All about the new unemployment insurance scheme in the UAE

November 18, 2022

Imagine this: You have worked diligently at your job for the last few years. But your employment is terminated due to an economic downturn or other reasons beyond your control. What happens, then? How will you manage expenses until you find a new job? To safeguard employees against such unforeseen circumstances, the Ministry of Human Resources and Emiratisation (MoHRE) has announced a new unemployment insurance scheme in the UAE.

What is the new unemployment insurance scheme in the UAE?

Group of employees in the workplace
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The UAE unemployment insurance scheme will provide relief to employees who have lost their jobs

The new programme provides compensation for individuals in the public and private sectors who have lost their employment. MoHRE stated that the new social security scheme will ensure that Emiratis and resident employees can sustain a decent standard of living, while reducing business risks.

From January 1, 2023, it will be mandatory for employees to subscribe to the UAE’s new insurance scheme. Until now, only health insurance and motor insurance (for those who drive a car or any other vehicle) were mandatory in the UAE.

How does the new unemployment insurance scheme work?

According to WAM, the UAE’s new insurance scheme has two categories:

  • The first category covers people with a basic salary of AED 16,000 or less. The premium for employees in this category is AED 5 per month or AED 60 annually.
  • The second category consists of people whose base pay exceeds AED16,000. In this case, the unemployment insurance scheme will cost AED 10 per month or AED 120 annually.
  • Commission-based employees can also enrol in the unemployment scheme in the UAE.

The policy compensation will be paid monthly for three months following the date of unemployment:

  • The compensation is calculated on 60 percent of the employee’s basic pay.
  • Under the new unemployment insurance scheme in the UAE, the monthly compensation cannot exceed AED 10,000 for those with a base pay of AED 16,000 or less. For those with a base pay of more than AED 16,000, the monthly compensation would be capped at AED 20,000.

Who is eligible for the new UAE unemployment insurance scheme?

Arab employees in the workplace
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Both public and private sector employees are eligible for the UAE’s new insurance scheme

The new rule applies to all UAE federal government and private sector employees, except investors, domestic assistants, part-time employees, minors under 18 years of age and those who receive a retirement pension.

To qualify for compensation, the employee must have paid the premium for at least 12 consecutive months. Employees can make payments monthly, quarterly, semi-annually or annually. The insurance policy’s value is also subject to value-added tax (VAT).

Which companies will offer the new unemployment insurance in the UAE?

In November 2022, MoHRE signed the unemployment insurance scheme in the UAE with a group of nine local insurance companies, represented by Dubai Insurance Company. This formally established the framework of the new Unemployment Insurance Scheme.

Here are the nine companies that will offer the new UAE unemployment insurance scheme:

  • Abu Dhabi National Insurance Company
  • Orient Insurance
  • Dubai Insurance Company
  • Al Ain Ahlia Insurance Company
  • National General Insurance Company
  • Emirates Insurance Company
  • Orient UNB Takaful Company
  • Abu Dhabi National Takaful Company
  • Oman Insurance Company

How to apply for unemployment insurance in the UAE?

Man sitting in front of a laptop with a credit card, applying for the new UAE unemployment insurance scheme
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Wondering how to apply for the new unemployment insurance scheme? You can do so through various online channels.

According to WAM, employees can enrol in the new insurance programme through the following channels:

  • Insurance Pool’s website
  • Smart application
  • Bank ATMs
  • Kiosk machines
  • Business service centres
  • Money exchange firms
  • du and Etisalat
  • SMS

Additional methods for employees to enrol in the unemployment insurance programme may be announced later.

How can employees claim compensation?

To claim compensation under the new unemployment insurance scheme, policyholders must follow the below process:

  • The employee must submit the claim via the authorised channels: the insurance pool’s call centre, smart application or e-portal.
  • The claim must be filed within 30 days of the unemployment date.
  • The compensation will be paid within two weeks of the claim date and is limited to three months per claim.

However, employees will not be eligible for compensation in the following scenarios:

  • There has been reported fraud or some form of deceit involved in the claim.
  • The establishment where the policyholder was employed is found to be fictitious or fraudulent.
  • The employee was dismissed due to disciplinary reasons or any applicable legislation under the UAE’s Labour Law in the private sector.

They will also not be able to claim compensation if they resigned from their job, left the UAE or accepted a new job.

Frequently Asked Questions

What is unemployment insurance in the UAE?

The new unemployment insurance programme offers financial assistance to Emiratis and residents employed in the public and private sectors if they lose their jobs due to employment termination.

What are the benefits of an employee in the UAE?

Employees in the UAE enjoy many benefits. However, these may differ for full-time and part-time employees:

  • Annual paid leave of 30 days
  • 60 days of maternity leave
  • Parental leave up to 5 days
  • Sick leave
  • Health insurance

The new unemployment insurance scheme in the UAE is a big step in revolutionising the job sector in the country! It will ensure that citizens and residents can sustain a decent standard of living, and enhance the UAE’s appeal as a place to live and work.

Similarly, if you’re looking to protect your home and car with insurance, then get in touch with our experts at Hala. We offer different categories of car insurance in the UAE, including Third Party, Comprehensive and Agency insurance. Get a quote for your car insurance in just one minute from Hala!

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