The United Arab Emirates has recently introduced a mandatory unemployment insurance scheme, known as the Unemployment Insurance Scheme (UIS) or the Involuntary Loss of Employment (ILOE) scheme. This scheme is designed to assist workers during the period of unemployment by providing cash compensation with a limit of up to 3 months.
However, failure to sign up for the scheme or comply with its rules may result in fines and penalties. In this blog post, we will explain the fines and penalties for non-compliance with unemployment insurance rules in the UAE, the eligibility criteria for unemployment insurance and how to sign up for it.
What is the UAE’s Unemployment Insurance Scheme?
Unemployment Insurance, introduced by the Ministry of Human Resources and Emiratisation (MOHRE), is designed to assist workers during periods of unemployment by providing cash compensation if they face unemployment.
As of now, more than 250,000 employees have subscribed to the program. The amount of monthly premium paid is based on the salary of the employee. Employees with a salary below 16 thousand dirhams would need to pay a monthly premium of 5 Dirhams, while employees with a salary of 16 thousand dirhams or more, will be required to pay a monthly premium of 10 dirhams.
Registration for unemployment insurance is the responsibility of each individual employee and NOT the employer. Employees are required to provide the details of their Emirates ID and their date of birth, and mobile number. They will receive a One Time Password on their registered mobile number confirming the registration and request to select the payment frequency. Once the payment is confirmed, the employee will be able to download a copy of the unemployment insurance policy.
Employees can make the premium payments monthly, quarterly, or annually in advance. There is also the option to make a 2 years policy. Payment methods range from regular debit cards, or through specific outlets such as Etisalat, Du, Tasheel offices, and a few money exchange providers.
What Are The Eligibility Criteria for Unemployment Insurance in the UAE?
To be eligible for insurance in the UAE, an employee must meet the following criteria:
- Be a UAE national or a resident of the UAE.
- Be currently employed and have a valid employment contract.
- Have been working for at least 12 months.
- Be involuntarily unemployed.
- Meet the income requirements as set by MOHRE.
We have explained the details of the new Unemployment Insurance Scheme and everything you need to know in a previous post, you should give it a read to know more about the terms and conditions of this policy before registration.
What Is The Fine Or Penalty for Not Participating In Unemployment Insurance?
According to the Ministerial Resolution No. 604 of 2022 Concerning Unemployment Insurance Scheme, there are two types of fines and penalties for not subscribing or complying with the policy.
These fines include:
- A fine of Dh400 for failure to subscribe to the scheme after the deadline of the 30th of June 2023.
- A fine of Dh200 and cancellation of the insurance certificate for failure to pay insurance instalments on time.
Additionally, fines may be deducted from wages or end-of-service gratuity if not paid within three months, and failure to pay all fines may prevent an employee from obtaining a new work permit.
How to Sign Up for the UAE’s Unemployment Insurance Scheme?
The unemployment insurance scheme, which provides financial assistance to employees who have lost their job involuntarily, became effective on January 1, 2023.
Registration for the policy can be completed through the official Unemployment Insurance Registration portal. The responsibility for registering for the unemployment insurance scheme and paying the premium is solely on the employees themselves, and not the employer.
Our team at FinFlx has made the registration process extremely easy through the Employee Financial Wellbeing App. Employers can register all their employees to access the app completely free.
The FinFlx App offers access to financial education, flexible saving plans, employee benefits such as insurance plans etc.
Employers can create their corporate account and register all their employees through the free Employee Financial Wellbeing Program
The UAE’s Unemployment Insurance Scheme is a crucial safety net for workers who may lose their jobs involuntarily. It is mandatory for all employees to sign up for the scheme by June 30th 2023, failure to sign up will result in fines and penalties.
Employees are responsible for registering themselves for the scheme and paying the monthly/annual premiums accordingly. By understanding the fines and penalties for non-compliance, eligibility criteria and signing up for the scheme, employees can ensure they have financial assistance during periods of unemployment.