UAE Unemployment Insurance

What is an Unemployment Insurance Scheme?

The UAE Unemployment Insurance Scheme or Involuntary Loss of Employment (ILOE) program is a form of insurance/ social security that provides the residents of UAE and other Gulf countries working in the private sector, financial support if they lose their jobs due to unforeseen circumstances or termination of employees. 

The main aim of this scheme is to ensure the living needs of the unemployed. This scheme relaxes employees from the fear of losing their jobs. The financial support is provided in return for a monthly premium paid by the worker during his employment period. The compensation is provided in the form of cash.

Scope of the scheme

This scheme applies to all the private and federal sectors except the following:

  • Those who have their own business or invest in other businesses
  • Domestic workers
  • Employees on a contract or temporary basis
  • People under the age of 18
  • People who are retired from their job and work with another employer
uae unemployment insurance

Cost of UAE Unemployment Insurance Scheme

The cost of UAE unemployment insurance subscription is classified under two categories:

1. Employees who are receiving a basic salary of AED 16,000 or less need to pay monthly insurance of AED 5 or AED 60 annually. The compensation provided to this category of employees does not exceed AED 10,000. The monthly compensation provided to an employee is 60% of the average basic salary over the most recent 6 months before the Involuntary Loss of Employment.
 
2. Employees who are receiving a basic salary of more than 10,000 AED need to pay monthly insurance of AED 10 or AED 120 yearly. The compensation provided to this category of employees does not exceed AED 20,000. 
 
The worker may choose how to pay the premium whether monthly, quarterly, half-yearly or annually. The insured person may also opt for additional benefits along with these benefits by paying an extra premium amount. The value of the subscribed insurance policy is subjected to VAT.

How to subscribe to the UAE Unemployment Insurance Scheme?

A person eligible for this scheme may subscribe via various means such as the Involuntary Loss of Employment Scheme website, application, bank ATMs, kiosk machines, service centers, money exchange companies etc, which is announced by MoHRE (Ministry of Human Resource Emirates).

Listed companies that provide insurance policy

Dubai Insurance Company is the representative of insurance pool that consists of the 8 national insurance companies:

1. Dubai Insurance Company
2. Abu Dhabi National Insurance Company
3. Al Ain Ahlia Insurance Company
4. Emirates Insurance Company
5. National General Insurance Company
6. Orient Insurance
7. Oman Insurance Company
8. Orient UNB Takaful Company

How to file the compensation claim?

The workers must submit a claim within 30 days of unemployment with valid proof. The insurance company generally takes two weeks from receiving the claim to transfer the funds to the insured’s bank account.

The Insurance Company must process the insurance claims in adherence to the terms and conditions of the Central Bank of UAE. The compensation provided to the employee will be paid from the date the person loses the job and this amount will be paid for 3 months or until the person finds the new job, whichever happens first.

Any breach of terms and conditions of insurance policy by insurance companies with respect to the private sector employees in UAE will be regulated by MoHRE.

Concerning the employees of the Federal government, the Federal Authority for Government Human Resources will implement the mechanism in collaboration with the Ministry of Finance. 

What is the eligibility of UAE Unemployment Insurance Scheme

To be eligible for the compensation, employees must have been paying the premium amount for consecutive 12 months.

Dismal of Compensation

In the following circumstances, the worker will lose his/her eligibility to receive the compensation amount:

  • If the employee was dismissed from their organization for disciplinary reasons under UAE Labor Law in the private sector.
  • If fraud has been involved in the loss of unemployment
  • If the organization where the employee works is fictitious

Objectives of the UAE Unemployment Insurance Scheme

The major objective of the UAE unemployment insurance scheme is to:

  • Provide the insured with a decent amount to cover the cost of living during the unemployment period.
  • Enhance the competitiveness of Emirates in the global market
  • Provide social protection to ensure decent living during the unemployment period
  • Achieve a competitive advantage economically by attracting and retaining the best talent

Regulations governing the UAE Unemployment Insurance Scheme

Following are the regulations that govern the UAE Unemployment Insurance Scheme:

  • Federal Decree Law No 13 of 2022 concerning Unemployment Insurance Schemes
  • Cabinet Resolution No 97 of 2022 concerning Procedures and Controls for Implementing UAE Unemployment Insurance Scheme.

Deadline Extension for subscribing Unemployment Insurance Scheme

Previously the Ministry of Human Resource Emirates had given the eligible employees until 30 June 2023 to subscribe to the unemployment insurance program and if they fail to subscribe a fine of AED 400 will be imposed. This date has been extended till 1 October 2023 and a penalty will be imposed on non-subscribers.

Payment of unemployment insurance contributions

According to the regulations and guidelines of MoHRE, it is the responsibility of employees, not employers, to enroll in compulsory unemployment insurance programs.To avoid the penalties and recurring fines employers should subscribe to unemployment insurance before the due date. 

Employers may also wish to pay the unemployment insurance amount on behalf of the employees. At present, the IOLE program allows this choice only for mainland employers, because free-zone entities are yet to be registered.

Implications

Employers should remind their employees regularly to subscribe to the unemployment insurance program and urge employees to consider the impact of noncompliance of the same.
Employers should also factor in contribution costs and administrative processes with respect to the equalized assignees.

Frequently Asked Questions (FAQs)

The Unemployment Insurance is a security that provides financial support to employees if they loss their jobs.

Yes it is mandatory for every employee to register themselves in the Unemployment Insurance in UAE and failing to do so may result in legal complications.

The last date to enroll in UAE Unemployment Insurance in UAE has been extended from 30 June 2023 to 30 September 2023.

You can submit the claim through three approved claim channels the insurance pool’s e-portal, the insurance pool’s smart application, and the insurance pool’s call centre.

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