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Executive summary
The United Arab Emirates (UAE) Ministry of Human Resources and Emiratisation (MoHRE) has extended the due date for fines to be imposed on nonsubscribers to the unemployment insurance program. Eligible employees now have until 1 October 2023 to register to avoid the AED400 fine.
Detailed discussion
Background
The mandatory unemployment insurance program, also known as the Involuntary Loss of Employment (ILOE) program, was introduced on 1 January 2023 for employees working in the private sector and the federal government.
The scope of the program was subsequently extended to free-zone workers, excluding Dubai International Financial Centre (DIFC) employees, effective 3 May 2023. Further information on this announcement can be found on the EY Global Tax Alert, UAE issues update to the mandatory unemployment insurance program, dated 31 May 2023.
Details on the eligibility criteria, subscription cost and rules for claiming benefits with respect to the mandatory unemployment insurance can be found on the EY Global Tax Alert, UAE implements mandatory unemployment insurance scheme, dated 18 January 2023.
Deadline extension
Previously, the MoHRE had given eligible employees until 30 June 2023 to subscribe to the mandatory unemployment insurance program or risk a fine of AED400. On 15 June 2023, the MoHRE announced via their Twitter that they have extended the due date for the imposition of fines for nonsubscribers to the mandatory unemployment insurance program to 1 October 2023.
Payment of unemployment insurance contributions
According to MoHRE regulations, enrolling in the job loss insurance program is the employee’s, and not the employer’s, responsibility. Eligible employees should register in the unemployment insurance program prior to the deadline to avoid incurring fines.
Employers may also wish to facilitate payments on behalf of employees and define a process for reimbursing the contribution from their employees. However, at present, the ILOE program allows this option only for mainland employers, because free-zone entities are yet to be registered.
Implications
Employers should continue to update their employees on the implementation of the unemployment insurance program and urge employees to consider the impact that noncompliance could have on their ability to obtain new work permits.
Employers should also factor in the contribution costs and administrative process with respect to equalized assignees.
For additional information with respect to this Alert, please contact the following
EY Consulting LLC, Dubai
- Xavier Delaunay
- Roman Gusev
- Neha Shah
- Anjana Joseph
Ernst & Young LLP (United States), Middle East Tax Desk, New York
- Asmaa Ali
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
