Mandatory Unemployment Insurance scheme in UAE comes into effect

Mandatory Unemployment Insurance scheme in UAE comes into effect

The Ministry of Human Resources and Emiratisation (MoHRE) signed an agreement with a group of nine local insurance companies, to launch the framework of the new Unemployment Insurance Scheme.

The new insurance scheme aims to provide protection for employees in the privet sector and the UAE’s federal government by providing them with a cash compensation for a limited period not exceeding three months for each claim in the event of job termination for reasons beyond their control.

It is a form of insurance/social security that provides financial support if they lose their jobs, as a result of termination by their employers.

Not applicable for:

• investors, business owners who own and manage their business themselves
• domestic workers
• employees on a temporary basis
• juveniles under the age of 18
• retirees who receive pension and have joined a new employer.

Cost of subscription

1-Workers with a basic salary of AED 16,000 or less will need to pay a monthly insurance premium of AED 5, i.e. AED 60 annually. The compensation for this category must not exceed a monthly amount of AED 10,000.

2-Those with a basic salary exceeding AED 16,000 will need to pay AED 10 per month, i.e. AED 120 annually. The compensation for this category must not exceed AED 20,000 monthly.

The worker may choose to pay the premium on a monthly, quarterly, half-yearly or on an annual basis.

The insured worker may, in coordination with the insurance company, subscribe to additional benefits in addition to the above basic package.

Filing for a compensation claim

The worker must submit the claim within 30 days from the date of his/her unemployment.

Compensation will be paid from the date he/she loses the job and will be paid for 3 months or until he/she finds a job, whichever is earlier. 

Eligibility

The worker must have been paying the monthly premium for  at least 12 consecutive months.

Suspension of the compensation

The insured worker will lose his/her eligibility for compensation if any of the following situations occur:

• he/she was dismissed from work for disciplinary reasons under the UAE’s Labour Law in the private sector.
• there has been fraud or deceit involved in his/her claim
• the establishment where he/she works is fictitious.

The insured (employee) is not eligible for a compensation if they have left the country or joined a new job.

Various Channels for Subscribing
Employees may subscribe to the insurance scheme via the Insurance Pool’s website, smart application, bank ATMs, kiosk machines, business service centres, money exchange companies, du and Etisalat, SMS, or any other channel, which MoHRE may announce at a later date.