Starting from January 1, 2023, all Emirati and foreign workers in the public and private sectors in the United Arab Emirates (UAE) are required to enrol in the country’s new unemployment insurance UAE program. The deadline to do so is January 30, 2023, and those who do not enrol by this date will be fined AED 400. Additionally, those who do not pay the insurance within three months of the due date will be charged an additional AED 200.
The unemployment insurance program provides participants with a fixed cash sum for a period of three months if they lose their jobs. The compensation, which begins on the first day of unemployment, is granted at a rate of 60% of the individual’s basic income, with a monthly maximum payment of AED 20,000.
What exactly is unemployment insurance UAE?
This new insurance policy permits participants to get a fixed amount of cash for a period of 3 months in the event that they lose their job at the beginning of being unemployed. If a person loses their job, they is available for up to three months, at a rate 60 percent of base income, and an annual maximum in the amount of approximately Dh20,000 ($5,445).
Every Emirati and foreign employee in the private and public sectors must sign up for the UAE’s job loss insurance scheme beginning 1 January 2023. They will be scheduled to have signed up by the 30th of January in 2023. A cost of AED 400 will be imposed on those who have not signed up to the program. A further AED 200 will be for those who do not make payments within three months from the due date.
Who can be eligible for unemployment insurance in the UAE?
Anyone who was recently employed is eligible to receive unemployment benefits in the UAE however, it is not applicable to investors (such as the owners of the workplace) or domestic helpers part-time employees, those younger than 18 years old, and retirees who are receiving pensions and are enrolled in new employment. Employees who were fired because of misconduct are ineligible to receive compensation.
If an employee is forced to quit their job because of “reasons that are beyond their control” this scheme will pay an amount of cash for up to 3 months in the event of a claim. To be entitled to compensation the insured must satisfy the following criteria: in accordance with the rules of the Involuntary Loss of Employment Scheme:
- There is a minimum subscription duration of 12 consecutive months for those who are insured under the scheme
- There is no break during the subscription period for 3 consecutive months.
- The insured has to be bound to pay all insurance premiums on time.
- The insured has to prove that the reason for being laid off isn’t due to resignation
- The insured cannot be fired for disciplinary reasons as per the Labour Relations Law and the Human Resources Law of the federal government as well as any other applicable laws.
- The insured is required to make their claim within the period of 30 days of the date of the end of the employment relationship or until the conclusion of the labor dispute that is referred to the judiciary
- The injured worker shouldn’t have a current complaint related to absence from work
- The insured is not eligible for reimbursement if there is fraud or deceit in their claim. Likewise, the company which they represent is fictional
- The loss of employment must not result from strikes or stoppages of labor that are not peaceful no matter if they cause injury or not.
- The insured must legally resident within the UAE
In addition, the policy states that the loss of job must not be caused by any of the following reasons:
- A result of war, whether declared or unproclaim or unconfirmed, riot, insurrection rebels, revolutions military or usurping power an invasion, or the actions of a foreign adversary conflict, civil war, hostilities or civil disorder
- In the event of pollution discharge and nuclear events or explosive, radioactive, toxic or any other harmful effect of any nuclear explosive equipment or component of the equipment
- Direct or indirect consequence of chemical or biological pollution that is a direct or indirect result of or contributing to terrorist acts
- A result of an action taken through the government in the United Arab Emirates that led to nationalisation or expropriation of the employer’s facility and the confiscation of the employer’s assets that led to his insolvency
- Due to the event of force majeure, in conformity with the Civil Transactions Law of the United Arab Emirates No. (5) in 1985.
How can I apply for unemployment insurance UAE?
In order to obtain the insurance policy, employees are able to make contact with one of the firms located in the UAE for the purchase of the insurance policy and pay for the premium for insurance.
The scheme will be run through Dubai Insurance Company. Dubai Insurance Company, which is the representative of the insurance pool comprised of nine firms:
- Dubai Insurance Company
- Abu Dhabi National Insurance Company
- Al Ain Ahlia Insurance Company
- Emirates Insurance Company
- National General Insurance Company
- Orient Insurance
- Abu Dhabi National Takaful Company
- Oman Insurance Company
- Orient UNB Takaful Company
Employees can sign up to the insurance plan through a variety of methods such as:
- Insurance pool’s site (www.iloe.ae) and the smart application
- Machines for kiosks, ATMs at banks and bank branches
- Business service centers
- Money exchange companies
- du and Etisalat
How much will insurance cost?
The insurance scheme is split into two types.
The first applies to those who earn under Dh16,000 per calendar month. The monthly cost for an employee who is insured in this group amounts to Dh5 (or Dh60 annually).
The second applies to those who earn greater than the Dh16,000 mark per month. In this scenario, the insurance premium is Dh10 each month (or Dh120 annually). Employees may receive payments monthly or quarterly, semi-annually, or every year. The value of the insurance policy is subject to tax on value added (VAT).
Furthermore, the monthly pay is not more than Dh10,000 for the first category, and an amount of Dh20k for the other. Insurance coverage compensation is calculated each month at 60% of the base salary.
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How can you submit the insurance claim?
The employee who was terminated must have been covered for at least 12 consecutive months in order to receive reimbursement beginning from the date they first joined the plan.
In order to claim insurance, the insured must be able to meet the following criteria.
- Minimum subscription duration includes 12 continuous months.
- All insurance premiums have to have been paid in time.
- The main reason for unemployment must not come from resignation.
- The loss of employment cannot have occurred because of a disciplinary issue.
- The claim must be filed within 30 days of the date of loss of employment.
- The employee shouldn’t be a victim of a complaint relating to absences from the workplace.
- The employee isn’t eligible for compensation if there was deceit or fraud involved in the process of claiming.
- The loss of jobs shouldn’t be due to non-peaceful labour strike or cease-workers.
- The insured must be legally resident within the UAE.
- The loss of employment need not result from any of the following reasons:
- War and riots, insurrection and armed rebellion and usurping violence, invading, or act of an enemy foreign conflict, hostilities, civil war, or civil disorder.
- The discharge of pollutants is nuclear event, explosive, toxic, radioactive, or any other danger of any nuclear device that is explosive or component of the equipment.
- The pollution of the environment caused by biological or chemical sources of or supporting the terrorism.
- The government’s direct action of the UAE has led to the confiscation or nationalization of the facility of the employer as well as the seizure of the employer’s funds, resulting in bankruptcy.
- Force majeure (unforeseeable circumstances) as per the Civil Transactions Law.
Additionally, employees who are insured aren’t entitled to the benefits in the event that they have moved out of the country or are starting a new job.
How do you calculate the claim for Unemployment Insurance UAE?
The monthly pay will be 60 % of the average wage during the 12 months preceding the losing the job.
- Maximum amount of compensation per claim Three consecutive months
- Maximum duration of benefits: During the period of insurance throughout the entire working life of the insured within the UAE the total claims payment must not be more than 12 months of monthly benefits (regardless of the amount of claims filed).
What do I do to receive unemployment benefits if I have to quit my job?
Within 30 days from the day they are laid off those who are insured and lose their jobs are required to submit a claim using three approved claims channels that include the insurance pool’s online portal and smart application or a contact center.
Compensation is paid within two weeks of the date of the claim and shall not exceed three months per claim.