The Federal Decree-Law No. 13 of 2022 Concerning Unemployment Insurance (Unemployment Insurance Law) came into effect on 1 January 2023 and requires Emirati nationals and expatriate employees working full-time in the UAE’s federal and private sectors to enrol in an unemployment insurance scheme (the Scheme).
The Scheme pays employees a cash sum for a maximum of three months if they lose their jobs. Compensation shall be paid from the date of an employee’s job loss and will be calculated at 60% of their basic salary. Employees earning less than AED16,000 will be eligible to receive up to AED10,000 per month, and those earning more than AED16,000 will be eligible for a maximum of AED20,000 per month. Employees are eligible to benefit from the Scheme if they have worked and subscribed for at least 12 months to it, and as long as they have not been dismissed for disciplinary reasons or because they resigned. Employees who work on a commission basis may also subscribe to the scheme. However, insured employees are not eligible for the payment if they have left the country or have started a new job.
Enrolment into the scheme was initially only mandatory for all mainland-employed employees; however, in a major update, the UAE government has confirmed that the Scheme is now mandatory for employees of free zone and semi-governmental employers with the exception of employees of entities registered in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). While the position is that DIFC and ADGM employees are not mandated to subscribe to the Scheme, it is possible for employees of entities registered in these financial free zones to voluntarily enrol in it. The deadline for employees to apply is 30 June 2023 or, if the employee was hired after 1 January 2023, four months from their respective start date.
While employers are not required to register their employees onto the Scheme, nor are employers required to pay any contributions to it, we recommend that employers inform and educate their employees of their obligation to enrol in the Scheme. Non-compliance under the Scheme can risk fines for the employee and impact on the employee’s ability to renew their work permits, pending any outstanding fines.
Please feel free to reach out to our Middle East Labour & Employment Practice and we would be pleased to assist with preparing employee communications to educate staff, respond to queries connected with the Scheme, and assist you to better understand the requirements of the Unemployment Insurance Law and implementation of the Scheme.