UAE: Extension of the Deadline for mandatory unemployment Insurance

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published on 11 October 2023 | reading time approx. 2 minutes

 

Under Federal Law No. 13 of 2022 on Unemployment Insurance, employees working in the public and private sectors are responsible to subscribe to the unemployment insurance. Exempt from the obligation are investors, business owners who own and manage their business themselves, domestic workers, temporary workers, persons under 18 years of age and retirees re-entering the labour market. Unemployment insurance is part of social security and provides financial assistance to employees in the event of dismissal by their employer. The goal is to continue to provide a livelihood for the unemployed and to shape a competitive economy to attract and retain international talents in the UAE.

   

 

  

The implementation deadline was initially set for 30 June 2023, before being pushed back to 1 October 2023. As of 1 October 2023, a fine of AED 400 will be imposed by the Ministry of Human Resources and Emiratization (MOHRE) on those who have not taken out unemployment insurance or who do not make payments for it. The competent authority will consistently punish non-compliance with the obligation.
 
According to the MOHRE, more than 5.7 million employees have already taken out unemployment insurance since 1 January 2023. The responsible ministry has already asked people to register, so that the consequent imposition of fines is to be expected.
 

Requirements for the payment of unemployment benefits and registration process

Art. 5 of Federal Law No. 13 of 2022 defines the eligibility requirements. To be entitled to the compensation, the employee concerned must have paid into the insurance for an uninterrupted period of at least 12 months. The entitlement ceases if the insured leaves the territory of the UAE or takes up employment elsewhere. The insured shall receive the compensation for up to three months. For calculating the amount of compensation, the basic salary in the last six months before unemployment is reduced by 40 percent, so that the unemployed person is entitled to 60 percent of the regular monthly basic salary. Employers are free to enroll their employees at no additional cost.
 
It should be noted that these regulations do not apply to employees who resign from their employment relationships or are dismissed for disciplinary reasons.
 
The employee is free to choose whether to pay the premium monthly, quarterly, semi-annually, or annually. He must submit the application for unemployment benefits within 30 days of becoming unemployed. The selected insurance company then has time to transfer the compensation to the insured's account within two weeks of receiving the application. Workers can apply through the ILOE insurance pool website and app, as well as through any other channel that the MOHRE may announce.
 

Amount of unemployment benefit

Within the scope of the amount of the premium to be paid, the following differentiation is made:
 
If the affected employee earns a base salary of up to AED 16,000 per month, he or she is obligated to pay a monthly contribution of AED 5. The monthly payment to which he is entitled in return is up to AED 10,000.
 
If the basic monthly salary is more than AED 16,000, he is obliged to pay AED 10 per month for unemployment insurance. The maximum monthly payment in this case is AED 20,000.

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