The government has prioritized the welfare of the UAE citizens and has brought many programs for their benefit. Right from the infrastructure development in the country to bring transparent labor laws the government has been providing various benefits to the people. The latest development in this regard is the unemployment insurance scheme. This scheme was introduced by the authority to provide financial stability and sustainability for the employees in the country. This is a social security scheme that supports unemployed individuals.
Unemployment insurance
Unemployment insurance is provided in the UAE for the Emiratis and the residents. This program was announced by the Ministry of Human Resources and Emiratisation. The aim of the programme is to support individuals who lost their jobs. This program should be subscribed to by all the Federal government and private sector employees prior to Jun 30, 2023. The employee who does not subscribe to the scheme will be penalized.
How will the programme work?
A total of 9 insurance companies have signed up for a programme in collaboration with the Ministry of Human Resources and Emiratisation. The list of insurance companies are as follows.
- Abu Dhabi National Insurance Company
- Al Ain Ahlia Insurance Company
- National General Insurance Company
- Dubai Insurance Company
- Orient Insurance
- Oman Insurance Company
- Orient UNB Takaful Company
- Abu Dhabi National Takaful Company
- Emirates Insurance Company
Unemployed Insurance will have two types of categories. Employees earning basic salary of up to AED 16,000 and employees earning more than AED 16,000 as basic salary.
Unemployment insurance UAE cost for the first category employees is AED 5 and VAT per month which is amounting to AED 60 per year.
The second category of individuals will get AED 10 and VAT per month which is AED 120 per year. The payments from the employees are made according to month wise, quarterly, yearly or semi-annually. The value of the insurance policy is as per VAT.
The idea of insurance is to secure the future and not to burden any individual. The employees will get a cash sum monthly if they meet the criteria. Accordingly, the sum will not increase by AED 10k for the first category. On the other hand, the second category will get AED 20k. The figures are finalized based on 60 percent of the basic salary.
Employees who lost their job should intimate and make a claim in a span of 30 days through the prescribed channels. These channels include smart app, calling helplines and insurance portals. The compensation will be paid back in a span of 2 weeks. The claim is capped for a maximum of 3 months.
There are various methods of subscription and you can use the official website or app for free subscription. Employees who do not register for the insurance by Jun 30, 2023 should pay a penalty of AED 400.
Employers are not required to register employees nor they are required to pay for the scheme.
Who is eligible for unemployment Insurance?
The UAE unemployment insurance scheme came into effect on January 1, 2023 and it is compulsory for all employees. The UAE citizens and residents who lost their jobs can get the benefit of this insurance cover.
A UAE resident employee or Emirati should have work experience and should have subscribed to the scheme and this subscription should be a minimum of 12 months for getting the eligibility.
For any disciplinary reasons if the employee resigns or gets fired then the employee is not eligible for getting any benefit from the insurance. Employees who are insured are not eligible if they leave the country or join another company.
Exemption
This scheme is not applicable to the following.
- Domestic employees
- Investors
- Employees in free zones
- Contract employees
- Under 18 employees
- Retirees with pension benefits
Documents required for subscription enrollment
- Emirates Identity
- UAE mobile number
Take away
There are various recruitment agencies which provide job assistance services. There are various reasons for loss of employment and the government has taken progressive measures to provide support during unemployment. During unemployment, employees face difficult times and unemployment insurance will provide support to the employees. Employees can take care of their families during this transition period.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
