Unemployment Insurance in UAE: Scheme, How to Apply, News & Update
The purpose of infrastructure and labor law in the UAE is to protect the rights of workers. As of the beginning of the year 2023, the unemployment insurance law establishes that it is mandatory to provide workers with insurance against job loss. In this sense, this unemployment insurance in UAE aims to guarantee the economic and labor stability of employees.
In this article, you will learn everything about unemployment insurance in the UAE.
- Learn about unemployment Insurance in UAE.
- What are the objectives of unemployment insurance in the UAE?
- What person is eligible to obtain unemployment insurance in the UAE?
- Know the termination reasons for which an employee cannot get unemployment insurance benefits in the UAE
- How can an employee apply for unemployment insurance in the UAE?
- Cost of unemployment insurance in UAE.
- How does an employee receive unemployment insurance compensation if he loses their job?
- How to calculate unemployment insurance claims in UAE?
- Conclusions
1. Unemployment Insurance in UAE
This unemployment insurance in UAE allows the insured to claim a specific sum of money during the next three months from the loss of their job counted from the first day of unemployment. In this sense, this sum of money will be the equivalent of 60% of the monthly income, which may not exceed AED 20,000, which is equivalent to $5,445.
All persons who are employees in the UAE must enroll in this insurance with a deadline of June 30, 2023. Anyone who does not comply with this requirement will be subject to a fine.
On the other hand, not all people have the obligation to enroll in this insurance. Therefore, these are the categories that are exempt from the registration of unemployment insurance in the UAE:
- Owners of companies in which they work directly.
- Domestic workers
- Workers with a fixed-term contract.
- Persons under 18 years of age.
- People who enjoy a pension but are still working.
- Free Zone Workers.
The unemployment insurance scheme is a form of insurance that offers temporary financial support to residents working in the public and private sectors if they lose their jobs as a result of termination of employment contracts or any other cause beyond their control.
In this sense, the goal of the unemployment insurance scheme in UAE is to ensure a continued dignified life for the unemployed and achieve a competitive knowledge economy by attracting and retaining the best international talent.
2. What are the objectives of unemployment insurance in the UAE?
Unemployment insurance in the UAE has several fundamental objectives, among which the following stand out:
- Provide money to the beneficiary for a limited time.
This is one of the main objectives since the employee has lost his job through no fault of his own and therefore this sum of money will serve him to have greater peace of mind to better cope with the time in which he will be unemployed.
- Improve the competitiveness of Emiratis in the labor market.
The labor market is already a very attractive market for those who wish to work in the country. This will add even more value and make the UAE job market even more attractive.
- Provide social protection to guarantee a dignified and continuous life for the unemployed.
In general terms, this unemployment insurance improves the quality of life of legal residents in the UAE since they know that they have economic support in the event of becoming unemployed.
3. What person is eligible to obtain unemployment insurance in the UAE?
Basically, anyone who has lost their job in the country except for the above exceptions. Likewise, employees who have been fired for misconduct will not be entitled to receive unemployment insurance in Dubai benefits.
On the other hand, if the employee loses his job for reasons beyond his control, he will be entitled to receive the benefits of this insurance. However, the employee who has been terminated for a reason beyond their control must meet the following criteria:
- The insured must have a subscription period in unemployment insurance of at least 12 consecutive months.
- Enrollment must not be interrupted for at least 3 consecutive months.
- There must be a commitment by the beneficiary to pay all the premiums owed in the corresponding time.
- The beneficiary must prove that the reason for his unemployment is not due to his resignation.
- Likewise, the cause of the dismissal must not be for disciplinary reasons.
- The beneficiary of the insurance must present the application within 30 days following the date of termination of the employment relationship or the decision of judicial power.
- There should be no existing complaints due to absence from work against the worker.
- Likewise, the worker who has acted intentionally in a work accident or if he works for a shell company will not be entitled to unemployment insurance benefits.
- The termination of the unlimited employment relationship must not be due to strikes or violent work stoppages, regardless of whether they generate damage or not.
4. Know the termination reasons for which an employee cannot get unemployment insurance benefits in the UAE
Additionally, the termination of the employment relationship cannot be given for the following reasons:
- If it is due to war or insurrection, riot, civil war or civil disorder, or a foreign attack.
- Contamination, nuclear, radioactive, toxic incidents, or any other dangerous effect of a similar nature.
- Biological contamination products directly or indirectly from terrorist actions.
- For acts of the UAE government related to expropriation or nationalization of the employer’s company headquarters or the confiscation of its assets which has led to its insolvency.
- For cases of force majeure.
5. How can an employee apply for unemployment insurance in the UAE?
First of all, employees must contact one of the companies in the UAE in charge to purchase the policy.
In addition, employees have several ways to enroll in this insurance program, including:
- Through the website of the insurance companies.
- ATMs and kiosk machines.
- Through the Business Services Center.
- Through exchange companies.
6. Cost of unemployment insurance in UAE.
This is the UAE unemployment insurance scheme:
The first category applies to those employees who receive a monthly salary of AED 16,000. In these cases, the monthly premium is AED 5.
For its part, the second category of the insurance program applies to those employees who have a monthly salary of more than AED 16,000. In this case, the monthly premium will be 10 AED.
On the other hand, the corresponding compensation will not exceed AED 10,000 in the cases of the first category and AED 20,000 for the second category.
7. How does an employee receive unemployment insurance compensation if he loses his job?
The employee has a period of 30 days from the loss of his job to file a claim through the channels provided for this purpose: via the web, through the smart application, or through the contact center.
Likewise, the compensation will be delivered within two weeks after the date of the claim and will not exceed three months of salary.
8. How to calculate unemployment insurance claims in UAE?
The monthly compensation will be 60 percent of the average salary of the last 12 months before the job loss. However, the maximum compensation for any claim is three consecutive months.
For its part, the maximum period of benefits during the insurance period throughout the insured’s entire working life in the UAE, the total payment of claims shall not exceed 12 monthly installments regardless of the number of claims submitted.
9. Conclusions
Unemployment insurance in the UAE is an instrument that the country’s government has implemented with the general objective of helping the population economically at a time as difficult as the unemployment situation.
Similarly, all workers legally residing in the UAE must enroll in this insurance program. For its part, in order to qualify for the benefits of this unemployment insurance, the root causes of the termination of the employment relationship of the employee with the company must be beyond their control. That is, it should not be for reasons of resignation or disciplinary causes.
The compensation stipulated by this insurance is monthly and corresponds to 60 percent of the average salary of the last 12 months before the loss of employment and will not exceed a period of three months, the period during which the unemployed person must find a new job.
Likewise, the worker must take into account that this insurance covers 12 months of the worker’s working life. Therefore, when the worker completes this period, the unemployed person will not be able to continue enjoying the unemployment benefit.
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