As of January 1, 2023, the United Arab Emirates (UAE) introduced the Unemployment Insurance Scheme, an initiative to provide financial protection to employees during periods of job loss.
This program provides a lifeline for UAE nationals and residents working in the private sector or federal government, overseen by the Ministry of Human Resources and Emiratisation (MoHRE). Let’s explore the critical aspects of the Unemployment Insurance Scheme and how new employees can subscribe to it.
Objectives of the Unemployment Insurance Scheme
The Unemployment Insurance Scheme has several essential objectives:
Income During Unemployment: The scheme’s primary goal is to provide financial support to insured individuals during unemployment, offering them a safety net to cover their essential expenses.
Enhancing Competitiveness: By providing this benefit, the UAE aims to strengthen the competitiveness of its Emirati workforce in the labor market, ensuring they have access to financial support during challenging times.
Social Protection: The program guarantees a decent standard of living for job seekers.
Knowledge Economy: The program aligns with the UAE’s vision of becoming a competitive knowledge economy by attracting and retaining top international talent.
Eligibility for the Unemployment Insurance Scheme
Eligibility for the Unemployment Insurance Scheme includes UAE nationals and residents employed in the private sector or federal government. To be eligible for compensation, the worker must have paid the monthly premium for at least 12 consecutive months. Note that no costs or fees are required from the employers for their employees to access the scheme.
Excluded Groups from the Insurance Scheme
Investors (owners of the establishments where they work)
Employees with temporary employment contracts
Juveniles under 18
Retirees who are receiving a retirement pension and have started a new job
New employees can enjoy a four-month grace period to register for unemployment insurance. This time frame allows new employees to settle into their roles before meeting this important obligation.
Employees who miss the grace period for registration will face an AED 400 fine. Additionally, if they pay their insurance premiums for less than three months beyond the due date, an additional penalty of AED 200 will be imposed.
Unemployment insurance subscription fees are deliberately kept affordable. They are at most AED 5 per month for workers earning basic monthly salaries of AED 16,000 or less. For workers earning more than AED 16,000, the subscription fee is capped at AED 10 per month.
Workers also have the option to subscribe to additional insurance benefits to enhance their coverage, offering added financial support in various situations.
To simplify the subscription process, new members can enroll in the Unemployment Insurance Scheme through various convenient channels.
Al Ansari Exchange
Bank ATMs and applications
Businessmen service centers
Conditions for Compensation
To be eligible for compensation under the scheme, employees must meet the following conditions:
Subscription to the insurance scheme for at least 12 consecutive months.
Not being dismissed from work for disciplinary reasons or resigning.
In the unfortunate event of unemployment, individuals subscribed to the scheme must follow specific steps to claim compensation:
The worker should submit their claim for unemployment within 30 days from the date they became unemployed.
The insurance company must transfer compensation within two weeks of receiving the claim.
Compensation is payable from the date of job loss and will continue for up to three months or until the insured individual secures new employment, whichever comes earlier.
MoHRE is responsible for monitoring and reporting any breaches of the insurance policy’s terms and conditions by the insurance companies.
For federal government employees, the Federal Authority for Government Human Resources coordinates the implementation of the Unemployment Insurance Scheme in collaboration with the Ministry of Finance.
New employees, both UAE nationals and residents, are encouraged to explore and subscribe to this valuable safety net, ensuring they have a reliable source of income during periods of unemployment. The scheme not only protects the livelihoods of individuals but also bolsters the resilience of the nation’s workforce, ultimately contributing to the prosperity of the UAE.