On 15 September 2022 the UAE government issued a Federal Degree Law No. 13 of 2022 concerning Unemployment Insurance (“the Law”), which came into force on 29 September 2022 and applied to all workers (UAE National and Expats) in the private sector and the Federal government sector in the State.
In line with the Law and the relevant Cabinet Insurance Scheme, the Ministry of Human Resources and Emiratization (MoHRE) recently executed an agreement with a group of nine local insurance companies, to launch the framework of the new Unemployment Insurance Scheme.
The new insurance scheme aims to provide protection for 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 employees 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.
The agreement was signed in the presence of Dr Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, and Butti Obaid Al Mulla, Chairman of Dubai Insurance Company. The agreement was signed by Khalil Al Khoori, Under-Secretary for Human Resources Affairs at MoHRE, and Abdul Latif Abu Qura, CEO of Dubai Insurance Company.
Under the new insurance scheme, federal government and private sector employees must subscribe to the scheme from 1st January 2023. 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.
The insurance scheme is divided into two categories – the first covering those with a basic salary of Dhs16,000 and less. The insurance cost for the insured employee in this category is set at Dhs5 per month (or Dhs60 annually). The second category includes those with a basic salary exceeding Dhs16,000, and the insurance cost is Dhs10 per month (or Dhs120 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). The employee who works on a commission basis may also subscribe to the scheme.
The value of the monthly compensation will not exceed Dhs10,000 for the first category, and Dhs 20,000 for the second category, where the insurance coverage compensation is calculated on a monthly basis at the rate of 60 percent 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, the insurance pool’s smart application, and the insurance pool’s 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. Compensation for an employee is eligible if they have worked and subscribed for at least 12 months to the insurance scheme as long as they have not been dismissed for a disciplinary reason or because of resignation.
The insured (employee) is not eligible for a compensation if they have left the country or joined a new job.
Employees may subscribe to the insurance scheme 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.