The UAE is a country that is recently updating its regulations and adding new ones. The most recent program of the country is unemployment insurance UAE, which is mandatory for foreign and local employees.
In this article, you are going to learn more about the UAE unemployment insurance scheme, including the eligibility criteria, how to apply for it, and how to make a claim. Let’s observe:
- What is unemployment insurance UAE?
- What are the eligibility criteria for unemployment insurance UAE?
- How does unemployment insurance UAE work?
- How much does unemployment insurance UAE cost?
- What is the process to apply for unemployment insurance UAE?
- How can a terminated employee make an insurance claim?
- How can Connect Resources assist you with unemployment insurance UAE?
1. What is unemployment insurance UAE?
The new unemployment insurance was announced last year, but this program is being enforced since January 1st, 2023.
It is a scheme where employees now need to purchase insurance against job loss since it is mandatory for those that are eligible. The UAE is now enforcing this new scheme to ensure financial stability for employed individuals as well as their well-being.
This goes along with the new end-of-service savings scheme for expats in Dubai since both can help a person while they look for another job.
So, it is a way to ensure that Emiratis and expats can sustain a decent life even when they are facing an unemployment period. Moreover, it will reduce business risks.
According to the most recent information, more than sixty thousand people have subscribed to this new scheme. Basically, if a person loses his or her job, he or she will receive a cash sum for three months, regardless if he or she works in the public or private sector.
Therefore, if you have an employee contract in the UAE, you can apply for this new scheme to stay protected in case you terminate your employment relationship.
1.1 Is unemployment insurance mandatory for everyone in the UAE?
Unemployment insurance is not mandatory for everyone in the UAE. This is because there are some categories of workers that it does not cover. Therefore, it is important to check the eligibility criteria to determine it.
However, if you are eligible, then you must subscribe to it as per the MoHRE, regardless of where you work, your job position, and any other.
This is because if you are not subscribed to the scheme, and you are eligible, you will have to pay a charge of AED 400 for a fine.
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2. What are the eligibility criteria for unemployment insurance UAE?
It is worth mentioning, that not all people are eligible for unemployment insurance Dubai. For this reason, they need to check eligibility to see if it is mandatory to apply for this new program.
So, who is eligible for unemployment insurance in UAE? The person who complies with the following:
- Employees from the private and public sector.
- Employees who work on a commission basis.
However, it is worth noting that the ones that suit under any of the following categories cannot apply for unemployment insurance:
- Investors (owners of establishments where they work).
- Domestic helpers.
- Part-time employees.
- Employees who are under 18 years old.
- Retirees (if they receive a pension and have joined a new job).
As you can see, it is important to check whether you are eligible or not. If you have been considering securing part-time work or a second job, you need to know that you will not be eligible for this insurance for this second job.
3. How does unemployment insurance UAE work?
Once you have your labour contract in the UAE, and your visa, you can start working legally. But, what happens after your work contract is terminated? If you are subscribed to unemployment insurance in the UAE, you can submit your claim to receive compensation.
If you comply with the criteria to make a claim, you will receive compensation for a maximum of three months from the date you lose your job.
This cash amount will be calculated at 60% of your basic salary. And the maximum payment will be AED 20,000 per month since this is established by the Ministry.
4. How much does unemployment insurance UAE cost?
Since unemployment insurance is a new scheme, there are still many doubts about it and about how it works.
Many employees may believe that the employer is the one responsible for paying the insurance, but this is not the case.
4.1 Who pays for the insurance coverage?
The employee has to pay unemployment insurance by himself. However, the payment can be monthly, quarterly, or on an annual basis, as per the agreement with the insurance company.
4.2 How much does the insurance cover cost?
According to the Ministry, the insurance program has two categories. Thus, the payment will be based on under which category the worker falls.
The first category covers those workers that earn less than AED 16,000 per month. In this case, an employee that wants to get insurance coverage has to pay a monthly premium of AED 5. However, the insured can decide to pay it annually, which will be AED 60.
The second category covers those workers that earn more than AED 16,000 per month. Employees will have to pay AED 10 per month, or AED 120 annually. They can agree to pay the premium monthly, annually, quarterly, or semi-annually.
It is worth noting that the insurance policy’s value is subject to VAT. So, the employee has to be aware of the total payment they have to make.
As you can see, it is not a payment that will become a burden to employees. Therefore, you can decide to pay it annually if you do not want to have worries about this matter. Or, you can pay it monthly if this way is easier for you.
