Losing a job can be a tough experience, but unemployment insurance is a safety net for you in the UAE! This scheme is designed to support both Emiratis and expats working in various sectors in case of unexpected job loss.
In this article, we’ll explore key aspects of this important financial protection, answering your most pressing questions about how unemployment insurance works in the UAE.
- Purpose
- Eligibility
- Compensation Amount
- How to subscribe
- Cost
- Penalties
- Compensation Claim
- Active Payments eligibility
What Is the Purpose of the Unemployment Insurance Scheme in the UAE?
The unemployment insurance scheme in the UAE serves several purposes:
- Provides income support to individuals during their unemployment period, ensuring they can meet their basic needs.
- Enhances Emiratis’ competitiveness in the labor market by providing financial security and reducing the financial burden of job loss.
- Contributes to the overall goal of building a competitive knowledge-based economy by attracting and retaining the best international talent.
Who Is Eligible to Participate in the Unemployment Insurance Scheme?
Both Emirati nationals and residents working in the federal government and private sectors are eligible to participate in the unemployment insurance scheme.
However, certain categories are exempt from the scheme, including:
- Investors (owners of companies they work at)
- Domestic helpers
- Temporary-contract workers
- Juveniles under the age of 18
- Retirees who are entitled to a pension and have joined a new job.
How Does the Compensation Amount in the Unemployment Insurance Scheme Work?
The compensation amount in the unemployment insurance scheme is based on the individual’s average basic salary over the six months before the loss of employment.
- Employees with a basic salary of AED 16,000 or less are eligible for a maximum monthly compensation of AED 10,000.
- Those with a basic salary exceeding AED 16,000 can receive a maximum monthly compensation of AED 20,000.
The compensation is paid for a maximum of three consecutive months or until the individual finds a new job, whichever occurs earlier.
How Can Individuals Subscribe to the Unemployment Insurance Scheme?
To subscribe to the unemployment insurance scheme, individuals can visit the ILOE Insurance Pool website and its app and any other channels announced by the Ministry of Human Resources and Emiratisation (MoHRE).
Is Unemployment Insurance Mandatory in UAE?
Yes, unemployment insurance is mandatory in the UAE. Moreover, starting from October 1, 2023, the UAE Government started implementing fines for workers who haven’t subscribed to the Unemployment Insurance scheme or have failed to make timely payments.
What was the Last Date for Unemployment Insurance in UAE 2023?
The UAE’s mandatory Unemployment Insurance Scheme, which began on January 1, 2023, had a deadline extended to October 1, 2023, for workers to enroll and comply with the scheme’s requirements.
How Much Does Unemployment Insurance Cost in Dubai?
In Dubai, the unemployment insurance cost varies according to the salary.
- For employees with a basic salary up to AED 16,000, the cost is AED 5 per month or AED 60 annually.
- For those earning over AED 16,000, the monthly cost is AED 10, or AED 120 annually.
Who Is Responsible for Paying Unemployment Insurance in the UAE?
In the UAE, the responsibility of subscribing and paying for unemployment insurance falls entirely on the employee; this means that employers are not required to contribute to this insurance, nor are they obligated to deduct the premium from the employee’s salary.
It’s an individual responsibility for employees to ensure they are covered under this scheme.
What Are the Penalties for Non-compliance with the Unemployment Insurance Scheme?
Non-compliance with the unemployment insurance scheme can result in fines and other penalties like employees who failed to subscribe to the scheme before 1 October 2023 was fined AED 400.
Additionally, if an insured worker fails to pay their insurance premiums for more than three months beyond the due date, they may be fined AED 200, and their insurance certificate may get cancelled.
Besides, it is crucial for employees to settle any fines within three months of the due date to avoid further consequences.
How Can Employees File a Compensation Claim Under the Unemployment Insurance Scheme?
Employees must submit a compensation claim within 30 days from the date of their unemployment. Moreover, The insurance company has two weeks to process the claim and transfer the compensation to the insured’s account.
In addition, it is important for employees to ensure that they meet the terms and conditions of the insurance policy and the applicable legislation of the Central Bank of the UAE to receive their compensation successfully.
Can Employees Subscribe to Additional Benefits in Addition to the Basic Package of the Unemployment Insurance Scheme?
Yes, insured workers have the option to subscribe to additional benefits in coordination with the insurance company. These additional benefits can provide extra coverage and support beyond the basic package of the unemployment insurance scheme.
However, it is recommended that individuals assess their needs and consider subscribing to additional benefits that align with their specific requirements.
What Happens if an Insured Worker Leaves the Country or Starts a New Job?
If an insured worker leaves the country or starts a new job, they will not be eligible for unemployment insurance benefits.
They need to understand that the unemployment insurance scheme is designed to provide support to those who have lost their jobs and are actively seeking new employment within the UAE.
After How Many Months of Active Payments Is the Individual Eligible for Compensation?
To be eligible for compensation under the unemployment insurance scheme, you must have paid the monthly premium for at least 12 consecutive months.
In addition, this requirement ensures that individuals have made sufficient contributions to the scheme before accessing the benefits in case of job loss.
Can Employees of Free Zone Areas and Semi-governmental Employers Participate in the Unemployment Insurance Scheme?
Yes, the UAE government has recently announced that the unemployment insurance scheme is now mandatory for employees of free zones and semi-governmental employers.
Additionally, this doesn’t apply to employees of entities registered in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).
However, employees of entities registered in these financial-free zones can voluntarily enroll in the scheme.
With the unemployment insurance scheme in the UAE, you can rest assured of any unexpected problems with your work. Also, after knowing all about this scheme, make sure to apply for it to be eligible for it to be on the safe side.
