Overview Unemployment Insurance in the U.A.E.
Unemployment Insurance in the U.A.E. | Legal Authorities
1. U.A.E. Federal
Decree Law No. 13 of 2022 re: Insurance for Unemployment
(“Main Law”)
2. U.A.E. Ministerial
Decision No. 604 of 2022, re the System for Unemployment Insurance (“Ministerial
Decision”) further clarifying certain aspects of the law.
Unemployment Insurance in the U.A.E. | Effective Dates
o
Main Law came into effect on September 29, 2022.
o
Ministerial Decision, dated November 30, 2022, became
effective on December 15, 2022.
o
Insurance implementation commencement date is January
1, 2023.
o
Deadline for compliance (subscription) – June 30, 2023,
after which penalties will apply.
o
Employees employed after January 1, 2023, must register
within 4 months from: 1) entering the U.A.E.; OR 2) from change of status; OR
3) final approval of work permit.
(Article 11, Ministerial Resolution).
Unemployment
Insurance in the U.A.E. | Objectives
1)
Ensure income during unemployment;
2)
provide social security; and
3)
continue to attract and retain world’s best
talent to the country.
Unemployment
Insurance in the U.A.E. | General Guidelines
o
Obligation of employees,
not employers.
o
Although
companies can offer this as benefit for their employees.
o
Mandatory, not optional.
o
Suspension of work permit in the event of non-compliance (Ministerial
Decision, Article 10).
Unemployment
Insurance in the U.A.E. | Compensation Scheme
o
Temporary compensation during unemployment.
o
Maximum insurance compensation is for 3 months of
unemployment.
o
Up to 60% of
monthly salary.
o
Eligibility after
1 year of paying into the scheme.
Unemployment
Insurance in the U.A.E. | Insurance Subscription Fees
(Article
3, Ministerial Decision)
o
Those who earn less than AED 16,000.00 – AED 5/month.
o
Those whose basic salary is above AED 16,000 – at AED
10.00/month.
o
Commission basis employees – can choose category of
insurance they wish to opt-in for.
o
Average of monthly salary over last 6 months to be used as a
base.
Unemployment
Insurance in the U.A.E. | Applicability and Exceptions
o
Unemployment
insurance is available for employees of:
§ public
sector
§ private
sector
o
Exclusions:
1)
part time employees
2)
owners of businesses
3)
investors
4)
domestic workers
5)
minors below 18
6)
retirees
o
Other
Exclusions
§ Free zone
employees (for the time being)
§ Employees terminated for gross misconduct
§ Employees who resign
Unemployment
Insurance in the U.A.E. | Insurance Provider
(Article 2, Ministerial Decision)
o
For now, in Dubai, Dubai Insurance Company is main
provider of the Unemployment Insurance, https://www.dubins.ae/en/.
o
Ministry (MOHRE) can license other insurance
companies.
Unemployment
Insurance in the U.A.E. | Payment of the Subscription Fee (Article
4, Ministerial Decision)
1)
insurance provider’s website;
2)
insurer’s mobile application;
3)
insurer’s call center;
4)
business centers approved by the Ministry;
5)
ATMs and Kiosks, set by the insurer, and in coordination
with MOHRE;
6)
exchange houses; and
7)
SMS.
Unemployment
Insurance in the U.A.E. | Obligation to Pay
(Article 6, Ministerial Decision)
o
Failure to pay for more than 3 months – terminates insurance
policy.
o
Financial penalty imposed for non-compliance.
o
In the event of a Court case, subscription must continue
until work permit is cancelled, or employment ends.
Unemployment
Insurance in the U.A.E. | Submission of a Claim
(Article
7, Ministerial Decision)
o
Claim for coverage to be submitted within 30 days from termination
of employment.
o
Reason mentioned in work permit cancellation
(termination or resignation) will be used by insurer.
o
Insurance provider must pay compensation within 2 weeks
of application.
o
In the event of court case, final court
judgment must be submitted in request for compensation, within 30 days of
judgment.
o
Upon receipt of maximum compensation, employee must
re-subscribe for another 12 months before becoming eligible again.
Unemployment
Insurance in the U.A.E. | Penalties for Non-Compliance
(Article 9, Ministerial Decision)
o
Failure to subscribe by June 30, 2023 –
subject to AED 400.00 fine.
o
Failure to pay within 3 months – subject to AED 200.00
penalty.
o
Failure to pay penalty within 3 months:
§ Deduction of
fine by MOHRE from salary through WPS, or from end of service.
§ Suspension
by MOHRE of issuance of new work permits (Article 10, Ministerial
Resolution).
Unemployment
Insurance in the U.A.E. | Grace Period to Subscribe
(Article
11)
Unemployment Insurance UAE | FAQs
At the moment the Dubai Insurance Company is appointed as the provider of the UAE Unemployment Insurance. It is compulsory for both working residents and nationals.
No. The Unemployment Insurance UAE is mandatory for the employees and not the employers.
The following are the list of categories who are exempted from applying for the Unemployment Insurance in the UAE.
Part-time employees, owners of businesses, investors, domestic workers, minors below 18 and retirees.
Other exclusions include:
- Free zone employees (for the time being)
- Employees terminated for gross misconduct
- Employees who resign
Presently in Dubai, the Dubai Insurance Company is the main provider of the Unemployment Insurance.
Yes.
- If you fail to subscribe by June 30, 2023 – you will be subjected to AED 400 fine.
- If you fail to pay within 3 months, you will be subjected to AED 200 fine.
- If you fail to pay penalty within 3 months:
-MOHRE will deduct the fine through your salary via WPS or from end of service.
-MOHRE will suspend the issuance of new work permits.
Yes. You will not be able to claim for the Unemployment Insurance Scheme if you resign or get terminated from the company due to misconduct.
June 30th, 2023 is the deadline set for the UAE employees to register for the Unemployment Insurance Scheme.