The government of the UAE has made the welfare of its citizens a priority and has implemented various programs for their benefit. From infrastructure development to transparent labor laws, the government has been providing numerous advantages to the people. One of the latest developments in this regard is the introduction of an unemployment insurance scheme. This scheme aims to provide financial stability and sustainability for employees in the country, serving as a social security program for unemployed individuals.
Content Recap:
Unemployment Insurance in the UAE
The UAE offers unemployment insurance for both Emiratis and residents of the country. This program was announced by the Ministry of Human Resources and Emiratisation with the objective of supporting individuals who have lost their jobs. It is mandatory for all federal government and private sector employees to subscribe to this program by September 30, 2024. Failure to subscribe will result in penalties.
Functioning of the Program
A total of 9 insurance companies have partnered with the Ministry of Human Resources and Emiratisation for the implementation of this program. The list of insurance companies is as follows:
- Abu Dhabi National Insurance Company
- Al Ain Ahlia Insurance Company
- National General Insurance Company
- Dubai Insurance Company
- Orient Insurance
- Oman Insurance Company
- Orient UNB Takaful Company
- Abu Dhabi National Takaful Company
- Emirates Insurance Company
The unemployment insurance will have two categories based on employees’ basic salary. Those earning up to AED 16,000 fall into the first category, while those earning more than AED 16,000 are in the second category.
In the first category, the cost of unemployment insurance for employees is AED 5 plus VAT per month, which amounts to AED 60 per year. For the second category, the cost is AED 10 plus VAT per month, totaling AED 120 per year. Employees can choose to make payments on a monthly, quarterly, yearly, or semi-annual basis. The insurance policy value is subject to VAT.
The purpose of insurance is to secure the future without burdening individuals. Eligible employees will receive a monthly cash sum if they meet the criteria. In the first category, the sum will not exceed AED 10,000, while in the second category it will be AED 20,000. These figures are determined based on 60% of the basic salary.
Employees who have lost their jobs must notify and make a claim within 30 days through designated channels such as a smart app, helplines, or insurance portals. The compensation will be paid within 2 weeks, and the claim is capped at a maximum of 3 months.
Subscription for the program can be done through various methods, including the official website or app, which are free of charge. Employees who fail to register for the insurance by June 30, 2023, will be subject to a penalty of AED 400.
Employers are not required to register their employees or pay for the scheme.
Eligibility for Unemployment Insurance
The UAE unemployment insurance scheme became effective on January 1, 2023, and is mandatory for all employees. UAE citizens and residents who have lost their jobs can avail the benefits of this insurance coverage.
To be eligible, a UAE resident employee or Emirati must have work experience and have subscribed to the scheme for a minimum of 12 months. Employees who resign or are terminated for disciplinary reasons are not eligible for insurance benefits. Additionally, insured employees who leave the country or join another company will no longer be eligible.
Exemption
This scheme does not apply to the following categories:
- Domestic employees
- Investors
- Employees in free zones
- Contract employees
- Employees under 18 years old
- Retirees with pension benefits
Documents Required for Subscription Enrollment
- Emirates Identity
- UAE mobile number
Conclusion
During periods of unemployment, individuals face challenging times. The UAE government has taken progressive measures to provide support through the unemployment insurance scheme, allowing employees to take care of their families during this transition period.