrue. It said that the salary by which a bonus is calculated is the salary of the pension account itself, where insured individuals receive a 1.5 salary for each of the first five years of service, a two months’ salary for each of the following five years of service and three month’s salary for each of the next five years of service.
During this period, insured people receive all their insurance rights. For example, the maximum pension of 100% is granted to individuals exposed to a work-related disability or in case the insured passes away, which is exactly what an insured individual who worked and contributed for 35 years receives.
Additionally, insured Emiratis may choose to add employment periods when shifting entities.
The GPSSA called on all their new, current and previous members to verify their registration and contribution payments from the moment they are recruited into an organisation.
Warning over non-payment of contributions
The pension authority is also warning that UAE private sector employers that do not pay monthly contributions or provide incorrect data for their Emirati employees risk incurring penalties or even a prison sentence.
The GPSSA announced that charging an insured person with a percentage greater than the due contribution or failing to pay expenses, would result in a fine of AED5,000 for each insured person.
A court ruling is immediately taken to oblige entities to return excess amounts to their insured employees.
In a statement it said: “Employers are fined for every Emirati employee not registered with the GPSSA and bear the responsibility of contributing on his/her behalf retroactively and paying the due contributions as per the employee’s start date.”
Pension law states that monthly pension contributions are not refundable, so any delay in paying contributions beyond the specified dates results in mandating the company/entity owner to pay an additional amount at the rate of 0.1% of the contributions due for each delayed day and without the need to send a warning.
An additional 10% is charged from the value of due contributions on entities that pay contribution amounts based on an incorrect salary to avoid paying contributions at a higher rate or to those who fail to pay due contributions for some or all of their employees.
Employers risk imprisonment and a fine of not more than AED5,000 for each employee if the entity sends incorrect data or refrains from providing information on all practices that are considered illegal.
Abu Dhabi workers get their dues
The Abu Dhabi Labour Court successfully helped 14,777 workers to receive dues worth AED317m ($86.3m) from their employers in 2022.
About 8,560 workers were involved in collective litigation for a total of AED125m ($34m), and 6,217 workers engaged in individual cases for dues worth AED192m ($52.3m).
The court affirmed that it is paying special attention to the speedy settlement of labour cases and facilitating the payment of the dues owed to workers, in accordance with the directives from the Abu Dhabi Judicial Department (ADJD).
The Labour Court also noted that the procedures adopted, in coordination with the concerned authorities, facilitates speedy resolution of the disputes in a record time, and ensure that all parties obtain their rights as per the labour laws of the UAE that safeguard and protect the rights of workers through a pioneering judicial system that ensures justice.
Moreover, the Labour Court praised the cooperation between the strategic partners in providing services to help workers meet their basic needs during the litigation, as well as the “outstanding efforts” of the Ministry of Human Resources and Emiratisation in addressing the grievances of workers who wish to work for other companies in the UAE.
