Enrollment into the scheme was initially only mandatory for all mainland-employed employees; however, in a major update, the UAE government confirmed that the scheme is now mandatory for ALL employees of free zone and semi-governmental employers, except for employees of entities registered in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). While the position is that DIFC and ADGM employees are not mandated to subscribe to the scheme, it is possible for employees of entities registered in these financial free zones to voluntarily enroll in it.
- The deadline for employees to apply is June 30, 2023, or, if the employee was hired after January 1, 2023, four months from their respective start date.
- Previously employees working in the free zone or with a semi-government organization were exempt from the registration rule.
- If employees working in the UAE fail to subscribe to the scheme once the deadline passes, they face a fine of AED 400.
[Original article posted November 3, 2022] This 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:
- A basic salary of Dh16,000 or less has an insurance cost for the insured employee set at Dh5 per month (or Dh60 annually).
- 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).
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.
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 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.