?The scope of the United Arab Emirates’ (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.
What’s Next?
Registration. All employees in the UAE must enroll with the unemployment insurance scheme and start paying insurance contributions according to the following parameters:
- If the employment contract was entered into prior to Feb. 28, the deadline for registration is June 30.
- Employees who commenced employment after Feb. 28 must register within four months of the start date of employment.
The majority of employees will need to register by the end of June.
Contribution thresholds. The contribution thresholds are as follows:
- Employees earning less than 16,000 dirham (approximately $4,357) per month are to contribute a minimum of five dirham (approximately $1.36) per month.
- Employees earning more than 16,000 dirham per month are to contribute a minimum of 10 dirham (approximately $2.72) per month.
Failure to Register
If the employee fails to register by the applicable deadline, they will have to pay a fine of 400 dirham (approximately $108.93).
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 200 dirham (approximately $54.46) will be imposed.
Are Employers Required to Register Employees?
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, it is recommended that employers notify and inform employees of the obligation to register and provide the information.
Joanna Matthews-Taylor is an attorney with Baker McKenzie in Dubai, UAE. Sami Nasr is a paralegal at Baker McKenzie in Dubai. © 2023 Baker McKenzie. All rights reserved. Reposted with permission of Lexology.