The UAE government has announced that a new unemployment insurance scheme is now mandatory for employees of free zone companies and semi-government bodies.
The scheme, which was introduced on January 1, 2023, was previously limited to workers employed by public and private employers that are registered in the UAE’s mainland and are under the authority of the Ministry of Human Resources & Emiratisation. It gives employees who have lost their job financial support at 60% of their basic salary for up to three months.
The deadline for the newly-covered employees to register for the scheme is 30 June 2023 or four months from their start date if they were hired after 1 January 2023.
The unemployment insurance support is only available for employees that have made contributions of either AED 5 or AED 10, depending on the category of employee, to the scheme for 12 consecutive months. Workers that resign from their position or are dismissed for misconduct are unable to claim financial support under the scheme. An overall cap on the monthly assistance available, linked to the employee’s salary, is set at either AED 10,000 or AED 20,000.
Employment expert Ruth Stephen of Pinsent Masons said: “While the legal obligation to register and pay the contributions sits with the employee, employers should inform and educate their employees of their obligations to the scheme. Employers should also ensure that they respond appropriately to employee queries connected with the scheme, such as the mechanics of payment, the benefits available and any payment deadlines.”
She warned that non-compliance under the scheme risked fines for employees as well potential difficulties renewing their work permits while outstanding financial penalties remain unpaid.