UAE job loss insurance scheme: Who pays and subscribes, employee or employer? Law clarified

UAE job loss insurance scheme: Who pays and subscribes, employee or employer? Law clarified

Employers in the UAE are neither required to register their employees nor pay for the mandatory job loss insurance scheme, which came into effect on January 1, 2023.

Under the newly-launched scheme, Emiratis and expat workers employed in the private sector and the federal government must subscribe to the insurance scheme by June 30, failing which they will be subject to a Dh400 fine.

Joanna Matthews-Taylor, partner, Baker McKenzie, said subscriptions are to be paid by the employees because a Certificate of Insurance for the coverage will be issued to the employees.

Naji Khairallah, Senior Associate, Galadari Advocates and Legal Consultants, said with regard to the mechanism of collecting insurance premiums, Article (6) of the Resolution states there are no costs borne by the employer or the entity for which the employee works.

A call centre representative of the Involuntary Loss of Employment (ILOE) Insurance Scheme told Khaleej Times that company is not allowed to register its employees for the insurance scheme and then deduct the money from their salary. The employee must subscribe to the scheme himself.

The scheme has been categorised into two parts. Employees earning a basic salary of less than Dh16,000 or below are required to pay Dh5 plus VAT per