Application of Unemployment Insurance Scheme Extended to Free Zones

May 08, 2023 - Authors : Patrick Obeid

The UAE’s mandatory unemployment insurance scheme has been extended to employees employed by free zone companies. All employees in the UAE (with the exception of those employed by the local government) should abide by the scheme requirements and must, accordingly, register within the mandatory timeline.

According to the scheme, the employees must enroll in the unemployment insurance scheme and start paying insurance contributions. If the employment contract was entered into prior to 28 February 2023, the deadline for registration is 30 June 2023, and employees who started employment after 28 February 2023 must register within four months of their commencement date.

Contribution thresholds for the insurance scheme are dependent on an employee’s monthly salary. Employees earning less than AED 16,000 per month must contribute a minimum of AED 5 per month, while employees earning in excess of AED 16,000 per month must contribute a minimum of AED 10 per month.

It is important to note that failure by an employee to register by the applicable deadline will result in fines of AED 400 being imposed against the employee. Also, 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 AED 200 will be imposed.

Employers are not required to register their employees in an insurance scheme, nor are they 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 necessary information.

For more details, please feel free to contact our UAE partner Zainab Aziz

This article, together with any commentary, does not constitute legal advice. It is provided solely for information purposes on a complimentary basis, without consideration of any specific objectives, circumstances, or facts. It reflects then current views of the writer which may modify in time and based on differing objectives, circumstances, or facts. Access to this article does not form any attorney- client relationship.

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