UAE: Unpaid Job Loss Insurance Fines May Be Deducted From The Salary

The UAE unemployment insurance scheme has been made mandatory for every employee in the Emirates from the first of January this year. According to the insurance scheme, an employee would be given sixty percent of the average base salary given in the recent six months before the loss of a job.

The grace period for subscribing to the scheme has been set till June 30 this year and if the employee fails to pay within that date, a fine of AED 400 will be collected.

Employees who fail to pay the fines won’t be able to obtain new work permits

A ministerial resolution states that if an employee fails to pay the insurance subscription amount within three months from the due date then it will be deducted from their salary via the wage protection system, gratuity collection, or through any such services that are deemed fit by the Ministry of Human Resource and Emiratisation (MoHRE).

The non-payment of the insurance scheme subscription will also make the employee ineligible for a new work permit until the dues are paid within the stipulated time period.

The employees can request the payment of fines through the MoHRE website or other approved channels. They can even opt for payment via installments or request a waiver. 

The insurance scheme under MoHRE was first announced in the month of October last year and the scheme would provide up to AED 20,000 per month for a period of three months from the date of unemployment. The subscription is on a monthly basis and has two options of AED 5 or AED 10 depending upon the salary of the employee. 

According to a news report, more than 60,000 employees signed up for the unemployment insurance scheme on the first two days of its launch.

Around ninety percent of the employees who subscribed did so on an annual payment basis where they pay the full subscription amount for a year and eighty-six percent of the subscribers used the official website www.iloe.ae for signing up for the scheme.

Other modes of subscription points are also provided like smartphone applications of the banks in UAE, business service centers, Al Ansari Exchange, self-service kiosks, telecom bills, etc.

The insurance scheme was implemented under federal-decree law No.13 of 2022 and aims at providing financial security to employees in the public and private sectors in case of unemployment.      

Category A of the subscription model is meant for individuals who earn a monthly income of AED 16,000 or below. A monthly charge of AED 5 is charged for this category and this can be paid on a monthly, quarterly, or annual basis.

Category A is eligible to get up to a maximum of AED 10,000 per month for three months in the event of unemployment. Category B is meant for employees who earn more than AED 16,000 per month and the subscription charge is set at AED 10 which can also be paid on a monthly, quarterly, or annual basis.

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The maximum benefit for this category is set at AED 20,000 per month for three months in the event of unemployment. 

There are certain conditions and criteria that need to be fulfilled by the employee in order to be eligible for the unemployment insurance scheme. They are as follows: 

1. The employee should not have been dismissed from the job as part of any disciplinary actions under the Labor Relations Law and Human Resources Law. 
2. There are certain exceptions in the employee category like temporary contract workers, domestic workers, juveniles under the age of 18, investors or owners of businesses, free zone workers, and retirees who are eligible for pension or got a new job. These sections are exempted from the unemployment insurance scheme.      
3. The employee must have subscribed to the scheme and paid the monthly fees for 12 consecutive months and there should not be any interruption in the payment for three consecutive months.
4. The employee’s loss of job should not be caused due to resignation.  
5. The claim for the insurance scheme should be submitted within 30 days from the date of unemployment. 
6. There should not be any existing complaint against the employee regarding the absence from work. 
7. Unemployment should not be caused by any sort of non-peaceful labor strike or stoppage and whether it resulted in any sort of harm or not. 
8. The insurance claim shall stand canceled if there has been any instance of fraud or deceit involved in the claim. 

The maximum claim benefits shall not exceed a period of 12 months in the insurance period in the entire work life of an employee working in the UAE.

That is, an employee can’t make more than four claims (each claim consisting of 3 months of unemployment) for the entire period of working in the UAE.

The new unemployment insurance scheme protects the Labor rights of UAE workers and is a progressive scheme launched by the Emirates administration. For more information and to subscribe to the insurance scheme, visit the official website www.iloe.ae.