International Finance

UAE professionals face crackdown for unemployment insurance non-compliance

The UAE government has emphasised that the responsibility for the insurance enrolment lies with the employee and does not entail any additional costs for the employer

The UAE government’s Ministry of Human Resources (MoHRE) will crack down upon professionals, who have not yet subscribed to the unemployment insurance scheme or have failed to pay their premiums on time.

“The deadline for subscribing to the job loss insurance system ended in October 2023, yet 14% of employees remain unregistered,” the MoHRE informed the media.

By November 29, 2023, over 6.7 million employees subscribed to the unemployment insurance scheme.

The Involuntary Loss of Employment Insurance (ILOE) scheme, which came into force on January 2023, has been made mandatory for all employees across the Gulf country. Even free zone and federal government workers have been instructed to sign up for the scheme.

Individuals who fail to enrol in the insurance programme will have to pay a fine of AED400 (USD 108), while those who don’t make regular payments will get a fine of AED200. Non-compliant employees may also lose the chance to renew their employment permits.

“We urge workers to pay their due fines promptly in order to avoid administrative measures that will be taken against non-compliant individuals, including being denied new work permits,” the MoHRE stated further, while adding, “the fine amount will then be deducted from the employee’s salary or end-of-service benefits.”

The scheme aims to provide public and private sector employees in the Gulf nation with a three-month compensation amount after job losses.

While the deadline for enrolling in the scheme expired on September 30, private sector employees with work permits issued after October 1, 2023, must enrol with the scheme within four months, or face a Dirhams 400 fine.

The insurance has been made available through platforms like the ILOE website and its smart application, BOTIM application (which is a UAE-based ‘Voice over Internet Protocol’ solution run by Astra Tech), bank ATMs and kiosk machines, business service centres, money exchange companies du and Etisalat, SMS and other channels that the Ministry of Human Resources specifies with the insurance service provider.

Workers who are liable to pay fines for non-compliance can settle the fees through the MoHRE’s smart application, official website or authorised business service centres.

The UAE government has also emphasised that the responsibility for the insurance enrolment lies with the employee and does not entail any additional costs for the employer.

The scheme excludes investors (business owners who own and manage their ventures), domestic workers, temporary employees, minors under the age of 18, and retirees who receive pension and have joined a new employer.

The insurance scheme is divided into two categories. The first one covers those professionals who have a basic salary of AED16,000 or below, where the insurance premium is set at AED5 per month (AED60 annually), with the maximum monthly compensation being determined at AED10,000.

The second category includes those with a salary over AED16,000, and the insurance premium in this segment is AED10 per month (AED120 annually). The monthly compensation for this category is capped at AED20,000.

The compensation will be calculated at the rate of 60% of the average basic salary in the past six months before unemployment and will be paid for a maximum of three months for each claim from the date of unemployment, provided the employee in question was not terminated for disciplinary reasons or he/she has not voluntarily resigned.

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