What is the ‘Unemployment Insurance scheme’?
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.
The financial support will be given in exchange of a monthly insurance premium paid by the worker during his employment. It aims to ensure continued decent living for the unemployed and achieve a competitive knowledge economy by attracting and retaining best international talent.
Objectives of the scheme
The insurance scheme aims to:
- provide the insured with income for a limited period of time during his/her unemployment
- enhance the competitiveness of Emiratis in the labour market
- provide social protection to ensure continued decent living for the unemployed
- achieve a competitive knowledge economy by attracting and retaining best international talent.
To be eligible for the compensation, the worker must have been paying the monthly premium for at least 12 consecutive months.
Scope of the scheme
The scheme applies to all workers in the private and federal sector 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.
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. The value of the insurance policy is subject to VAT.
Federal government and private sector employees must subscribe to the scheme from 1 January 2023.
Filing for a compensation claim
- The worker must submit the claim within 30 days from the date of his/her unemployment. The insurance company has two weeks, from receiving the claim, to transfer the compensation to the insured’s account.
- The insurance providers must process the insurance claims in accordance with the terms and conditions of the insurance policy and the applicable legislations of the Central Bank of the UAE.
- Compensation will be paid from the date he/she loses the job and will be paid for 3 months or until he/she finds a job, whichever is earlier.
- MoHRE will report any breach to the terms and conditions of the insurance policy by the insurance companies.
- With respect to the employees of the federal government, Federal Authority for Government Human Resources will implement the mechanism of the ‘Unemployment Insurance Scheme’ in coordination with Ministry of Finance.
Channels for subscribing
Workers may subscribe to the scheme via ILOE Insurance Pool website and its app and any other channel which MoHRE may announce.
This article is issued in the public interest based on the available data from the government websites and also from the available information in the public domain.
Spectrum Accounting and Auditing is a medium sized accounting, auditing and tax consulting firm based in Dubai. Our constant quest for continuous growth is the foundation for high-quality accountancy, audit and advisory services. The diversity of skills and technical expertise available with Spectrum along with its affiliated offices caters to all kinds of needs of its clients throughout United Arab Emirates, Middle East and India.
If you have any query: [email protected] / Call: +971 4 2699 329 / WhatsApp: +971 50 9866 466