UAE to Fine Delayed Pension Payments for GCC Workers

Photo: WAM

The General Pension and Social Security Authority (GPSSA) of the United Arab Emirates has made an important announcement for all employers across the country. They are asking companies to make sure they pay the monthly social security contributions on time for employees who are citizens of other GCC countries, such as Saudi Arabia, Bahrain, Kuwait, Oman, and Qatar. This reminder is part of a larger effort to ensure that Gulf nationals working in the UAE continue to enjoy full social security benefits just as they would in their own countries.

What Is the Protection Extension System?

This system, known as the Unified Protection Extension System, was designed to protect the pension rights of GCC citizens working outside their home countries but within the GCC region. It ensures that an Omani or Kuwaiti citizen working in the UAE still gets the same kind of pension and social protection they would have received if they were working in Muscat or Kuwait City. This system was officially put in place through Cabinet Resolution No. 18 of 2007 and is managed in the UAE by GPSSA.

Big Change Starting July 2025

Starting from July 1, 2025, GPSSA will begin to apply financial penalties to employers who delay the payment of pension contributions for their GCC national employees. While the requirement to pay pensions on time is already in place, this is the first time that daily penalties will be strictly enforced for delays. These penalties will be automatic and don’t require any prior warning or reminder from the authorities.

When to Pay and What Happens If You’re Late

Pension contributions must be paid each month. For every month of work, the payment should be made in the first half of the following month. For example, pension contributions for work done in July 2025 must be paid between August 1 and August 15, 2025. If the employer doesn’t make the payment by August 15, they will begin receiving a penalty of 0.1 percent of the unpaid amount every single day starting from August 16. This fine will continue to increase daily until the payment is made. Employers won’t receive any reminders. Once the deadline passes, the penalty will begin automatically.

Why These Rules Are Important

The goal of these new penalties is to protect the long-term financial wellbeing of GCC workers. Pension contributions are not just paperwork—they are a crucial part of securing an employee’s future after retirement. If contributions are not paid on time, employees may lose out on the benefits they’ve earned, or face difficulties when they retire or become unable to work. That’s why the GPSSA and other pension authorities across the Gulf are taking this issue more seriously.

The Legal Power Behind the Change

These new enforcement measures are supported by Article 12 of the Protection Extension System Law. This article gives pension authorities the right to go after employers who delay or avoid making the required payments. GPSSA can take legal action against the company to collect the missing contributions as well as any penalties. It can also work with the pension authority in the employee’s home country to make sure that the money gets to the right place. So, for example, if a Saudi national working in Dubai doesn’t receive their pension contributions, GPSSA can take action on behalf of Saudi Arabia to recover the amount.

Agreement Among All GCC Countries

The decision to enforce these penalties more strictly was supported during the 23rd meeting of the Committee of Heads of Civil Retirement and Social Insurance Agencies in GCC countries. All six Gulf nations agreed that stronger actions are needed to protect their citizens who are working in other GCC countries. This shows that the entire region is committed to improving social protection and ensuring that every worker’s future is secure.

Employer Responsibilities Under the System

Under the Unified Protection Extension System, all employers in the UAE—whether in the public or private sector—must register their GCC national employees with the GPSSA. After registration, they are required to submit the pension contributions every month based on the rules of the employee’s home country. The system is not optional; it is a mandatory requirement for every company that employs workers from other GCC nations.

Who Pays What?

One common question employers have is about how much they need to pay. According to the system, the employer pays the same percentage they would normally pay for an Emirati employee. If the pension rate in the employee’s home country is higher than what is paid in the UAE, then the difference must be paid by the employee themselves. This rule makes sure that the employer is not overburdened, while the employee still receives the full benefits of their home country’s system.

Serious Consequences for Delay

Employers who delay payments after July 1, 2025, will face serious financial consequences. Not only will they have to pay the daily fine of 0.1 percent of the unpaid amount, but they could also face legal action. If the unpaid amount continues to grow, the company may also face investigations or restrictions when hiring new GCC employees. Over time, failure to follow these laws could hurt the company’s reputation and its ability to do business in the region.

Why It’s Important to Follow the Rules

This entire system is about fairness and protection. When companies pay pension contributions on time, they are helping their employees build a stable future. Whether the worker retires in their home country or remains abroad, they’ll have access to the same benefits that any other citizen would have received. Employers who follow the rules are not just avoiding fines—they’re showing that they care about their workers and are committed to doing business the right way.

The GPSSA has made it clear: time is running out for employers to get compliant. Starting from July 1, 2025, there will be no more leniency or reminders. Companies are expected to understand their responsibilities, register their GCC employees, and make timely payments each month. This is not only the law—it’s a responsibility to the people who work for them.

The GPSSA also encourages companies to check their records and systems to ensure they are ready. If they need help understanding the rules or need support in registering their employees, they can reach out to the GPSSA for guidance.