UAE announces exemptions for freezone workers

In the United Arab Emirates, employees of companies in freezone have been exempted from compulsory participation in the unemployment insurance scheme.

Subscription is compulsory for most UAE citizens and expats working in both the public and private sectors. Exceptions, apart from workers in the freezone, are investors and owners of private companies, freelancers, domestic staff, minors under the age of 18 and pensioners.

Public and private sector workers who fail to register for unemployment insurance will be fined. For example, failure to register with the insurance scheme will result in a fine of AED 400 on the worker. Fines of AED 200 will also be imposed on employees for failing to pay contributions for three months or more.

Employees must subscribe by June 30, 2023, or face financial penalties. Employees must pay contributions under the scheme for at least 12 months. In turn, employers are not required to register their employees with the scheme or pay any contributions to the scheme.

However, employers are advised to remind their employees of their obligation to register. Under the new scheme, UAE nationals and residents are entitled to cash compensation payments within three months of losing their source of income.

The Ministry of Human Resources and Emiratisation had earlier urged everyone – public and private sector workers – to sign up for the scheme. This can be done on the ministry’s website, in the iloe smart app, through ATMs or Al Ansari Exchange kiosks.

All those who are temporarily unemployed will be paid until they are reemployed, subject to a number of conditions. Thus, the monthly compensation will be 60% of the employee’s salary, but no more than AED 20,000 per month.

To qualify for the compensation, the employee must have been insured under the scheme for at least 12 consecutive months. The scheme does not cover those dismissed for disciplinary reasons.

If an employee decides to resort to fraud, such as applying for compensation by submitting information about dismissal from a non-existent company, they will be fined. Compensation is discontinued when the person takes up a new job.

Those claiming insurance benefits must be in the UAE legally. The loss of employment cannot be the result of war, riot, insurrection, revolution, invasion or other unrest.

Loss of employment due to a nuclear accident, radioactive, toxic release or explosion of similar equipment, terrorist attack involving biological or chemical weapons, nationalisation of a company and expropriation of its property by UAE authorities, or other force majeure circumstances are also not covered.

Source: Arabian Business

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