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Unemployment Insurance Schemes in Today’s Job Market

Unemployment Insurance in UAE

Unemployment insurance aims to provide job protection for both Emirati citizens and residents. Likewise, this plan applies to workers in both public and private companies. Furthermore, its main purpose is to guarantee the economic stability of the unemployed and at the same time attract the best international talent.

In this article, you will look at all the aspects of this unemployment insurance UAE and how it can benefit you. In the same way, you will be able to find out if you meet the criteria to register for this Emirati government plan.

Benefits of Unemployment Insurance

Before showing the benefits of unemployment insurance in Dubai and the other Emirates, you will see what this insurance is. In this case, it is social insurance for residents and Emiratis who have lost their jobs and who work in different business sectors. Likewise, the benefits of said insurance plan are the following:

Financial Stability During Job Loss

One of the benefits of the plan is that you could receive compensation if you lose your job for unjustified reasons. Also, the compensation provided by the government for this unemployment plan is for 3 months. Therefore, you will be able to have financial stability for a generous amount of time.

Additionally, thanks to this compensatory period to find a new job in the UAE without the economic stress generated by unemployment.

Peace of Mind in Uncertain Times

The decree of Federal Law No. 13 supports the job loss protection uae. Likewise, this is about Involuntary Loss of Employment or ILOE. Thus, thanks to this law, you are safe from losing your job. However, it is only possible for circumstances other than disciplinary action or resignation until you have a new job.

Eligibility and Application Process

Citizens eligible to obtain unemployment insurance benefits are those over 18 years of age. Furthermore, they can remain in both a public and private sector company. However, they must have worked for at least 1 full year to qualify for this benefit.

In addition, workers dismissed for disciplinary reasons or who have resigned due to a personal decision cannot receive it. Likewise, the following workers are not eligible:

  • Business owners, investors, and entrepreneurs who own and manage commercial entities in the country
  • Under 18 years old
  • Temporary employees
  • Domestic workers
  • Retirees who have a pension and work with a new employer

Who Qualifies for Unemployment

Apart from the characteristics mentioned above to receive unemployment insurance, there are others that you should consider. To start, you must have made contributions to the said plan of at least AED 5 or 10. This depends on the category of the employee and that the contributions have been made for at least 1 full year.

Likewise, we must emphasize that workers fired for misconduct or who resigned are not included in the job loss insurance scheme. Similarly, the monthly limit of such assistance is between AED 10,000 and AED 20,000. The obligation to make contributions to the insurance plan falls on the employee.

However, employers must keep their employees informed and educate them regarding such a plan. They should also be attentive to queries of their workers that have to do with UAE unemployment insurance. In this case, it involves information on payment methods, benefits, and payment terms that must be made.

On the other hand, if the employee fails to make contributions to the plan, they risk receiving fines. Additionally, they may have trouble renewing their work permits while the sanctions remain in effect.

How to Apply for Unemployment Insurance

To benefit from unemployment insurance, you must subscribe to the ILOE Insurance Fund website. Likewise, you can do so through the mobile application of said fund or any of the methods established by MOHRE. Additionally, to claim the insurance, you must follow the procedure described below:

  1. The employee must file a claim for job loss within 30 days.
  2. The insurance company will then process the claim and transfer the compensation amount to the account of the worker two weeks later.

In this case, claims must comply with the terms and conditions of the UAE unemployment insurance scheme. Furthermore, to disburse the insurance amount, the regulations of the Central Bank of the UAE also apply. Also, the worker will receive compensation for 3 months or until he or she finds a new job, whichever occurs first.

The Ministry of Human Resources and Emiratisation in UAE (MOHRE) is the entity in charge of supervising the insurance plan. It also reports any breach of terms and conditions by insurance companies. Similarly, they are responsible for imposing the corrective measures they consider appropriate for those involved.

For its part, the Federal Government Human Resources Authority is in charge of the plan for public employees. In addition, they will manage unemployment insurance for employees in that sector in conjunction with the UAE Ministry of Finance.

Unemployment insurance uae last date to register

The enrollment deadline for newly covered workers is June 30, 2023. However, they can sign up within 4 months from the start date if they were hired after January 1, 2023.

Understanding Payouts and Duration

To receive Dubai unemployment insurance benefits you will need to pay the costs associated with it. In this case, the cost of the premiums for said insurance depends on your base salary, which is why it varies. Additionally, employees can opt for other benefits apart from those established in the basic package.

Therefore, you can discuss the additional benefits with the insurance company to choose them according to your needs. Likewise, the employee can choose between paying the premiums monthly, quarterly, semiannually, or annually. Additionally, you must consider that the unemployment insurance policy is subject to Value Added Tax (VAT).

As we have mentioned, insurance premiums depend on the base salary of the employee as follows:

  • If the employee earns a salary of AED 16,000 or less, he or she must pay AED 5 per month, i.e. AED 60 per year. In this case, the maximum compensation these employees can receive is AED 10,000.
  • Employees with a basic salary of AED 16,000 or more must pay AED 10 per month, i.e. AED 120 per year. For these employees, job loss insurance will cover up to a maximum of AED 20000.

