Fines, no new work permit, wages deduction – the penalties for not subscribing to UAE Unemployment Insurance Scheme

Fines, no new work permit, wages deduction – the penalties for not subscribing to UAE Unemployment Insurance Scheme

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Workers insurance policy explained
Workers in Dubai in the Business Bay area of Dubai.
Image Credit: Clint Egbert/Gulf News

Dubai: Signing up for the Unemployment Insurance Scheme is mandatory for all private and federal sector workers in the UAE and failing to sign up for the insurance policy can result in fines.

To avoid penalties, it is important to make sure you sign up for the scheme before the deadline – June 30, 2023, and not delay the payment of the insurance instalments. If you do incur any fines, not paying them within the required time limit will also impact your job prospects, as per the fines and penalties that have been announced by the Ministry of Human Resources and Emiratisation (MOHRE).

What is the mandatory Unemployment insurance scheme?

The Unemployment Insurance Scheme, also known as Involuntary Loss of Employment (ILOE), came into effect on January 1, 2023, and you can register for it through the official ILOE portal – www.iloe.ae.

So far, over 250,000 employees have subscribed to the programme, and it benefits workers financially, until they find a new job. Depending on your salary, you just have to pay Dh5 or Dh10 per month to be eligible for the three-month compensation.

What are the fines and penalties?

The fines and penalties for not subscribing or complying with the ILOE policy are stipulated in Articles 9 and 10 of the Ministerial Resolution No. 604 of 2022 Concerning Unemployment Insurance Scheme, and are of two types:

1. Failure to subscribe to the scheme

If you do not subscribe to the Unemployment Insurance Scheme after the deadline, which is June 30, you will face a Dh400 fine.

2. Failure to pay insurance instalments on time

If you have subscribed to the scheme but have not paid the premiums according to the selected payment frequency (monthly, quarterly, semi-annual or annual) for a period exceeding three months from the due date, the insurance certificate will be cancelled and a penalty of Dh200 will be imposed.

Not paying the fine? It might get deducted from your wages

Besides, stipulating the fines for not subscribing or paying the instalments, the ministerial resolution also highlights the penalties for ignoring the payment of the fines.

According to clause 4 of Article 9 of the resolution, an employee who fails to pay their fines for three months from the due date will have the fine amount deducted from their wages through the Wage Protection System (WPS), or end-of-service gratuity.

No new work permit

If you do not pay all your fines you may be prevented from getting a new work permit, which will prevent you from joining a new job.

As per Article 10 of the resolution, if there are fines resulting from non-subscription or non-compliance with the ILOE scheme – the employee will not be eligible for a new work permit.

Article (10) – Refusal of Granting New Work Permits

It is mandatory that all due fines resulting from non-subscription or non-compliance with the payment of insurance premiums be paid within the prescribed periods in accordance with paragraph (2) of Article No. (97) of 2022 referred to above. If not, the employee will not be eligible for a new work permit until all due fines are paid within the specified timeframe.

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