Tax News Update    Email this document    Print this document  

June 23, 2023
2023-1135

UAE extends registration timeline for the mandatory unemployment insurance program

  • The United Arab Emirates Ministry of Human Resources and Emiratisation has announced an extension of the deadline for fining nonsubscribers to the mandatory unemployment insurance program.
  • The deadline has been extended to 1 October 2023.
  • Eligible employees should register prior to the revised deadline to avoid financial penalties and potential challenges in securing work permits.

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 in our May 2023 Global Tax Alert.

Details on the eligibility criteria, subscription cost and rules for claiming benefits with respect to the mandatory unemployment insurance can be found in our January 2023 Global Tax Alert.

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

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement