United Arab Emirates: 2023 Unemployment Insurance scheme update
The UAE government recently published legislation requiring federal employees and private sector workers to sign up for an unemployment insurance program. In the event that an employee loses their work, the plan is intended to offer financial support.
What should employees do?
Beginning on January 1, 2023, employees must register with an unemployment insurance program.
Several chosen insurance companies in the UAE offer unemployment insurance programs. There are numerous ways for an employee to sign up for an insurance program, including:
Insurance booth website
Employee's bank
ATM machines throughout the UAE
Exchange centers
Banking centers
Du / Etisalat
Directly with an insurance company
Once registered, employees must start paying monetary contributions to the scheme as follows:
Employees earning less than AED 16,000 must make a minimum monthly contribution to their chosen plan of AED 5.
Employees who make more than AED 16,000 a year are required to make a minimum monthly contribution to their chosen plan of AED 10.
A penalty of AED 400 will be levied against the employee for failing to enroll in an unemployment insurance program. Employees are subject to a further AED 200 punishment if they do not enroll in an insurance plan and do not make any contributions for more than three months.
Benefits under the scheme
Employees will be eligible to receive financial assistance from the scheme for a period of up to three months from the date of termination, equal to 60% of their monthly income, provided they have paid contributions into the system for at least 12 months and meet the qualifying requirements. Compensation for employees making less than AED 16,000 per month is regulated at AED 10,000, and for those making more than AED 16,000 per month, it is set at AED 20,000. Benefits under the plan will end three months after the employee finds alternative employment in the United Arab Emirates, whichever comes first.
Please be aware that employees who quit or are fired for disciplinary reasons will not be eligible for the scheme's benefits.
Are employers required to register employees in a scheme?
No. Employers are not obligated to pay any contributions to a plan or to enrol their employees in an insurance program. Only employees are required to participate in the unemployment insurance program. Employers are recommended to remind staff members of this requirement to register.
Please contact the Baker McKenzie contacts listed above if you would want to speak with us about the new Unemployment Insurance program, any employment law-related difficulties, or issues more broadly.