Don’t Miss the Deadline for Registration to Unemployment Insurance Scheme in the UAE

The Ministry of Human Resources and Emiratisation Ministry (the “MoHRE”) extended the due date as regards registration to Unemployment Insurance Scheme for employees from 30 June 2023 to 1 October 2023.

Therefore, every government and private sector employee is required to participate in the mandatory Unemployment Insurance Scheme until 1 October 2023 unless the MoHRE extends that due date further. Do not miss the deadline of 1 October 2023 otherwise you will risk a penalty of AED 400.

But first, let’s remember the regulations in regard to Unemployment Insurance Scheme brought into force effective from 1 January 2023 along with the liabilities of employees fall under the scope.

The legal background

The MoHRE introduced the Unemployment Insurance Scheme for government and private sector employees by the Federal Decree-Law No. 13 of 2022 (the “Decree-Law 13/2022”) announced on 15 September 2022 effective from 1 January 2023.

Pursuant to this law, the MoHRE issued the Cabinet Resolution No. (97) of 2022 (the “Resolution 97/2022”) laying down the procedures and controls for implementing the Unemployment Insurance Scheme on 14 October 2022.

The MoHRE issued another resolution, Ministerial Resolution No. 604 of 2022 (the “Resolution 604/2022”) on 30 November 2022, containing detailed provisions regarding the mechanism of the Unemployment Insurance Scheme supplementing the Resolution 97/2022 and extending the due date for registration to 30 June 2023.

However, the due date as regards registration to the Unemployment Insurance Scheme for employees has been extended from 30 June 2023 to 1 October 2023 based on the Ministerial Resolution No. 340 of 2023.

The scope of the

Unemployment Insurance Scheme

In accordance with the Decree-Law 13/2022, Resolution 97/2022, and Resolution 604/2022 (hereinafter together referred to as “the Unemployment Insurance Legislation”), government and private sector employees are required to participate in the Unemployment Insurance Scheme by purchasing an insurance policy that provides coverage in case of termination of employment based on eligibility criteria. Nevertheless, the excluded categories for this mandatory scheme were set down as follows:

a. Investors (self-employed)

b. Domestic Workers

c. Contractual workers/employees on a temporary basis

d. Juveniles under the age of 18

e. Pension-receiving retirees who have joined a new employer.

Calculations of the

insurance premium

Insurance premiums are calculated based on the basic wage/salary, which is the average of last 6 months preceding unemployment, in either of the following two categories:

a. Category - 1: Not more than AED 5 per month if the subscription salary does not exceed AED 16,000

b. Category - 2: Not more than AED 10 per month if the subscription salary exceeds AED 16,000.

Payment of the insurance premiums is the responsibility of the insured on a basis of the payment frequency that will be settled for as monthly, quarterly, annually, biannually.

Conditions for

claiming insurance benefits

a. The insured period of subscription in the Unemployment Insurance Scheme shall not be less than 12 consecutive months. Therefore, the service provider must issue an insurance policy for a minimum of 12 months.

b. The insured must be committed to paying all insurance premiums according to the prescribed frequency.

c. Providing evidence of unemployment due to reasons other than resignation of the insured.

The insured may not have been dismissed from his/her job for disciplinary reasons according to the applicable laws regulating labor relations in the private sector and human resources in the federal government.

Loss of employment may not be attributed to strikes or other non-peaceful protests, regardless of the extent of damage caused.

The Insured may not be the subject of an existing absconding report.

d. A claim must be submitted within 30 days following the termination of the employment relationship, or when the court rules on the labor complaint.

In order to obtain compensation, the claim should not be fraudulent or deceitful. Similarly, the establishment where the employee works should not be fictitious.

e. It is necessary for the insured to have legal residence in the country.

Procedures for insurance claims and

receiving the compensation

An application for unemployment insurance must be submitted by the insured within 30 days from the date of termination of the work relationship along with documentation demonstrating the insurer's entitlement to compensation.

In accordance with the eligibility conditions and criteria, the unemployment insurance provider must respond to the claim and pay the compensation within 2 weeks from the date of submission.

Amount of compensation

Based on the Unemployment Insurance Scheme Legislation, each claim shall be compensated monthly at a rate of 60% of the subscription salary for a maximum period of 3 months from the date of unemployment.

However, the monthly compensation for the first category does not exceed AED 10,000, and for the second category does not exceed AED 20,000.

There is a 12-month limit on the period during which an insured may receive compensation during their period of employment on the labor market in the country.

Fines and collection methods

In the event that a worker/employee fails to subscribe to the Unemployment Insurance Scheme after the deadline for subscription, a fine of AED 400 will be imposed.

In the event that the insured fails to pay the insurance premiums for a period exceeding three 3 months from the due date, the insurance certificate will be canceled, and a penalty of AED 200 will be imposed.

Workers/employees who fail to pay their fines for 3 months from the due date will have the fine amount deducted from their wages through the Wage Protection System, end-of-service gratuity, or any other alternative method deemed acceptable by the MoHRE.

It is mandatory that all due fines resulting from non-subscription or non-compliance with the payment of insurance premiums be paid within the prescribed periods in accordance with Unemployment Insurance Scheme Legislation. If not, the employee will not be eligible for a new work permit until all due fines are paid.