In brief
The scope of the UAE’s mandatory employee unemployment insurance scheme has been extended. Effective immediately, all employees in the UAE (except for employees employed by the local government) must register within the required timeline. This includes employees employed by free zone companies.
You can view a summary of the scheme in our previous client alert.
What’s next?
Registration
All employees in the UAE must enroll with the unemployment insurance scheme and commence paying insurance contributions as follows:
- If the employment contract was entered into prior to 28 February 2023, the deadline for registration is 30 June 2023.
- Employees who commenced employment after 28 February 2023 must register within four months of the start date of employment.
The majority of employees will need to register by end of June 2023.
Contribution thresholds
- Employees earning less than AED 16,000 per month are to contribute a minimum of AED 5 per month.
- Employees earning in excess AED 16,000 per month are to contribute a minimum of AED 10 per month.
What happens if an employee fails to register?
Failure by an employee to register by the applicable deadline will result in fines of AED 400 being imposed against the employee.
If the employee fails to pay the insurance premiums in accordance with the payment periods for more than three months, the insurance certificate will be cancelled and a fine of AED 200 will be imposed.
Are employers required to register employees in a scheme?
No. 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, we recommend that employers notify and inform employees of the obligation to register and provide the information.
To speak to us in relation to the unemployment insurance scheme, any employment law related matters, or issues more generally, please reach out to the Baker McKenzie contacts above.
