Fines imposed on workers who fail to comply with Unemployment Insurance Scheme in UAE

Gulf Today, Staff Reporter

The UAE Ministry of Human Resources and Emiratisation (MoHRE) will begin collecting financial penalties from workers who remain unregistered in the Unemployment Insurance Scheme or who fail to pay their periodic installments as per the payment schedule they selected upon registration.

The legal deadline for subscribing in the system ended in October 2023, 10 months after the system’s implementation on 1 January. This period allowed all eligible workers to register in the Scheme to avoid financial penalties and access the system’s benefits.

“The financial penalties that were implemented affected approximately 14% of all workers, the group that had failed to register in the system,” said the Ministry in a statement. “Workers who fail to subscribe to the system face a AED400 fine, while those who do not meet their regular payment obligations incur a fine of Dhs200.”

The Ministry noted that workers who are subject to fines can pay them using the MoHRE smart application, website, or by visiting authorised business service centres. The Ministry’s digital channels allow users to submit requests to pay fees in installment plans to reduce the burden on workers. Requests to be exempt from the system can also be submitted, along with supporting documents, where the Ministry notifies applicants of its decision in that regard within 15 working days through its official channels.

The Ministry urged workers to pay their due fines promptly in order to avoid administrative measures that will be taken against non-compliant individuals, including being denied new work permits. The fine amount will then be deducted from the employee’s salary or end-of-service benefits.

On another note, the Ministry if Human Resources and Emiratisation revealed that over 6.7 million workers had registered in the Unemployment Insurance Scheme, including citizens and residents working in the federal government and the private sector. Those exempt from subscribing include investors (business owners who own and manage their establishments), domestic workers, employees with temporary work permits, juveniles under the age of 18, and retirees who receive pension and have joined a new employer.

The system offers social security, allowing workers in the UAE to maintain a decent lifestyle in the event of unemployment, providing insured workers with financial compensation for up to three months following loss of employment, while they secure a new job opportunity.

The Ministry called on private-sector employees who received work permits after 1 October 2023 to register in the Unemployment Insurance Scheme within four months, cautioning that failure to comply with registration requirements within the deadline will result in a Dhs400 fine.

Subscription can be completed by visiting the Involuntary Loss of Employment (ILOE) Insurance Pool website (www.iloe.ae), the ILOE smartphone application, designated physical self-service kiosks, ATMs, business service centres, exchange companies, banking applications, SMS text messages, telecom companies’ bills, or the ILOE call centre on 600599555.

The Unemployment Insurance Scheme is divided into two categories: the first covering those with a basic salary of Dhs16,000 and under, where the insurance premium for the insured employee in this category is set at Dhs5 per month (Dhs60 annually), and the maximum monthly compensation is set at Dhs10,000.

Meanwhile, the second category includes those with a basic salary exceeding Dhs16,000, where the insurance premium is Dhs10 per month (Dhs120 annually). The monthly compensation for this category is capped at Dhs20,000.

The insurance compensation can be claimed as long as the insured (employee) has been subscribed to the Unemployment Insurance Scheme for at least 12 consecutive months. The insured’s right to compensation is forfeited in the event that he/she cancels their residency and leaves the country or joins a new job, within the processing period. The claim will be processed within two weeks of submission.

The compensation is paid for a maximum of three months from the date of unemployment for each claim, provided the employee in question was not terminated for disciplinary reasons, and has not voluntarily resigned.

The amount is calculated at the rate of 60% of the average basic salary in the last six months before unemployment.