What is the ‘Unemployment Insurance scheme’?
In the event that a UAE employee working in the Private sector or under the Federal government loses their job as a result of termination by their employer, they will receive the benefits of Unemployment Insurance (60 percent of their average basic salary, calculated on an average of the six months leading up to unemployment), which is a form of insurance or social security. An insurance premium will be paid by the worker during his employment in exchange for financial support.
Note: The scheme provides security for employees who lost their jobs due to reasons other than disciplinary action or resignation until they find a new job.
Scope of the scheme
The scheme applies to all workers in the private and federal sector except:
- 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
- Employees working in the Free Zones
Cost of subscription
Category A:
Workers with a basic monthly salary of AED 16,000 or below 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.
Category B:
Those with a basic monthly salary above 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.
Note: It can be paid monthly, quarterly, Semi-annually, or annually.
Filing for a compensation claim
The worker must submit the claim within 30 days from the date of his/her unemployment. The insurance company has two weeks, from receiving the claim, to transfer the compensation to the insured’s account.
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
To be eligible for the compensation, 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:
- She/he was dismissed from work for disciplinary reasons under the UAE’s Labor Law in the private sector (Federal Decree Law No. 33 of 2021 Regarding the Regulation of Employment Relationship and its amendments) and the Human Resources Law in the federal government, in addition to any applicable legislations.
- There has been fraud or deceit involved in his/her claim.
- The establishment where he/she works is fictitious.
Failure of Subscription/Payment
According to the Cabinet Resolution No. 97 of 2022, UAE employees that fail to subscribe to the insurance within the grace period will be required to pay a fine of Dhs400 imposed by the Ministry, and a fine of Dhs200 in case the insured fails to pay the prescribed insurance premiums for more than three months.
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