The Unemployment Insurance scheme, U.A.E

The Unemployment Insurance scheme is a form of insurance/social security that provides Emiratis and residents working in the federal and private sectors, financial support if they lose their jobs, as a result of termination by their employers.

The financial support will be given in exchange of a monthly insurance premium paid by the worker during his employment.

Scope of the scheme

The scheme applies to all workers in the private and federal sector except:

• Investors, business owners who own and manage their business themselve

• Domestic workers

• Employees on a temporary basis

• Juveniles under the age of 18

• Retirees who receive pension and have joined a new employer.

Cost of subscription

1. Workers with a basic salary of AED 16,000 or less will need to pay a monthly insurance premium of AED 5, i.e. AED 60 annually. The compensation for this category must not exceed a monthly amount of AED 10,000

2. Those with a basic salary exceeding AED 16,000 will need to pay AED 10 per month, i.e. AED 120 annually. The compensation for this category must not exceed AED 20,000 monthly.

The worker may choose to pay the premium on a monthly, quarterly, half-yearly or on an annual basis.

Registration

As per Federal Decree-Law No. 13 of 2022 and its resolutions, it is mandatory for all employees in the UAE's federal and private sectors to sign up for the unemployment insurance scheme before the June 30 deadline to avoid fines. All employees in the UAE must enroll with the unemployment insurance scheme and commence paying insurance contributions as follows:

1. If the employment contract was entered into prior to 28 February 2023, the deadline for registration is 30 June 2023.

2. Employees who commenced employment after 28 February 2023 must register within four months of the start date of employment.

The majority of employees will need to register by end of June 2023.

Contribution thresholds

1. Employees earning less than AED 16,000 per month are to contribute a minimum of AED 05 per month.

2. Employees earning in excess AED 16,000 per month are to contribute a minimum of AED 10 per month.

What happens if an employee fails to register?

Failure by an employee to register by the applicable deadline will result in fines of AED 400 being imposed against the employee.

If the employee fails to pay the insurance premiums in accordance with the payment periods for more than three months, the insurance certificate will be cancelled and a fine of AED 200 will be imposed.

Are employers required to register employees in a scheme?

No. Employers are not required to register their employees in an insurance scheme, nor are employers required to pay any contributions to a scheme. The unemployment insurance scheme is an employee requirement only.

However, we recommend that employers notify and inform employees of the obligation to register and provide the information.

Thank You.

Success Sparrow Consultancy