UAE unemployment insurance deadline approaches; penalties to be imposed

Penalties will be deducted from the salaries or benefits of the employees who fail to comply


The deadline for enrolling in the United Arab Emirates’ (UAE) unemployment insurance scheme is fast approaching, with penalties to be imposed on those who miss the last date, that is, 30 September 2023.

This mandatory scheme applies to all employees throughout the country, encompassing both free-zone and federal-government workers. Officially named the involuntary loss of employment insurance (ILOE) scheme, it has been in effect since 1 January, 2023, with the primary aim of providing financial stability to residents in case they lose their jobs due to reasons unrelated to disciplinary action or voluntary resignation. Under this insurance, those who lose their jobs can get up to 60 per cent of their basic salary. Claim can only be filed by employees who have received salary or wages for 12 months consecutively.

To date, nearly five million employees have registered for this unemployment insurance scheme. However, beginning 1 October, significant fines will be imposed on those who fail to enrol or comply with the law. Any outstanding fines will be deducted from the employee’s salary or end-of-service benefits.

It’s crucial to note that employees may be denied new work permits if they fail to settle these fines. That means, it is essential to clear these fines to be able to secure new employment opportunities.

The unemployment insurance scheme in the UAE imposes fines and penalties to ensure compliance. Employees who fail to subscribe to the scheme before the deadline  will have to cough up a fine of Rs 9,026 or 400 Dirhams, while those who fail to pay premiums for more than three months from the due date may incur a penalty of Dirhams 200 (Rs 4,513).

Employers who collaborate with insured individuals to wrongfully receive unemployment benefits may face a hefty fine of Dirhams 20,000 (Rs 4,51,333).

Those seeking claim are required to submit proof of involuntary unemployment within 30 days of losing their job. Subscription fees and compensation vary based on salary categories.

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