Costs revealed for UAE unemployment insurance scheme

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The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) has signed an agreement with a group of nine local insurance companies to launch the Unemployment Insurance Scheme.

Federal government and private sector employees can subscribe to the scheme from January 1, 2023.

It’s divided into two categories – the first covering those with a basic salary of up to AED 16,000. The insurance cost for employees in this category is set at AED 5 per month (or AED 60 annually).

The second category includes those with a basic salary exceeding AED 16,000, and the insurance cost is AED 10 per month (or AED 120 annually).

The payment can be made by the employee monthly, quarterly, half-yearly, or on an annual basis. The value of the insurance policy is subject to value-added tax (VAT).

Employees who work on a commission basis may also subscribe to the scheme.

Monthly Compensation and Subscription & Claims Process

The value of the monthly compensation will not exceed AED 10,000 for the first category, and AED 20,000 for the second category, where the insurance coverage compensation is calculated on a monthly basis at the rate of 60 per cent of the basic salary and for a maximum of three months for each claim from the date of unemployment.

The insured (the employee) must submit the claim through the three approved claim channels – the insurance pool’s e-portal, smart application or call centre, provided this is done within 30 days from the date of unemployment.

Compensation will be paid within two weeks from the date of the claim and capped at a maximum of three months per claim.

Employees are eligible for compensation if they have worked and subscribed for at least 12 months to the insurance scheme, and as long as they have not been dismissed for a disciplinary reason or resigned.

The insured (employee) is not eligible for a compensation if they have left the country or joined a new job.

Employees can subscribe via the Insurance Pool’s website, smart application, bank ATMs, kiosk machines, business service centres, money exchange companies, du and Etisalat, SMS, or any other channel, which MoHRE may announce at a later date.

As previously announced, those excluded from the insurance scheme include investors, owners of establishments in which he or she works, domestic helpers, employees with a temporary employment contract, juveniles under 18 years of age, and retirees who receive a retirement pension and have joined a new job.

Protection and Empowerment

The new insurance scheme aims to protect employees in the private sector and the UAE’s federal government by providing them with a cash compensation for a limited period not exceeding three months for each claim in the event of job termination for reasons beyond their control.

It also creates a safety net that supports workers in their career path and ensures their livelihood by relying on mechanisms that do not incur additional costs for employers and is paid by the employee himself and provide a balance in the job market that allows achieving the UAE’s strategic goals and supporting the continuity and growth of economic activities.

“We are keen to accelerate the implementation of the unemployment insurance law, through this agreement, which outlines the practical details of implementing its provisions on the ground, including employees in the federal government and private sectors, leading to a highly competitive and attractive labour market, while enhancing the stability of the workforce to be able to contribute to building the best and most active economy in the world,” said Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratisation.

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