A couple of things you need to know about the unemployment insurance scheme

The unemployment insurance scheme (the Scheme) was introduced in Federal Decree-Law No. 13 of 2022 and went into effect on 1 January 2023. The Scheme will provide financial support to qualifying individuals in the public and private sectors in the event of unemployment.

Who does the Scheme apply to?

The scheme is mandatory for Emirati and foreign workers in the private and public sectors but does not apply to the following groups: investors; domestic workers;employees contracted on a temporary basis; minors (those under the age of 18); and retirees who are already receiving pensions, and who have joined a new employer. 

Free zone employees are also exempt from participating in the Scheme.

Are there any employer obligations?

Employees, rather than employers, will be required to directly register onto the Scheme and pay the contributions themselves. There is no obligation on employers to do anything. 

When is the registration date?

Employees must subscribe to the Scheme from 1 January 2023 and have a six (6) months grace period, extending the registration deadline to 30 June 2023

How much are the contributions?

The Scheme divides subscribers into 2 categories: those who earn a basic salary of less than AED 16,000, and those who earn a basic salary of more than AED 16,000. Those who fall under the former category are required to pay a monthly subscription fee of AED 5, while those who fall under the latter category must pay a monthly subscription fee of AED 10. The contributions will be subject to 5% VAT.

How often should contributions be made?

An employee may choose to pay the contribution on a monthly, quarterly, semi-annual or annual basis.

When can I benefit from the Scheme?

To be eligible for unemployment compensation, there must have been a monthly premium paid into the Scheme for a minimum period of 12 consecutive months. 

Are there any limitations to the Scheme?

An insured individual may lose entitlement to compensation in cases where the employee was dismissed for disciplinary reasons under the UAE Labour Law (private sector employees) and the Human Resources Law (public sector employees); fraud and/or deceit has been used to obtain unemployment insurance benefits; or if the company is fictitious.

If you have any questions or require support, please reach out to the PwC Legal Middle East Employment & Reward team.