You must remember that you will have to pay insurance premiums for at least 12 months to receive the benefit.

Calculating Your Unemployment Benefits

As we have noted, the amount you will receive during the three months of insurance or until you find a job will depend on your salary. This way, if you have covered the required premiums, you can receive up to AED 10,000 if your basic salary is AED 16,000 or less. In contrast, you will receive up to AED 20000 from the authorities if your basic salary is AED 16000 or more.

How Long Can You Receive Benefits

Claiming unemployment insurance compensation is only possible if you have paid premiums for 12 months in a row. In addition, you will lose the right to receive payment if you cancel your UAE residency and leave the country. You will also stop receiving the benefit if you obtain a new job during the processing period.

Hence, you will receive the benefit for 3 months if you lose your job and remain in the country with a valid visa. Additionally, you may receive this benefit during the three legal months and for up to 4 times, that is, for 12 non-consecutive months.

However, the worker will lose the unemployment insurance scheme benefit in the following cases:

  • Dismissed for disciplinary reasons following applicable laws and regulations
  • Fraud or deception by the employee in claiming the benefit
  • The establishment where he says he worked is fictitious.

Role of Employment Insurance in Job Transitions

Role of Employment Insurance in Job Transitions

The UAE job loss insurance scheme aims to provide support to workers across the country. Furthermore, it implements the necessary mechanisms so as not to generate additional costs for employers in the UAE. This plan was implemented by the Ministry of Human Resources and Emiratisation in conjunction with 9 insurance companies in the nation.

Furthermore, the said scheme is mandatory for workers in both employment sectors in the UAE. The legal framework of said insurance is the Federal Decree No. 13 of 2022. Likewise, Cabinet Decision No. 97 of 2022 regulates the mechanisms and controls for the execution of the plan. Also, Resolution No. 604 of 2022 regarding the Unemployment Insurance Law applies.

In this case, the law is an important element in filling the liability gaps in the UAE labor framework. Likewise, it serves to compensate local workers when they have lost their jobs. However, employees who have been left without work must comply with the aforementioned conditions.

Therefore, it is an important development for the insurance market due to the protection of insurance income. Employees must contract this service on a mandatory basis as established by the authorities of the nation. Thus, employees will have a period of help so that they can find a new job to compensate for the loss of the previous one.

In summary, the main objectives of said plan are the following:

  • Financially support the unemployed in the UAE
  • Give people a decent life like the one they had while working
  • Boost the competitiveness of Emirati and resident employees
  • Give people protection so that they do not become discouraged when they do not have a job

Mandatory nature of the Unemployment Insurance Law

UAE Job loss insurance is mandatory for public and private employees in the country. Therefore, you must subscribe and register with one of the insurance companies authorized for this purpose. Consequently, to sign up, you have several options for companies, including:

  • Emirates Insurance
  • National General Insurance
  • Oman Insurance
  • Orient Insurance
  • Abu Dhabi National Insurance Company
  • Al Ain Ahlia Insurance Company
  • Orient UNB Takaful Company

However, unemployment insurance at this time does not cover Free Trade Zone workers. However, shortly the authorities may create a special plan for workers in these areas. You should consider that, despite covering the majority of workers, there are exceptions, which we mentioned above.

Consequences of failure to subscribe and pay for the plan

UAE authorities will impose fines on employees who do not subscribe to unemployment insurance UAE. These fines will also apply to workers who fail to pay the corresponding insurance premiums. The mentioned term corresponds to Ministerial Resolution No. 340 of 2023, which modifies the previous term.

In this case, employees will receive the following fines if they do not comply with registration or payments:

  • Workers who do not register for unemployment insurance before the mentioned date will be fined AED 400.
  • If the worker does not pay the premiums for a period greater than 3 months after the due date, they also receive a fine. In this case, the fine will be AED 200 and the authorities will cancel your insurance certificate.
  • Workers who do not comply with the payment of fines after 3 months after the due date will have their payment deducted from their salary. The authorities will do this through the Wage Protection System (WPS) or end-of-service benefits. Also, the Ministry of Human Resources and Emiratization (MOHRE) may use another method to collect these fines from the employee.

In this case, you must review Article 9 of Ministerial Resolution No. 604 of 2022 in which you will find the details about this insurance.

Conclusion: Securing Your Financial Future

Therefore, job loss insurance UAE is a welcome change for workers and employers. In this way, it promotes confidence in the country to attract the right talents for local economic development. This is due to the constant changes between jobs and professions and the transitory nature of labor markets.

In addition, labor sectors expect the development of new lines of insurance combined with this law. Thus, the country will become one of the innovative nations in terms of employee insurance. If you want more information about this unemployment insurance, you can contact us to clarify your doubts.

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