UAE introduces unemployment insurance scheme from January 01, 2023

The President of the United Arab Emirates (UAE) on September 15, 2022 confirmed the introduction of the Unemployment Insurance scheme in UAE.

The Unemployment Insurance scheme is a form of insurance/social security that provides Emiratis and residents working in the federal and private sectors, financial support if they lose their jobs, as a result of termination by their employers except:

• investors, business owners who own and manage their business themselves
• domestic workers
• employees on a temporary basis
• juveniles under the age of 18
• retirees who receive pension and have joined a new employer.

Eligibility Requirements

• There must be a minimum subscription period of 12 consecutive months for the insured in the scheme.
• The insured must not be dismissed for disciplinary reasons under the Labour Relations Law and the Human Resources Law of the federal government.
• During the compensation period, the insured shall not be hired by another employer.
• There must not be any fraud/deceit involved in the claim.

Cost of subscription

• Workers with a basic salary of AED 16,000 or less will need to pay a monthly insurance premium of AED 5, i.e. AED 60 annually. The compensation for this category must not exceed a monthly amount of AED 10,000.
• Those with a basic salary exceeding AED 16,000 will need to pay AED 10 per month, i.e. AED 120 annually. The compensation for this category must not exceed AED 20,000 monthly.
• The worker may choose to pay the premium on a monthly, quarterly, half-yearly or on an annual basis.
• The insured worker may, in coordination with the insurance company, subscribe to additional benefits in addition to the above basic package

Compensation amount and Duration

• A monthly compensation of 60 percent of the contribution salary is provided for a period of three months from the date of unemployment up to a maximum of Dhs.20,000 (twenty thousand dirhams).
• An compensation period of 3 months is available for each claim; provided that the coverage period does not exceed (12) twelve months during the insured’s employment in the UAE labor market.

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change