Explaining the UAE’s Unemployment Insurance

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September 22, 2023

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What is Unemployment insurance scheme?

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The Unemployment Insurance scheme is a type of insurance and social security program designed to offer financial assistance to both Emiratis and residents employed in the federal and private sectors. In the event they lose their jobs due to termination by their employers. Workers must pay a monthly insurance premium during their employment in exchange for this financial support.

The subscription costs for the Unemployment Insurance scheme are as follows:
  1. Workers with a basic salary of AED 16,000 or less must pay a monthly insurance premium of AED 5 + VAT monthly. The maximum compensation for individuals in this category is capped at AED 10,000 per month.
  2. Those with a salary over AED 16,000 pay AED 10 + VAT monthly. The maximum monthly compensation for individuals in this group is limited to AED 20,000.
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The worker has the flexibility to opt for premium payment frequencies on a monthly, quarterly, semi-annual, or annual basis. Insured workers can opt for additional benefits in partnership with the insurance company, beyond the basic package mentioned earlier. Please note that the value of the insurance policy is subject to Value Added Tax (VAT).

Workers can enroll in the scheme through the ILOE Insurance Pool website and its app, or any other channels officially introduced by the Ministry of Human Resources and Emiratization (MoHRE). Federal government and private sector employees must complete their subscription to the scheme before September 30, 2023.

Filing for a compensation claim

The worker must submit the claim within 30 days from the date of their unemployment. The insurance company must process and transfer the compensation within two weeks of receiving the claim.

Insurance providers must adhere to the insurance policy terms and Central Bank of the UAE regulations when handling claims.

Compensation lasts up to 3 months or until new employment, whichever comes first.

The Ministry of Human Resources and Emiratisation (MoHRE) will report any insurance company violations of the policy terms and conditions.

The Federal Authority for Government Human Resources, in collaboration with the Ministry of Finance, will implement the ‘Unemployment Insurance Scheme’ for federal government employees.

Situations leading to Ineligibility for compensation:

  1. Termination from employment 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 relevant legislations.
  2. Discovery of fraudulent or deceptive activities related to their compensation claim.
  3. Employment at a fictitious establishment.
Failure to Enroll in and Fulfill Payments for the Unemployment Insurance Scheme

Starting on October 1, 2023, the UAE Government will impose penalties on individuals who do not enroll in or adhere to the payment requirements of the Unemployment Insurance scheme. This deadline aligns with Ministerial Resolution No. 340 of 2023, which modifies the timeline for imposing fines related to the Unemployment Insurance System, as specified in Ministerial Resolution No. 604 of 2022 on the Unemployment Insurance System.

Penalties:
  1. If a worker doesn’t enroll by October 1, 2023, there will be a fine of AED 400 imposed.
  2. Late payment beyond three months results in a AED 200 fine and certificate revocation.
  3. Should the worker fail to settle the fine(s) within three months of the due date.
    Collect fines through Wages Protection System (WPS), deduct from end-of-service benefits, or use Ministry of Human Resources and Emiratisation-approved methods.

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