All employees in the UAE are obligated to enroll in the compulsory unemployment insurance program. Failure to subscribe by the initial deadline of June 1 will result in fines after the one-month grace period, which concludes on June 30.
The mandatory job loss insurance applies to all employees in the UAE, encompassing both freezone and semi-government workers.
The insurance scheme consists of two categories:
1- Employees who earn a basic salary of AED 16,000 or lower must pay a monthly insurance premium of AED 5, which amounts to an annual payment of AED 60. The maximum monthly compensation for this category should not exceed AED 10,000.
2- Individuals with a basic salary exceeding AED 16,000 must pay AED 10 per month, totaling AED 120 annually. The maximum monthly compensation for this category should not exceed AED 20,000.
The worker has the option to make premium payments on a monthly, quarterly, semi-annual, or annual basis.
The insured employee has the opportunity to opt for additional benefits beyond the basic package, subject to coordination with the insurance company.
The value of the insurance policy is subject to the application of VAT.
Filing Compensation Claim
Workers must submit their compensation claims within 30 days of becoming unemployed. Once the worker submits the claim, the insurance company has a two-week period to transfer the compensation to the insured’s account.
Insurance providers have the responsibility of processing the claims. They must do so in accordance with the terms and conditions of the insurance policy. Additionally, they must adhere to the relevant regulations set by the Central Bank of the UAE.
Compensation will be paid to the worker starting from the date of job loss. It will continue for a maximum duration of 3 months. Alternatively, compensation will be provided until the worker finds new employment, whichever comes first.
Any violation of the insurance policy terms and conditions by the insurance companies will be reported by the Ministry of Human Resources and Emiratisation (MoHRE).
Regarding employees of the federal government, the Federal Authority for Government Human Resources will work in coordination with the Ministry of Finance to implement the “Unemployment Insurance Scheme” mechanism.
Eligibility
To be eligible for compensation, workers must have been consistently paying the monthly premiums for at least 12 consecutive months.
Suspension of Compensation
The insured worker will lose eligibility for compensation if any of the following situations occur:
- The employer dismissed them from work due to disciplinary reasons under the UAE’s Labor Law in the private sector (Federal Decree-Law No. 33 of 2021 Regarding the Regulation of Employment Relationship and its amendments), as well as the Human Resources Law in the federal government, and any other applicable legislation.
- Fraud or deceit is involved in their compensation claim.
- The establishment where they work is fictitious.
