The UAE’s unemployment insurance scheme is a mandatory programme that all Emirati and foreign employees in the public and private sectors must subscribe to from January 1, 2023, the Ministry of Human Resources and Emiratisation said.
It is now mandatory that employees working in free zones register for the unemployment insurance programme.
The social security support programme, which was announced last May, is a financial safety net that will pay Emiratis and residents a cash sum for three months if their job is ended by their employers.
To receive the unemployment financial support, employees must be registered with the scheme and pay an insurance premium based on their monthly salary.
The deadline for registration for the unemployment insurance programme is June 30, the ministry said.
Employees who fail to subscribe to the job loss insurance scheme by June 30 will face a Dh400 fine.
A Dh200 penalty will be imposed for failing to pay premiums after a grace period of 90 days and the policy will be cancelled, according to Dana Kansou, manager of strategic partnerships at Dubai Insurance, which is leading the campaign on behalf of the insurance pool in the UAE.
The system will ensure the sustainability of a decent life for Emiratis and residents during their unemployment period and will reduce business risks, the ministry said at the time.
The ministry signed an agreement with nine insurance companies that sets up the framework for the unemployment insurance scheme and released more details about the programme, including how much it will cost and that employees will pay for it themselves.
“The new unemployment insurance law is an essential part of the legislative and legal structure that the government is keen to develop to meet the requirements of the national economy,” Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, said.
“This supports the UAE’s endeavours to be the next capital of the future, and a global incubator for talent and companies and investments, which can be achieved through economic and social development and the empowerment of human capital.”
Here is everything you need to know about the new initiative.
What is the unemployment insurance scheme?
Last May, the Ministry of Human Resources and Emiratisation announced a new federal law covering the scheme.
It is a mandatory social security support programme that will pay Emiratis and foreign workers in the private and public sectors a cash sum for a maximum of three months if they lose their jobs.
How does it work?
Compensation will be paid for a maximum of three months from the date of an employee’s job loss and will be calculated at 60 per cent of their basic salary for a maximum payment of Dh20,000 ($5,445) per month, according to the ministry.
How much does the insurance cover cost?
The cost of the insurance programme is divided into two categories.
The first category covers employees who earn a basic salary of Dh16,000 or less per month. The second category is for workers who earn a monthly basic salary of Dh16,000 or more.
The insurance cost for employees earning a basic salary of Dh16,000 or less has been set at Dh5 per month, or Dh60 annually.
Workers who earn a monthly basic salary of Dh16,000 or more will pay Dh10 per month, or Dh120 a year.
Who pays for the insurance coverage?
Employees will pay for the unemployment insurance themselves. This can be paid either monthly, quarterly, half-yearly, or on an annual basis, the ministry said. The value of the insurance policy is also subject to VAT.
UAE unemployment pay – in pictures
If I lose my job, how much will I be paid under the unemployment insurance scheme?
The unemployment compensation will depend on your monthly basic salary.
However, the value of the monthly cash sum will not exceed Dh10,000 for the first category of employees and Dh20,000 for the second category.
It will be calculated at a rate of 60 per cent of the basic salary, the ministry said.
For example, if you earn a basic salary of Dh10,000 per month and you lose your job, you would receive 60 per cent of that for three months, or Dh6,000.
How do I receive the unemployment compensation if I lose my job?
Insured employees who lose their job must submit their claim through three approved claim channels: the insurance pool’s e-portal, smart application and call centre within 30 days from the date of their unemployment.
Compensation will be paid within two weeks from the date of the claim and capped at a maximum of three months per claim.
Who is eligible for the unemployment insurance scheme?
Employees are eligible for the jobless payment if they have worked and subscribed for at least 12 months to the insurance programme, as long as they have not been dismissed for disciplinary reasons or because they resigned.
Employees who work on a commission basis may also subscribe to the scheme.
However, insured employees are not eligible for the payment if they have left the country or have started a new job.
Is it mandatory for everybody who works in the UAE?
No, it is not. The insurance programme does not cover investors, such as owners of the establishments in which they work, domestic helpers, part-time employees, workers under the age of 18 and retirees who receive a pension and have joined a new job.
Should free zone employees register for the scheme?
Yes. It was mandatory since day one because the federal decree stipulated that it was compulsory for employees in the government and private sector to subscribe to the scheme, said Ms Kansou from Dubai Insurance.
“However, we opened the subscription channel for free zone workers only a few weeks ago,” she told The National.
A recent update to the Involuntary Loss of Employment (ILOE) website confirms that free zone employees can now register with the unemployment insurance scheme.
“Do you work in the private sector for an organisation that is not registered to MOHRE like the companies in the free zone area? You can subscribe now by clicking on subscribe here and proceed to 'Non-Registered in MOHRE' in the ILOE portal,” it said.
How do I subscribe to the scheme?
All federal government and private sector employees must subscribe to the new social security support programme by June 30.
The insurance pool, which is represented by Dubai Insurance, is responsible for providing the service.
Employees can subscribe to the insurance programme in a number of ways, including through the insurance pool’s website and its smart application, as well as bank ATMs, kiosk machines, business service centres, money exchange companies, du and Etisalat or by SMS, the ministry said.
The ministry may also announce at a later date other channels that will allow employees to sign up for the unemployment insurance scheme, it said.