Government and private agencies in the UAE are penalized for applying financial fines of up to 400 dirhams to workers and employees who refuse to participate in the “unemployment insurance” system, or who fail to pay premiums after subscribing for a period of three months. These penal measures were activated in accordance with the decision issued by The Council of Ministers, which provides for protection for workers in the government and private sectors, and to compensate them financially when they lose work as a result of termination of their services for undesirable reasons.
The new system: occupational protection and stability
The “Unemployment Insurance” system in the UAE aims to provide occupational protection and stability for all workers in the country. Balance in the labor market, the system is based on innovative mechanisms that work to achieve the strategic goals of the state and support the continuity of economic activities.
Excluded categories and commitment to participate
The system includes all workers in the government and private sectors in the UAE, whether they are citizens or residents. However, there are some groups that are excluded from the mandatory participation in the system. These excluded groups include investors, domestic workers, workers with temporary contracts, minors under the age of 18, and retirees receiving a pension who have taken up a new job.
In addition, workers in local government agencies are not obligated to participate in the scheme, and workers in the other two sectors must commit to participating in the scheme as of January 1, 2023.
Obligation to subscribe and penal fines
Workers and employees are obligated to participate in the scheme in accordance with UAE laws and with their own responsibility. Employers have an important role to play in guiding and motivating workers to commit to participating in the scheme. Penal procedures have been set for workers who fail to participate in the system, as a fine of 400 dirhams is imposed in the event of refraining from participating. In the event of subscription and failure to pay the installments for a period of three months, a fine of 200 dirhams will be imposed.
Optimism about responsiveness and commitment to the system
There is a state of optimism about the response of workers and employees to the “unemployment insurance” system and the commitment to pay premiums. Strict application of the latest punitive measures is the last option that could be considered.
Insurance coverage and benefit
The “Unemployment Insurance” system is divided into two categories. The first category includes workers and employees who earn a basic salary of 16,000 dirhams or less, and the monthly insurance premium for them is 5 dirhams per month or 60 dirhams annually. As for the second category, which includes workers whose monthly salaries exceed 16,000 dirhams, the value of the insurance premium is 10 dirhams per month or 120 dirhams annually. Thus, the subscription value is commensurate with the different groups and their financial capacity.
In the event that the worker or employee loses his job for reasons beyond his control, the insurance coverage for the first category is 10,000 dirhams per month as a maximum, while the insurance coverage for the second category is 20,000 dirhams. This coverage represents 60% of the basic salary to which the worker participated, and it continues for three months from the date of work interruption. In the event that the worker or employee is repeatedly unemployed, he can benefit from the insurance coverage up to 12 times during his career.
It seems that the insurance system against unemployment in the Emirates includes mandatory participation for workers in the private and federal government sectors, regardless of their nationality, and an agreement has been signed with the Dubai Insurance Company to provide the insurance policy for employees and workers against their unemployment. The worker or employee can choose any From the available subscription channels, specifying the subscription category and the method of paying the installments.
To benefit from the insurance coverage, the worker must have subscribed to the scheme for at least 12 months and the reason for termination of the employment relationship is beyond his control, such as job loss or employment termination by the employer, if the worker joins a new job and his employment relationship is terminated with this New work for reasons beyond his control, he can also benefit from insurance coverage.
Please note that the required value of the insurance premium is subject to value added tax. For more details, subscription details and entitlements, it is preferable to contact the Ministry of Human Resources and Emiratisation or the entity responsible for implementing the system in the UAE.
Conditions for entitlement to the value of compensation in the unemployment insurance system in the Emirates:
- 12 months must have passed since the date of subscribing to the system.
- The reason for terminating the employment relationship must be outside the worker’s will, and this does not include resignation or disciplinary action.
- If there is a fixed-term contract, and the labor relationship is terminated at the worker’s will in accordance with the terms of the contract, the worker must know that he will not be entitled to unemployment coverage in this case.
Please note that this is the general information available, and there may be additional details or exceptions that should be reviewed with the entity responsible for implementing the system in the UAE.