But, make sure to make payments on time, since you will have to pay AED 200 if you do not pay the premium within 3 months of its expiry.
If you have been struggling with job loss before, then this new scheme is perfect for you to ensure you have a great quality of life even when you are unemployed and looking for a job.
5. What is the process to apply for unemployment insurance UAE?
To apply for the unemployment insurance scheme UAE, you need to follow a simple process. The good news is that many firms in the UAE offer insurance policies to individuals.
So, it will not be difficult to find the one that can help you with this matter. Depending on the Emirate where you are located, you can contact any company to purchase your policy and make the necessary payments.
Here at Connect Resources, we can assist you to get the best policy that suits your budget.
Once you have selected the best firm, you have several ways to subscribe to the insurance program. You can choose among the following:
- Insurance pool’s official portal or smart application.
- Business service centres.
- Money exchange companies.
- Du and Etisalat.
- Bank ATMs.
- Kiosk machines.
However, the Ministry probably announces new channels that allow employees to sign up for the insurance scheme. This is with the purpose to make the process easier.
6. How can a terminated employee make an insurance claim?
Although unemployment insurance is available for almost all workers, it does not mean that everyone is eligible for compensation. This is because, as an insurer, you need to comply with the established criteria for filing a claim.
6.1 Who is eligible for the insurance compensation?
So, if an employee loses his or her job, due to reasons that are beyond his or her control, the employee is eligible for cash compensation, as long as it meets the following ten criteria. This is following the Involuntary Loss of Employment Scheme:
- Must have been subscribed to the insurance scheme for a minimum of 12 consecutive months.
- The subscription must not have been interrupted for 3 consecutive months.
- Once the person loses the job, must submit the claim within 30 days of the date of the job loss.
- The individual must have paid all the insurance premiums on time.
- The employee must have not been dismissed for disciplinary reasons, as per the current legislation.
- Resignation cannot be the reason for job loss or unemployment.
- The worker cannot have an existing complaint due to absence from work.
- If any of the following is true, the worker is not entitled to compensation: the establishment where they work is fictitious or there has been fraud involved in the claim.
- The employee cannot lose his or her job due to non-peaceful labour strikes.
- To file the claim, the insurer must be in the UAE.
Moreover, according to the regulations, the worker will not receive compensation if they have lost their job due to any of the following:
- War, riot, revolution, military invasion, or any other related.
- Discharge of pollutants, nuclear events, or other related.
- Terrorism or contribution to it.
- Direct action by the UAE Government of expropriation or nationalization.
- Force majeure causes, as per the Civil Transactions Law of the UAE.
6.2 The process for the insurance claim
If you are subscribed to the insurance claim, you have lost your job, and you also comply with the eligibility criteria for reimbursement, then you can file your claim.
You will need to submit your claim through any of the three approved channels of the insurance pool:
- Smart Application.
- Contact Centre.
Make sure to submit it within 30 days from the date you become unemployed. If after the insurance pool has evaluated your claim and it gets approved, you will receive your compensation within two weeks from the claim date.
6.3 How is the calculation of the insurance claim?
Once you submit your claim, you must know that you will receive compensation for a maximum of three months. And the calculation will be:
- 60% of your average salary over the 12 recent months before your job loss
- Maximum compensation period of three months
Also, you will get paid a cash sum that will not exceed AED 10,000 if you are classified under the 1st category. Those that are under the second category, will receive a monthly cash sum that will not exceed AED 20,000.
For example, if you have been working in the UAE and your basic salary was AED 10,000 per month, but you lose your job, then, according to the employment insurance, you will receive the 60% of this amount. Thus, you will get AED 6,000 for three months.
This is why employees should learn everything about the employee salary certificate. This is intending to be clear about how much you earn monthly.
7. How can Connect Resources assist you with unemployment insurance UAE?
The unemployment insurance law can be confusing for both employees and employers. In this regard, we have specialists that can help you clarify everything you need to know about it.
Also, we want to help your business achieve its full potential. Get to experience how a PEO can handle your HR needs by partnering with us to solve your requirements. We provide the following HR Services:
- Payroll Outsourcing
- Staff Outsourcing
- Employment Visa Outsourcing
- HR Consultancy
- Executive Search
- IT Outsourcing
- Contract Staffing Services
Do you want to learn more about the unemployment insurance scheme? Contact us at +971 43 316 688 so our team of experts can provide you with answers about how this insurance for unemployment can help workers. You can also send us an email at firstname.lastname@example.org.
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