UAE UNEMPLOYMENT INSURANCE SCHEME

On October 11, 2022, the Ministry of Human Resources and Emiratization ("MOHRE") stated that the UAE had established the unemployment insurance law according to Federal Decree No. (13) of 2022 ("Unemployment Insurance Scheme") to compensate insured employees with a monetary amount ("Compensation") for a limited term in the case of his/her unemployment in return for a premium collected from the employee.

The Unemployment Insurance Scheme establishes the main structure and criteria for its provisions' applicability. Article 3 of the Unemployment Insurance Scheme says it applies to private and federal employees but not investors, domestic workers, temporary contract workers, minors, or retirees who get a pension.

The scheme will be coordinated and administered by insurance companies ("Service Provides") authorized by the central bank, which has supervisory power over the UAE's insurance regulator. Accordingly, service providers must comply with the forthcoming Cabinet requirements for offering and administering the scheme. Importantly, under Articles 4 and 7 of the Unemployment Insurance Scheme, the Cabinet is also entrusted with issuing supplementary rules defining the mechanism, operation, and monthly premium paid by insured employees to service providers.

Articles 5 and 6 of the Unemployment Insurance Scheme spell out the initial requirements for payments, which are:

1. The plan covers the national and resident employees of the federal and private sectors.
2. Investors (company owners), domestic workers, contractual/temporary employees, juveniles under 18 and pension-receiving retirees who join a new firm are not covered.
3. The insured employee must be covered for 12 consecutive months, paying the Service Provider the monthly premium. However, the legislation has yet to define if consecutive employment must be completed under the same employer at the commencement of the coverage. The employee's job change during coverage may affect this criterion.
4. The employee's services have been terminated by his/her employer for any cause other than disciplinary ones. Service Providers will likely verify the cause of termination with the employer and MOHRE to determine the employee's eligibility for compensation.
5. The compensation will be suspended if the employee leaves the Service Provider during the Compensation Period.
6. The employee's entitlement to compensation is waived if the latter commits fraud or deception to obtain coverage.
7. The employee must submit the claim through the approved channels within 30 days from the date of unemployment.
8. Subscription fee payments can be made monthly, quarterly, half-yearly or annually.

How to Enroll in the Insurance Scheme?

The employee can purchase the policy through approved subscription channels. The insurer must offer a minimum set of benefits by law, but employees can negotiate additional benefits with the insurer.

Premiums for the scheme are paid by the employees and, therefore, do not pose any additional expenses to firms.

How is compensation calculated?

Each claim will be compensated in cash for up to three months. The monthly payout is determined at a rate of 60% of the basic salary.

When will the compensation be released?

It will be paid within two weeks of the claim date and will be capped at three months.

For how long will the payment be made?

The employee will be paid for either three months or until he or she finds new employment, whichever comes first.

Subscription Channels

• Insurance Website and smart application
• Bank ATMs and kiosk machines
• Business Service Centres
• Money Exchange Companies
• Du and Etisalat

Subscription Fees and Compensation

Category 1

• Basic Salary of AED 16,000 per month or less.
• insurance Cost- AED 5 per month.
• Monthly compensation will not exceed AED 10,000.

Category 2

• Basic Salary exceeding AED 16,000.
• insurance Cost- AED 10 per month.
• Monthly compensation will not exceed AED 20,000.

Several Gulf Cooperation Council (GCC) states, including Qatar, Oman, Kuwait, and Saudi Arabia, have set up programs to help unemployed people. Bahrain also offers unemployment insurance to nationals and permanent residents who lose their jobs.

Thus, the adoption of the Unemployment Insurance Scheme will lead to labour market stability by inspiring employees to the necessary trust and confidence in the safety net provided in the event of unemployment. The Cabinet resolution, however, will go into further detail about the processes involved in carrying out the scheme as intended.