3 April 2023
This article has been updated as of 25 May 2023.
The UAE has sought to provide protection to employees who have lost their jobs for reasons other than disciplinary action or resignation with the implementation of the first-ever mandatory unemployment insurance scheme. The UAE government issued Federal Decree Law No. 13 of 2022 concerning Unemployment Insurance Scheme (the Scheme) which was implemented on 1 January 2023 and requires qualifying employees to subscribe to the Scheme by no later than 30 June 2023.
The Scheme applies to UAE nationals and expatriates that work in both the private and public sectors, excluding the following categories:
Initially, the Scheme was only applicable to employees who had a Ministry of Human Resources & Emiratisation work permit or are part of the federal government. However, the scope of the Scheme has been extended to apply to employees employed by free zone companies (excluding the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) free zones). Therefore, effective immediately, all qualifying employees must subscribe to the Scheme by 30 June 2023. Employees that commenced employment after 1 January 2023 must subscribe to the Scheme within four months of entering the UAE under a work entry permit, initial approval of their work permit or status change (as applicable).
For employees employed by companies in the DIFC and ADGM free zones, subscription to the Scheme is not mandatory. The authorities in the DIFC and ADGM have confirmed that subscription to the Scheme is optional, although employees are encouraged to subscribe given the protection it provides in the event of job loss.
The contributions to be paid by the employee are currently as follows:
The obligation to subscribe to the Scheme and pay the required contributions is the individual employee’s responsibility. That said, it is recommended that employers inform their workforce of the Scheme and highlight their obligations to help ensure that penalties are not imposed against employees.
To be eligible to receive unemployment benefits under the Scheme, an employee must have been enrolled in the Scheme for at least 12 continuous months (calculated from the date of subscription to the Scheme) and paid all required contributions. If an employee is dismissed for a disciplinary reason or has resigned, s/he would not be entitled to receive unemployment benefits under the Scheme.
Eligible employees will be entitled to receive 60% of their registered monthly salary, up to a maximum of AED 20,000, for a period of three months from the date of termination of their employment.
If the employee obtains alternative employment during the three-month period, payments would be stopped. In event of fraudulent claims for compensation, sanctions may be imposed.
Failure to register within the deadline and/or pay the applicable contributions may result in the employee being disqualified from receiving unemployment insurance benefits and the authorities imposing financial penalties of:
In addition, employees will be unable to renew their residence visas and obtain new work permits until all fines have been paid.