UAE unemployment insurance scheme: New workers have four months to join

More than 6.5 million employees have registered in the system

The UAE has introduced a new programme that means people who lose their job can receive a basic cash payment each month. All photos: Getty Images

If an employee loses their job they will receive a monthly payment of 60 per cent of their salary, up to Dh20,000.

Domestic workers, anyone working on temporary contracts, under 18s and retirees are exempt from the new policy.

The monthly payment while unemployed is to help people pay their basic living costs.

If the terminated employee does not find another job after a certain amount of time, the financial support will stop.

Workers who start new jobs in the UAE for the first time will have a four-month grace period to sign up for unemployment insurance.

The scheme is a mandatory programme that all employees in the private sector and the federal government must subscribe to.

Employees in free zones, semi-government and local government bodies have the option to register.

Legal adviser Mohammed Najeeb told The National: “There is a four-month grace period to register with the UAE unemployment insurance system for employees who have started their work, as per the ministerial resolution No. 604 of 2022.”

He said that article No 11 in the law said people employed after January 1, 2023, must register in the scheme within four months of either entering the UAE, or from the issuance of their work permit or from changing their status.

This grace period also applies to new employees who started working after the October 1 deadline for registration, he added.

“As per the law, a Dh400 fine will apply to them if they failed to register in the scheme after four months,” he said.

Responsibility for registration lies with each employee, but the Ministry of Human Resources said there was an option for employers to register their staff in the system.

“The insurance system will give newfound hope to employees to have compensation for three months to help them have a decent life while searching for a new job. It will support people during times of financial hardship,” Mr Najeeb said.

Safety net

More than 6.5 million employees have registered for the unemployment insurance system, the ministry said on Wednesday.

Noor Saleem, 37, a Jordanian woman who joined a Dubai-based public relations and communication agency last month, is currently on her probation period and awaiting confirmation for her role as a communication adviser.

“It's a brilliant scheme that serves as a safety net if things go wrong, and I lose my job,” Ms Noor told The National.

“In such a situation, I won't have to worry about how to pay for my son's schooling or how to provide for him.”

She praised the scheme's four-month grace period for newcomers.

“It's a well-thought-out time frame, especially considering the standard probation period is usually three months,” she added.

For Mukhtar Younes, 32, an engineer who joined a private company in Sharjah two weeks ago, the grace period will give newcomers enough time to settle in and make an informed decision about signing up.

“I was confused when people were talking about the scheme. I didn’t know if I should apply or if there would be a fine on me. I wanted to have time to settle before registering in the system,” Mr Younes said.

“Four months is enough time for newcomers to subscribe and not to be worried about the fines.”

As well as the Dh400 fine, employees who fail to register will face an additional penalty of Dh200 if they fail to pay their insurance premiums for more than three months beyond the due date.

Subscribers are given the option of a single payment to cover the year or quarterly or monthly payments.

The scheme covers workers from the federal and private sectors, including UAE citizens and residents, as well as employees working in free zones.

Those who own the company where they work, domestic staff, temporary contract workers, under-18s and retirees who receive a pension but have since started working again are all exempt from signing up.

The nominal subscription fee does not exceed Dh5 per month for workers earning basic monthly salaries of Dh16,000 or less, nor Dh10 per month for workers earning more than Dh16,000.

Workers also have the right to subscribe to additional insurance benefits.

Subscriptions can be completed at www.iloe.ae.

To be eligible for compensation in the case of a job loss, the insured person must have been registered in the scheme for at least 12 consecutive months.

Workers who change jobs will still be insured under the scheme.