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UAE unemployment insurance: Deadline on October 1, $109 fine for failure to subscribe
Financial penalties will be levied for UAE private and federal employees who have not subscribed to the unemployment insurance plan by October 1, 2023.
A three-month extension to October 1, 2023, was granted by the Ministry of Human Resources and Emiratization (MoHRE) to subscribe to the national scheme.
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Those eligible for the scheme, but choose not to subscribe, will bear a financial penalty of $109 (AED 400).
In a reminder shared on X, formerly Twitter, MoHRE said: “We call on all eligible citizens and residents working in the private sector and federal government to subscribe to the Unemployment Insurance Scheme before 1st October to avoid a AED400 fine.”
“Now, employers have the option to register their employees in the Scheme, however, we emphasize that it remains the responsibility of the employee to subscribe, not the employer, who incurs no additional costs,” it added.
We call on all eligible citizens and residents working in the private sector and federal government to subscribe to the Unemployment Insurance Scheme before 1st October to avoid a AED400 fine.
Now, employers have the option to register their employees in the Scheme, however, we…— وزارة الموارد البشرية والتوطين (@MOHRE_UAE) September 19, 2023
The ministry previously set July 1 as the deadline to apply.
What is unemployment insurance?
Employees in the UAE were advised to opt in for an unemployment insurance scheme that came into force in October 2022. In November 2022, the ministry mandated an insurance plan for all, with a deadline in 2023.
The program aims to temporarily guarantee a monthly amount to public and private sector employees in the event of unexpected unemployment.
Payment is given out for a maximum of three months. To qualify for the payment, the employee must be insured for a minimum of 12 months.
How much does it cost to apply?
The cost of insurance has been divided into two categories:
Employees with a basic salary lower than $4,350 (AED 16,000) can contribute $1.3 (AED 5) per month toward the insurance. Monthly compensation for this category will not exceed $2,720 (AED 10,000).
Employees with a basic salary higher than $4,350 (AED 16,000) can contribute $2.72 (AED 10) per month toward the insurance. Monthly compensation in this category will not exceed $5,440 (AED 20,000).
The compensation amount upon job loss can be claimed at 60 percent of the basic salary.
The contribution toward the unemployment fund can be made monthly, quarterly, half-yearly, or annually, and the value of the insurance policy is subject to value-added tax (VAT).
Can employers pay for unemployment insurance?
Employers are not required to bear the cost of subscribing to the unemployment insurance but can choose to do so. The law also excludes “investors (owners of the establishments in which they work), domestic helpers, part-time employees, juveniles under the age of 18, and retirees who receive a retirement pension and have joined a new job,” according to an earlier state-run WAM news agency report.
Gulf states Qatar, Oman, Kuwait and Saudi Arabia have provided some form of unemployment support to citizens while Bahrain also has a form of jobless insurance for resident non-citizen workers.
Permission to reside in Gulf countries like the UAE has traditionally been tied to employment. Under recent reforms, UAE residents whose visa is canceled can remain for up to six months versus 30 days previously.
The changes come as part of the UAE’s wider vision to attract and retain talent in the country.
Read more:
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