UAE: Employees to be fined for not getting insurance against job loss

Starting January 1, 2023, subscriptions officially opened on the Involuntary Loss of Employment website


Waheed Abbas

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Published: Mon 2 Jan 2023, 10:06 AM

Last updated: Mon 2 Jan 2023, 10:25 AM

The UAE employees will face a financial penalty for not registering for the mandatory unemployment insurance scheme.

Starting from January 1, 2023, all employees – both Emiratis or expatriates – working in the private and federal government sectors are required to register for the involuntary loss of employment scheme. But investors, domestic helpers, temporary contract workers, juveniles under the age of 18 and retirees who’re entitled to a pension and joined a new job are exempted from registering for the scheme.

Employees with a basic salary of less than Dh16,000 are required to pay Dh5 per month or Dh60 per annum plus VAT as a premium. They will be compensated with 60 per cent of the average basic salary for the job loss for three consecutive months.

Employees with a basic salary of over Dh16,000 are required to pay Dh10 a month or Dh120 annual premium under this scheme.

The policy period is available for one or two years. Subscription is free of charge from Dubai Insurance but other channels such as exchange houses, telecom firms and banks could charge an additional fee for the services.

Joanna Matthews-Taylor, partner, Baker McKenzie, said failure to register in an unemployment insurance scheme will result in a penalty of Dh400 being imposed on the employee.

“When employees fail to register in an insurance scheme and do not pay any contributions for more than three months, they will be fined an additional Dh200,” said Joanna.

A call centre representative of the Involuntary Loss of Employment (ILOE) insurance scheme confirmed to Khaleej Times that employees will have to subscribe before June 30, 2023, otherwise they will be subject to Dh400 fine, which can be paid from the same channels through which the employees purchase the policy.

Joanna added that it is conditional upon the employees to pay contributions to the scheme for at least 12 months.

The Baker McKenzie lawyer pointed out that the scheme benefits will cease from the earlier of the date the employee secures alternative employment in the UAE or three months from the last day of employment.

Joanna added that employers are not required to register their employees in an insurance scheme, nor are employers required to pay any contributions to a scheme.

The unemployment insurance scheme is an employee requirement only. However, employers are advised to remind their employees of their obligation to register, she added.


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