UAE's New Unemployment Insurance Scheme 2023

The UAE has promulgated a new unemployment insurance scheme. It has come into force with cabinet resolution no. 97 of 2022 concerning the procedures and controls for implementing the unemployment insurance scheme. The Federal Decree-Law No. 13 of 2022 elaborates on all the aspects, including eligibility, assured monetary support, and monthly subscription, regarding this scheme.

The unemployment insurance scheme is intended to offer social security to Emiratis and residents of the UAE, who are working in the government as well as private sectors. With this insurance, the persons will get financial support in case of the unfortunate event of a job loss. So that they can sustain and have a decent living even during the unemployed period.

Another prominent aspect of this scheme is that the country can attract more international talent than before with such a scheme. The assurance from the authorities on the continued monetary support would ease the apprehensions many have while considering job options in the UAE.

The employees enrolling for the scheme will have to pay a nominal insurance premium on a monthly basis when they are employed.

Who All Are Eligible for the UAE Unemployment Insurance Scheme

All Emiratis and UAE residents employed in the public or private sector, who are above 18, are eligible for the new UAE unemployment insurance scheme. The employees must have worked for at least 12 months to become eligible for this scheme. At the same time, those dismissed from the job due to disciplinary reasons or resigned on their personal decision cannot claim the benefits offered by the unemployment insurance scheme in UAE.

The following are excluded from the subject scheme:

1. Investors, business owners, and entrepreneurs who own and manage their business entities in the UAE
2. Persons (juveniles) below the age of 18
3. Domestic workers and maids
4. Temporary employees
5. Retirees (who already receive pension) who have joined a new employer

How Much the UAE Unemployment Insurance Scheme Costs

The insurance premium costs depend on the employee’s basic salary. Accordingly, the premium varies. Each one can opt for additional benefits other than the basic package. The same can be discussed with the insurance company and pick the add-ons subsequently. The worker has the option to pay the premium monthly, quarterly, half-yearly or annually. One prominent factor to note is that the insurance policy is subjected to VAT.

The premium cost of the UAE unemployment insurance scheme is:

• The workers with a basic salary of AED 16k or less have to pay a minimum premium of AED 5 per month (AED 60 annually). The maximum compensation offered to this category of employees is AED 10k.
• The employees who receive a basic salary of AED 16k or more should pay AED 10 per month (AED 120 annually). The maximum compensation offered to this group of employees is AED 20k.

The worker should have been paying the insurance premiums for a minimum of twelve months to receive the benefits from this insurance program.

How to Claim Unemployment Insurance

The aspects of claiming the UAE unemployment insurance scheme are:

1. The employee, who lost his or her job, should file the claim within thirty (30) days of unemployment.
2. The insurance company would process the claim and transfer the compensation amount to the applicant’s account in two weeks.
3. All the claims would be processed according to the terms and conditions of the unemployment insurance policy.
4. The legislation and regulations promulgated by the Central Bank of the UAE also would be taken into consideration while approving the claim and disbursing the funds.
5. Compensation will be paid for a period of three (03) months or until the time the applicant gets a job, whichever is earlier, from the date he or she lost the job.
6. The Ministry of Human Resources and Establishment (MoHRE) will monitor the insurance scheme constantly. To report any breach of terms and conditions by the insurance companies and initiation of corrective measures.
7. In the case of government employees, the methodology for the unemployment insurance scheme would be instituted by the Federal Authority for Government Human Resources in association with the Ministry of Finance.

Objectives of the Unemployment Insurance Scheme

The basic objectives of the UAE’s unemployment insurance scheme are:

• Support the unemployed people financially when they are searching for another job.
• Provide them with a decent living, as they were when employed, during the unemployed time as well.
• Boost the competitive spirit among the Emiratis and residents in the job market.
• Ensure social protection for unemployed people, who might lose confidence when they lose their job.

The popularity of the Unemployment Insurance Scheme in UAE

Understanding the advantages of the UAE unemployment insurance scheme, many have joined the scheme during the initial days. Some of the prominent aspects in respect of the scheme are:

• More than 60,000 employees in the UAE have joined the scheme in the first two days.
• More than 95% of the employees, who joined the scheme, opt to pay the premium annually.
• The payment during the unemployment period would be calculated on 60% of the basic salary in the last six months of employment.
• The insurance claim can be submitted online or via connecting with the customer support centre on phone no. 600 599 555.
• Those dismissed from the job due to disciplinary reasons, fraud, or any other reasons under Federal Law no. 33 of 2021 or Human Resource Law, or any other legislation will not be eligible for the claim.
• Only the employees working in approved firms can join the scheme. The workers in fictitious firms cannot enroll in the unemployment insurance program. Even if they join any have, their claims may be rejected.
• Those below the age of 18 cannot be a part of the scheme.
• Employers, business persons, and investors, who own a company cannot join the unemployment insurance scheme in UAE.

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