A Detailed Guide To UAE’s New Unemployment Insurance Scheme 2023

The United Arab Emirates (UAE) is renowned for its robust economy, attracting diverse talents from around the world. In line with its continuous efforts to enhance the well-being of its residents and provide social security, the UAE has introduced a new unemployment insurance program. At present, the Unemployment Insurance Scheme is administered by the Dubai Insurance Company and is now in effect under cabinet resolution no. 97 of 2022.

Social Security for All

The UAE unemployment insurance scheme ensures that individuals, whether Emiratis or residents, can maintain a decent standard of living during periods of unemployment. It extends a helping hand during the turbulent times of job loss, giving individuals and families peace of mind. This initiative aligns with the UAE’s vision of nurturing a safe and secure environment for all.

Attracting International Talent

Beyond providing a robust safety net for its workforce, the UAE’s unemployment insurance scheme offers another notable benefit – the country’s increased ability to attract international talent. The assurance of continued monetary support from authorities alleviates many concerns when considering job options in the UAE. This will undoubtedly positively impact the nation’s ability to draw in top-tier professionals from around the world.

Affordable Premiums for Employees

Participation in the unemployment insurance scheme is not only beneficial but also affordable. Employees must pay a modest monthly insurance premium while they are gainfully employed. These premiums are calculated based on their basic salary, with additional benefits available as optional add-ons. Premium payments can be made monthly, quarterly, half-yearly, or annually, although it’s important to note that the insurance policy is subject to VAT.

The cost of the insurance premiums varies according to salary brackets:

• Workers earning a basic salary of AED 16,000 or less contribute a minimum premium of AED 5 per month (AED 60 annually). The maximum compensation available to this category is AED 10,000.
• Employees with a basic salary exceeding AED 16,000 contribute AED 10 per month (AED 120 annually), with a maximum compensation cap of AED 20,000.

To be eligible for benefits under this insurance program, workers must have paid the insurance premiums for at least twelve months. This requirement ensures the system is sustainable and supports those who genuinely need it.

Eligibility Criteria: Who Qualifies?

The new UAE unemployment insurance scheme is available to all Emiratis and UAE residents employed in the public or private sector who are above 18 years of age. To be eligible, employees must have a minimum of 12 months of work experience in the UAE. However, individuals who have been terminated for disciplinary reasons or have voluntarily resigned are not eligible to claim the benefits provided by the unemployment insurance scheme in the UAE.

Exclusions to the scheme include:

• Individuals who are investors, business owners, or entrepreneurs and who own and manage their business entities in the UAE.
• Minors below the age of 18.
• Domestic workers and housemaids.
• Temporary employees.
• Retirees who already receive a pension and have joined a new employer.

Guide on Claiming Unemployment Insurance

Here is a comprehensive guide on how to claim the benefits provided by the UAE unemployment insurance scheme:

• To file an unemployment claim, the employee who has lost their job must do so within thirty (30) days from the date of job loss.
• Upon processing the claim, the insurance company will transfer the compensation amount to the applicant’s account within two weeks.
• All claims will be processed following the terms and conditions of the unemployment insurance policy.
• The approval and disbursement of funds will also consider the legislation and regulations set forth by the Central Bank of the UAE.
• Compensation will be provided for a period of three (03) months or until the applicant secures new employment, whichever occurs earlier from the date of job loss.
• The Ministry of Human Resources and Establishment (MoHRE) will actively monitor the insurance scheme and take corrective actions to address any violations by insurance companies. This ensures the fair and transparent operation of the system.

If an insured individual fails to make payments according to the plan for more than three months after the due date, the insurance policy will be considered terminated. This is to encourage timely premium payments, which are vital to the program’s sustainability.

The introduction of the UAE’s new unemployment insurance scheme in 2023 marks a significant milestone in the nation’s commitment to social security and economic stability. This initiative supports residents during challenging times and enhances the UAE’s appeal as a destination for international talent. With affordable premiums, comprehensive eligibility criteria, and a transparent claims process, the unemployment insurance scheme sets a commendable example for the region and the world. It ensures that the UAE continues to be a welcoming and secure place for all who call it home.

About Smart Zone

At Smart Zone business setup company, we harness years of experience in the UAE business landscape, making us well-equipped to guide businesses through the intricacies of establishing themselves in the region. We understand the unique challenges and opportunities that exist within the Dubai market and provide bespoke solutions tailored to each business’s needs. With our business solutions, entrepreneurs can navigate the regulatory environment, understand local customs, and integrate into the Dubai business community easily and confidently.