Signing up to the unemployment insurance programme is optional for free zone employees, the UAE's Ministry of Human Resources and Emiratisation confirmed.
Previously, it was widely reported that subscribing to the scheme was mandatory for all Emirati and foreign employees, regardless of whether they worked in a free zone or not.
However, a message on social media platform X, formerly Twitter, from the ministry on Monday said joining the scheme was optional for employees at local and semi-government bodies, and those working in free zone companies.
“The second phase of the system on May 2, 2023, gave the chance for employees in local government bodies, semi-government, and free zones to register (optional) via the ID number,” said the ministry.
A ministry official subsequently confirmed this to The National.
Under Federal Decree Law No (13) of 2022 regarding unemployment insurance, it is mandatory for employees in the private sector and the federal government to register in the scheme. Employees in free zones, semi-government and local government bodies have the option to register in the scheme, the official said.
Responsibility for registration is the choice of each employee, but the ministry said there was an option for employers to register their staff in the system.
More than 6.5 million employees have registered in the UAE's unemployment insurance system, the ministry said on Wednesday.
This includes citizens and residents working in the private and public sectors, excluding investors, business owners who own and manage their businesses themselves, domestic workers, temporary employees, those under the age of 18, retirees who receive pensions, and those who have joined a new employer.
From October 1, a Dh400 penalty will be applied to those eligible for the system who have not subscribed.
Dr Abdullah Al Nasser, chairman of the Araa group advocate and legal consultancy, told The National that employees who fail to register or do not maintain their insurance payments will not be eligible for a new work permit.
“Article 10 of the ministerial resolution No. 604 of 2022 concerning unemployment insurance stated that the employee will not be granted any new work permit until all the outstanding fines are settled,” said the Emirati lawyer.
Employees, who meet the necessary criteria, will face fines of Dh400 if they fail to register in the scheme, as well as a fine of Dh200 for those who fail to pay their insurance premiums for more than three months beyond the due date.
Subscribers to the scheme are given the option of making a single payment to cover the year's subscription or in quarterly and monthly payments.
“The worker's insurance certificate will also be cancelled due to non-compliance with the payment of insurance premiums,” said Dr Al Nasser.
If the fine is not settled within three months from the due date, it will be deducted either through the wages protection system, end of service benefits or any other method approved by the Ministry of Human Resources and Emiratisation, the UAE government website states.
“The system aims to provide a safety net for citizens and residents, to have a decent life for them and their families until they find a new job," he said.
"The programme will enhance the UAE's labour market and attract the best global talent."
Mohammad Hamdi, a 40-year-old Egyptian employee in a general trading company in Sharjah, said he missed the October 1 deadline as he wasn’t aware of the programme.
“My employer did not inform me about this programme. My friend called me on September 30 asking if I registered.
"I know it is my mistake, but I wish there will be another extension of the deadline."
He tried to register before midnight, but he said the website was down for several hours.
“There was a problem with the website and the payment. I tried many times. At the end I managed to register but it was already October 1 and don't know if I will be fined or not,” he said.
How does the insurance programme work?
Employees and employers can subscribe by visiting the Involuntary Loss of Employment Insurance Pool website (www.iloe.ae), the ILOE smartphone application, designated kiosks, business service centres, exchange companies such as Al Ansari Exchange, and banks’ smartphone applications.
The Unemployment Insurance Scheme is divided into two categories.
The first covers those with a basic salary of Dh16,000 and under, where the insurance premium is set at Dh5 a month (Dh60 a year).
The monthly compensation is capped at Dh10,000.
The second category includes those with a basic salary exceeding Dh16,000, and the insurance premium is Dh10 a month (Dh120 annually).
The monthly compensation for this category is capped at Dh20,000.
Insurance compensation can be claimed if the employee has subscribed to the Unemployment Insurance Scheme for at least 12 consecutive months.
People lose their right to compensation if they cancel their residency and leave the country or join a new job within the processing period.
The claim will be processed within two weeks of submission.
The compensation is calculated at the rate of 60 per cent of the average basic salary in the last six months before unemployment.
This is paid for a maximum of three months for each claim from the date of unemployment, provided the employee was not terminated for disciplinary reasons, and has not voluntarily resigned.