UAE signs agreement with nine Insurance companies for unemployment insurance scheme

The UAE Ministry of Human Resources and Emiratisation (MoHRE) on Wednesday signed an agreement with nine local insurance companies, to launch the framework of the new Unemployment Insurance Scheme, in line with the Federal Decree Law No. 13 of 2022 and the relevant Cabinet Resolutions.

The new insurance scheme aims to provide protection for employees in the private sector and the UAE’s federal government by providing them with a cash compensation for a limited period not exceeding three months for each claim in the event of job termination for reasons beyond their control.

It also creates a safety net that supports employees in their career path and ensures their livelihood by relying on mechanisms that do not incur additional costs for employers and is paid by the employee himself and provide a balance in the job market that allows achieving the UAE’s strategic goals and supporting the continuity and growth of economic activities.

Protection and Empowerment

The agreement was signed in the presence of Dr. Abdulrahman Al Awar, Minister of Human Resources and Emiratisation, and Butti Obaid Al Mulla, Chairman of Dubai Insurance Company. The agreement was signed by Khalil Al Khoori, Under-Secretary for Human Resources Affairs at MoHRE, and Abdul Latif Abu Qura, CEO of Dubai Insurance Company.

Dr Al Awar said: “The new unemployment insurance law is an essential part of the legislative and legal structure that the government is keen to develop to meet the requirements of the national economy. This supports the UAE’s endeavours to be the next capital of the future, and a global incubator for talent and companies and investments, which can be achieved through economic and social development and the empowerment of human capital.”

“We are keen to accelerate the implementation of the unemployment insurance law, through this agreement, which outlines the practical details of implementing its provisions on the ground, including employees in the federal government and private sectors, leading to a highly competitive and attractive labour market, while enhancing the stability of the workforce to be able to contribute to building the best and most active economy in the world.”

Implementations and Exceptions

Under the new insurance scheme, federal government and private sector employees must subscribe to the scheme from 1 January, 2023. Those excluded from the insurance scheme include investors – owners of establishments in which he or she works, domestic helpers, employees with a temporary employment contract, juveniles under 18 years of age, and retirees who receive a retirement pension and have joined a new job.

The insurance scheme is divided into two categories – the first covering those with a basic salary of $4355.99 and less. The insurance cost for the insured employee in this category is set at $1.36 per month.

The second category includes those with a basic salary exceeding $4356 and the insurance cost is $2.72 per month. The payment can be made by the employee monthly, quarterly, half-yearly, or on an annual basis. The value of the insurance policy is subject to value-added tax (VAT).The employee who works on a commission basis may also subscribe to the scheme.

Monthly Compensation

The value of the monthly compensation will not exceed $2722.50 for the first category, and $5444.99 for the second category, where the insurance coverage compensation is calculated on a monthly basis at the rate of 60% of the basic salary and for a maximum of three months for each claim from the date of unemployment.

The insured (the employee) must submit the claim through the three approved claim channels – the insurance pool’s e-portal, the insurance pool’s smart application, and the insurance pool’s call centre, provided this is done within 30 days from the date of unemployment.

Compensation will be paid within two weeks from the date of the claim and capped at a maximum of three months per claim. Compensation for an employee is eligible if they have worked and subscribed for at least 12 months to the insurance scheme as long as they have not been dismissed for a disciplinary reason or because of resignation.

The insured (employee) is not eligible for a compensation if they have left the country or joined a new job.