Navigating the UAE's Anti-Discrimination Law: Key Changes and Implications
Breaking Down Law No. 57 of 2023: A Comprehensive Overview of the UAE's Social Security Reforms
Market Insight 10 January 2024 10 January 2024
Employment, Pensions & Immigration
Published on 31 October 2023, and effective immediately, Law No. 57 of 2023 marks a transformative milestone in the UAE's social security landscape. The legislation introduces sweeping changes, bolstering the rights and benefits of insured individuals, refining contribution processes, and fortifying the nation's social security framework.
Application of the Law
- Commencement and Scope: The law, in force since its publication, is applicable to UAE national individuals commencing employment and registered with the General Pensions and Social Security Authority (GPSSA) for the first. Notably, it excludes UAE nationals covered by the 1999 Pensions Law, pensioners under the same law, and those who have received end-of-service gratuity under the 1999 Pensions Law.
- Transition for Existing Emiratis: For UAE nationals already employed and registered for pension purposes under the GPSSA, the 1999 Pensions Law remains operative, except for specific amendments introduced by the 2023 Pensions Law.
- Commencement and Rates: Contributions under the new law commence from 1 January 2024, with no late payment penalties until the end of 2023. Insured individuals must be between 18 and 60 years old and medically fit. Monthly contributions include 11% month from the insured and 15% from the employer (26% in total). Private sector employers receive a 2.5% subsidy for nationals earning less than AED 20,000.
- Contributable Salary: Determined differently for the government and private sectors, the contributable salary is the basis for calculating contributions. The government sector includes basic salary, bonuses, and allowances up to AED 100,000. For the private sector, it is the wage specified in the employment contract calculated on the month of January each year (or the month employment commences if different for the first year), subject to a minimum of AED 3,000 and a maximum of AED 70,000.
- Contribution Period: The calculation considers various periods, including service, leaves, and insured periods, excluding periods of suspension without pay.
Obligations of Employers
- Registration and Reporting: Employers are obligated to register employees within one month of employment and report terminations to the GPSSA within 15 days. Delays incur penalties.
- Statement and Document Submission: Employers must provide accurate statements and documents to the GPSSA within 10 days of a request, with penalties for delays.
- Timely Contributions: Employers are required to make accurate contributions based on the actual salary of the employee. Contributions are payable on the first of each month following the month for which they are due.
- Criteria for Pension: Pension entitlement includes death, total disability, reaching pension age (with a minimum contribution period of 15 years), dismissal by disciplinary decision (with a contribution period of 30 years and reaching age 55), and specific cases of end of service.
- Nominal Service Period Purchase: The insured individual has the option to request the purchase of a nominal service period to be added to their actual service period under certain conditions. These conditions include expressing the desire in writing before the end of their service, having a minimum actual service period of 25 years (or 15 years if they are 60 years old), and not exceeding a purchase period of 5 years. The insured must pay the purchase cost, calculated based on contributable salary, before the end of their service, either in a lump sum or in instalments. If the insured passes away before completing the payments, the instalments will be collected from the pensions of the beneficiaries. Additional conditions may be determined.
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