Understanding the Unemployment Insurance Scheme in the UAE: A Guide for Workers
The UAE Government has launched the Unemployment Insurance Scheme to provide, in the case of loss of jobs due to termination by employers, Emiratis and residents employed in the federal and private sectors with unemployment allowance for their decent livelihood. It will introduce the element of a financial safety net that ensures a rise in competitiveness within the job market, attracting and retaining international talent to contribute towards fueling economic growth.
What is the Unemployment Insurance Scheme?
Unemployment insurance is a type of social security, covering workers against loss of employment initiated by the employer not due to their dismissal on account of disciplinary action against them. The scheme shall be applied to all Emiratis and expatriates working in the federal and private sectors, except those categories of employees that have been excluded.
Scope of the Scheme
The Unemployment Insurance Scheme is mandatory for all employees in the private and federal sectors, except a few. The following categories of workers are exempted from the ambit of the scheme:
● Investors and owners operating their own business
● Domestic help
● Employees employed on a temporary basis
● Juveniles below 18 years
● Retirees who are drawing pension and have joined another employer.
Cost of Subscription
The cost of subscription to the Unemployment Insurance Scheme is according to the employee's basic salary. Details include:
1. Employees whose Basic Salary is AED 16,000 or Less:
o Monthly premium: AED 5
o Annual premium: AED 60
o Maximum monthly compensation: AED 10,000
2. Employees whose Basic Salary is More Than AED 16,000:
o Monthly premium: AED 10
o Annual premium: AED 120
o Maximum monthly compensation: AED 20,000
The premium can be paid monthly, quarterly, half-yearly, or annually as opted by the employee. An employee may subscribe to more benefits other than the basic package in consultation with the insurance company. The value of the insurance policy is liable for VAT.
How to Subscribe to the Scheme
Subscriptions to the Unemployment Insurance Scheme can be made through the website and app of ILOE Insurance Pool, as well as through any other channels that MoHRE may announce. All federal government and private sector employees had to subscribe to it starting 1 January 2023.
Insurance Providers
The insurance pool is headed by Dubai Insurance Company. It encompasses the following nine national insurance companies:
● Dubai Insurance Company
● Abu Dhabi National Insurance Company
● Al Ain Ahlia Insurance Company
● Emirates Insurance Company
● National General Insurance Company
● Orient Insurance
● Oman Insurance Company
● Orient UNB Takaful Company
Filing for a Compensation Claim
The compensation claim shall be filed with the unemployment insurance scheme by the insured within 30 days from the date of unemployment. The insurance company shall process the claim and disburse the compensation into the account of the worker in two weeks' time from the submission of the claim. Compensation will be provided for a maximum period of three months or until the worker finds new employment, whichever is earlier.
Eligibility Criteria
The compensation shall be payable to workers who have paid the insurance premium for a continuous period of at least 12 months. Compensation shall be suspended in the case of a worker:
● Was dismissed on disciplinary grounds, provided for by UAE's Labour Law or the Human Resources Law in the Federal Government.
● Has committed fraud or deceit in making the claim.
● Is employed by a fictitious establishment.
Penalties for Non-Compliance
The UAE government has prescribed fines against employees for non-subscription or failure to comply with requirements for payment for unemployment insurance. Effective 1 October 2023:
● A penalty of AED 400 shall be imposed on whoever is late in paying the subscription.
● Fine of AED 200 to whoever does not pay his premium for more than three months beyond the due date, and this falls within the case of cancellation of his insurance certificate.
● In the event of failure to pay the fines within three months from the date it is due, the amount shall be deducted through Wage Protection System (WPS), end-of-service benefits, or by other means specified by MoHRE.
Objectives of the Scheme
The Unemployment Insurance Scheme aims to:
● Provide the insured with a temporary income during periods of unemployment.
● Make the Emirati workforce more competitive.
● Provide social protection against poverty with a standard of decent living for the unemployed.
● Contribute to a competitive knowledge economy by attracting and retaining top international talents.
Regulations Governing the Scheme
The Unemployment Insurance Scheme is governed by:
● Federal Decree Law No. 13 of 2022 Concerning Unemployment Insurance Scheme.
● Cabinet Resolution No. 97 of 2022 Concerning the Procedures and Controls for Implementing Unemployment Insurance Scheme.
How HHS Lawyers in Dubai Can Assist You
The Unemployment Insurance Scheme might be very difficult to deal with, considering all the requirements involved. Let HHS Lawyers in Dubai assist you with all your legal needs on employment and insurance issues. Our team of experts can seamlessly walk you through subscription, advising your rights and obligations and, if so required, on disputes or issues arising on the subject matter of the scheme. For reliable and professional legal services in the UAE, contact HHS Lawyers today.
