New UAE Unemployment Insurance Scheme Begins January 1, 2023

New UAE Unemployment Insurance SchemeThis month the Ministry of Human Resources and Emiratisation (MoHRE) signed an agreement with nine local insurance companies to launch the framework of the new UAE unemployment insurance scheme. The program provides protection for employees in the private sector and the federal government by giving them cash compensation (3 months maximum) in the event of job termination for reasons beyond their control.

Paying for Coverage

Employee contributions fund the program, and two income categories are the basis for the payment amounts:

  1. A basic salary of Dh16,000 or less has an insurance cost for the insured employee set at Dh5 per month (or Dh60 annually).
  2. A basic salary exceeding Dh16,000 has an insurance cost for the insured employee set at Dh10 per month (or Dh120 annually).

Payments can be made by the employee on a monthly, quarterly, half-yearly, or annual basis. The value of the insurance policy is subject to a value-added tax (VAT).

Eligibility

Employees are eligible for the UAE’s new unemployment insurance if they have worked and subscribed to the scheme for at least 12 months.

Those excluded from the scheme include investors – owners of establishments where they work, domestic workers, employees with a temporary employment contract, juveniles under 18 years of age, and retirees who receive a retirement pension.

The insured is not eligible for compensation if they have resigned, been dismissed for a disciplinary reason, left the country, or joined a new workplace.

Claims submission

The insured (the employee) must submit the claim within 30 days from the date of unemployment through one of the three approved claim channels – the insurance pool’s e-portal, app, or call center.

Monthly compensation

Monthly compensation will not exceed Dh10,000 for the first income category and Dh20,000 for the second. Payments are calculated at 60 percent of the basic salary from the date of unemployment.

Compensation is paid within two weeks from the date of the claim and is capped at a maximum of three months per claim.

 

Nexus, Asinta’s employee benefits consulting Partner in the Middle East, provided this information about unemployment insurance in the UAE.