The United Arab Emirates (UAE) has announced the unemployment insurance scheme which will be effective from 1 January 2023. Unemployment insurance is a form of social or insurance security for residents and Emiratis working in the private and federal sectors to have financial support in case of job loss. The unemployment insurance scheme in UAE aims to ensure a decent living. The unemployment insurance scheme in UAE aims to the economy by retaining the best international talent.
All those eligible employees have to subscribe to the scheme before the end of the deadline. They will be offered protection by giving three months of cash compensation if the relevant criteria are met.
• These are the key points of the UAE unemployment insurance scheme to remember:
• This unemployment insurance scheme will be implemented in the UAE from 1 January 2023.
• According to the current legislation, all the Residents and Emiratis are required to register by June 30, 2023.
• Non-compliance will cause financial penalties and might impact the new work permit eligibility of the employee and the contributions are also required to be paid by the employees.
Scope Of The Unemployment Insurance Scheme
This UAE unemployment insurance scheme applies to all workers in the federal and private sectors except:
• Domestic workers.
• Investors, and business owners who manage their businesses themselves.
• Employees working on a temporary basis.
• Juveniles under age18.
• Those who are retired and receive a pension or have joined a new employer.
Cost Of Subscription
• All those workers who are getting a basic salary of AED 16,000 or less will have to pay a monthly insurance premium of AED 5, annually AED 60. The compensation must not exceed a monthly amount of 10,000 AED.
• Those employees getting more than AED 16,000 as their basic salary will need to pay AED 10 per month which would be AED 120 per year. The compensation must not exceed AED 20,000 per month.
• The employee can choose to pay the premium on a quarterly, monthly, annual, or half-yearly basis.
• The insured employee may subscribe to additional benefits with the above basic package.
• The value of this unemployment insurance policy is subject to VAT.
Subscription
There are nine approved national insurance companies for the employees to subscribe to the scheme via the following options:
• Bank ATMs and kiosks
• ILOE website and its application
• Business service centers
• Telecommunication bills
• Money exchange centers
• SMS (yet to be launched)
Entities That Provide Insurance Policy
Dubai Insurance Company is the representative and consists of 9 national insurance companies:
1. Abu Dhabi National Insurance Company
2. Dubai Insurance Company
3. AI Ain Ahlia Insurance Company
4. National General Insurance Company
5. Emirates Insurance Company
6. Abu Dhabi National Takaful Company
7. Orient Insurance
8. Orient UNB Takaful Company
9. Oman Insurance Company
Penalties
Those employees who fail to subscribe to the scheme by the deadline can be disqualified from getting unemployment insurance benefits. Failure to pay the premiums or non-compliance can result in fines of:
• AED 200 for failure to pay the premium for more than 3 months.
• AED 400 for failure to subscribe to the scheme.
These penalties can be deducted by the authorities via different means, for example, from salary accounts, or end-of-service benefits.
Claiming Insurance Benefits
Employees must see if the conditions are meeting the Unemployment Insurance Law to claim insurance benefits:
• Insurance premiums should be paid for 12 months.
• Evidence of unemployment must be provided.
• Those employees who are dismissed for disciplinary reasons will not qualify for the insurance.
• Employees must submit a claim within 30 days of termination from employment.
• The employee must have a legal residence in the country.
• The claim must be accurate rather than fraudulent or deceitful.
Final Words
All those employees who are eligible according to the unemployment insurance criteria should apply for it and comply with the regulations to avoid penalties. This is an impressive initiative to accommodate the unemployed residents in the UAE financially. All you need to do is carefully understand the criteria of the Unemployment Insurance scheme and comply with the regulations.
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