The UAE Unemployment Insurance scheme is a form of social security/insurance to provide financial support when an employee loses their job as a result of termination by their employer.
The financial support will be given in exchange of a monthly insurance premium, paid by the employee during their employment.
The scheme applies to all workers in the government and private sector, for both Emiratis and residents. Some exceptions apply.
This new unemployment insurance scheme was introduced in Federal Decree-Law No. 13 of 2022. Ministerial Resolution No. 604 of 2022 and Cabinet Resolution No. 97 of 2022 provided the executive details for the implementation of the scheme fixing the deadline of 30th June 2023 for the enrolment.
1. Who has to subscribe
All government and private sector employees with the exception of the following categories:
- Investors (Business owners who own the entire business and manage it themselves)
- Domestic Workers
- Contractual workers/employees on a temporary basis
- Juveniles under the age of 18
- Pension-receiving retirees who have joined a new employer
Early on, there was some uncertainty about employees of companies registered in Free Zones, as they were not allowed to enroll in the scheme until beginning of May.
However, now the enrolment procedures have been updated and also employees of companies registered in Free Zones can (must) subscribe to the insurance scheme.
The deadline for enrolment in the unemployment insurance scheme is 30 June 2023.
Failure to enroll within the deadline will trigger late/non-subscription fines.
3. How to enroll to the UAE unemployment insurance scheme?
4. Premium and monthly compensation in case of unemployment
• Employees who are earning a basic salary not exceeding AED16,000.
• Insurance cost: AED5 per month (or AED60 annually)
• Employees earning AED16,000 and above
• Insurance cost: AED10 (or AED120 annually)
Each claim shall be compensated monthly at a rate of 60% of the subscription salary for a maximum period of 3 months from the date of unemployment, provided that the monthly compensation does not exceed AED10,000 (cat. A) / AED20,000 (cat. B).
5. Is the employer involved?
It is solely the employee's responsibility to subscribe and pay the unemployment insurance.
The employer is not involved and has no obligation neither to pay the premium nor to withhold the premium from the salary.
However, we highly recommend all the employers to inform their employees about the new mandatory unemployment insurance scheme.
Fidinam can help
Want to know more about this topic and what it means for you/your business? Need any assistance for the enrolment?
Don't hesitate to contact us via the form below or email@example.com. Our experts at Fidinam DMCC are here to support you.