A substantial move in helping to prevent financial hardship and anxiety in cases where employees find themselves unemployed through no fault of their own has been unveiled in the UAE.
The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) and nine local insurance companies have come together to give protection to employees in the private sector and the UAE’s federal government by providing them with cash compensation for a period not exceeding 3 months per claim in the event that their employment is terminated for reasons beyond their control (i.e. not because of resignation or disciplinary action against the employee).
The scheme excludes owners of establishments in which they work, domestic workers, employees with a temporary employment contract, individuals under 18 years of age, and those who receive a retirement pension.
UAE Unemployment Insurance Categories
There are 2 categories under the scheme – employees with a basic salary of AED 16,000 or less (premium will be AED 5 per month or AED 60 per annum), and those with a basic salary over AED 16,000 (premium will be AED 10 per month or AED 120 per annum). Premiums can be paid monthly, quarterly, half-yearly or annually and VAT is charged on the premium.
The UAE unemployment insurance scheme is intended to provide temporary financial support to eligible employees following involuntary job loss while they look for new employment.
How Is Compensation Calculated?
Compensation is calculated at 60% of the basic salary from the date of termination (for up to 3 months) but shall not exceed AED 10,000 per month in the first category and AED 20,000 per month in the second category.
How to Claim Unemployment Insurance
Claims are made through 3 approved methods – the insurance group’s e-portal, smart application or call centre – and must be made within 30 days of employment commencing. Claims are subject to the insured having worked and subscribed to the scheme for at least 12 months and should be processed within 14 days of the claim.
Payment into the scheme will be mandatory for eligible employees, and it is understood that more comprehensive coverage may also be negotiated with the insurers for increased premiums.
Legal Advice on UAE Employment Law
If you have questions about UAE employment law, termination, employee rights or employment disputes, professional legal advice can help you understand your position and available options.
For legal assistance with UAE or DIFC employment matters, contact James Berry & Associates Legal Consultants at [email protected].
