UAE workers must opt-in for unemployment insurance from 2023, costs revealed

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The UAE has announced the prices for its new unemployment insurance for private and federal sector employees after signing an agreement with a group of nine local insurance companies.

The Ministry of Human Resources and Emiratization (MoHRE) announced on Wednesday that the scheme will go into effect from January 1, 2023.

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The Emirates News Agency WAM reported on Wednesday that employees in the UAE must subscribe to the scheme from 2023.

Employees who work on a commission basis can also opt-in to the government-backed scheme.

Some exemptions include investors, owners of establishments in which he or she works, domestic helpers, employees with a temporary employment contract, juveniles under the age of 18, and retirees who receive a retirement pension and have joined a new job.

How much is the UAE unemployment insurance?

The cost of insurance has been divided into two categories:

  1. Employees with a basic salary lower than $4,350 (AED 16,000) can contribute $1.3 (AED 5) per month toward the insurance. Monthly compensation for this category will not exceed $2,720 (AED 10,000).
  2. Employees with a basic salary higher than $4,350 (AED 16,000) can contribute $2.72 (AED 10) per month toward the insurance. Monthly compensation in this category will not exceed $5,440 (AED 20,000).

The contribution toward the unemployment fund can be made monthly, quarterly, half-yearly, or annually, and the value of the insurance policy is subject to value-added tax (VAT).

The compensation amount upon job loss can be claimed at 60 percent of the basic salary.

Employers are not required to bear the cost of subscribing to the unemployment insurance.

How to apply for the unemployment insurance?

The insurance will be made available through various platforms, information from MoHRE said.

  1. Insurance Pool’s website or mobile application - The Insurance Pool was established in 2018 to be the legal entity responsible for providing insurance coverage to the workers insured under the United Arab Emirates Workers Protection Program. Dubai Insurance Company is the administrator of the Insurance Pool, which is also under the supervision of MoHRE.
  2. Bank ATMs and Kiosk machines
  3. Business service centers
  4. Currency exchange firms
  5. Telecom providers du and Etisalat
  6. SMS

How to claim unemployment insurance?

The monetary unemployment benefit can be claimed through the Insurance Pool’s website, mobile application, or call center.

The claim must be made within 30 days from the date of unemployment.

The compensation will be eligible if employees work and subscribe to the scheme for at least 12 months. The employee must also not have been dismissed for a disciplinary reason or have resigned.

Employees who leave the country are not eligible to receive the benefit.

UAE’s unemployment insurance

The UAE cabinet approved the scheme in May to provide unemployment benefits as part of a larger job security initiative launched by the government.

Gulf states Qatar, Oman, Kuwait and Saudi Arabia have provided some form of unemployment support to citizens while Bahrain also has a form of jobless insurance for resident non-citizen workers.

Permission to reside in Gulf countries like the UAE has traditionally been tied to employment. Under recent reforms, UAE residents whose visa is canceled can remain for up to six months versus 30 days previously.

The system is expected to provide stability and sustain an individual’s standard of living until another employment is found. The system functions like an insurance package where residents pay forward a certain sum every year to the unemployment fund.

“This supports the UAE’s endeavors 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,” Dr. Abdulrahman al-Awar, Minister of Human Resources and Emiratization was quoted as saying by WAM.

The changes come as part of the UAE’s wider vision to attract and retain talent in the country.

The United Arab Emirates recorded a three percent rise in new jobs during the third quarter of 2022, mainly driven by the country’s new and expanded visa options, Al Arabiya English reported on October 18.

The new and expanded visa options include the highly sought-after Golden Visa, the five-year green residency and multiple permit changes which came into effect earlier this month.

Read more:

New, expanded visa options fuel surge in UAE job creation: Report

UAE unemployment insurance scheme for public, private sector workers comes into force

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