Unemployment Insurance Scheme.. What is it?

Unemployment Insurance Scheme

Since the beginning of the current month, January 2023, We found all news and social media sites within the UAE talking about the start of mandatory registration in the unemployment insurance scheme, Which was issued by Federal Decree Law No. 13 of 2022, Cabinet Resolution No. 97 of 2022 Concerning the Procedures and Controls for Implementing Unemployment Insurance Scheme and Ministerial Resolution No. 604 of 2022 regarding the unemployment insurance scheme .. So let us see what are the details of this matter?

What is the ‘Unemployment Insurance scheme’?  

The unemployment insurance scheme, which the Ministry of Human Resources and Emiratisation (MOHRE) announced on Sunday, January 1, That it is mandatory to register in it, Is a system that aims to compensate the insured with a cash amount for a limited period in case he is unemployed and until an alternative job opportunity becomes available. in order to sustain a decent life for national and resident employees during the period of unemployment, While reducing business risks.

And also the Ministry of Human Resources and Emiratisation (MOHRE) will play a central and major role in protecting the rights of employees in the UAE. Which will also monitor the work of insurance service providers.

To whom does this scheme apply? 

According to article no(3) of Federal Decree Law No. 13 of 2022 regarding the unemployment insurance scheme, The scheme applies to all employees in the private and federal sector except:

• investors, business owners who own and manage their business themselves

• domestic workers

• employees on a temporary basis

• juveniles under the age of 18

• retirees who receive pension and have joined a new employer.

• Free Zone employees ( According to the latest data / MOHRE ).

What is the Cost of subscription?

Based on the subscription salary, the insured shall pay the value of the insurance premium for the basic insurance package as follows:

Category A:  Includes employees earning a basic salary of Dh16,000 or less, with an insurance cost of Dh5 per month.

Category B:  Includes employees earning Dh16,000 or above, with an insurance cost of Dh10 per month.

To be eligible for the compensation, based on article no (5) of Law No. 13 of 2022:-

1- There must be a minimum subscription period of (12) twelve consecutive months for the insured in the scheme.

2- The insured may not be dismissed for disciplinary reasons under the Labor Relations Law and the Human Resources Law of the federal government in addition to any applicable legislation.

3- The insured shall not be entitled to compensation if there has been fraud or deceit involved in his/her claim or if the establishment where he/she works is fictitious. If such a situation arises, the establishment and the insured shall be subject to the penalties and fines.

As for the amount of compensation, you will be entitled :-

1- A monthly compensation of 60 percent ( 60 % ) of the contribution salary is provided for a period of three months from the date of unemployment up to a maximum of 20,000 AED (twenty thousand dirhams).

2- An compensation period of 3 months is available for each claim; provided that the coverage period does not exceed (12) twelve months during the insured's employment in the UAE labor market.

This is based on what was explained in detail in Article No. (6) of the aforementioned law.

- Under this insurance scheme, YOU must submit the claim within 30 days from the date of unemployment. The insurance company has two weeks, from receiving the claim, to transfer the compensation to your account.

- Taking into consideration, The insurance providers must process the insurance claims in accordance with the terms and conditions of the insurance policy and the applicable legislations of the Central Bank of the UAE.

Yes, indeed, According to Ministerial Resolution No. 604 of 2022 regarding the unemployment insurance scheme, The subscription deadline or the grace period for participation for the categories eligible to participate ends on 30-June-2023, Bearing in mind that if the insured was appointed at a date later than 01-January-2023, he has a period of 4 months as a grace period for subscription, starting from the date of entering the country or amending his status.

Subscription in the unemployment insurance scheme is mandatory, except for the categories exempted by law or by a resolution of the Ministry (MOHRE), And as stated in Article No. (8) of Cabinet Resolution No. 97 of 2022 Concerning the Procedures and Controls for Implementing Unemployment Insurance Scheme. In the event of non-compliance with participation in the “unemployment insurance scheme "  a fine of 400 AED, And in the event of non-compliance with paying the premiums after subscribing to the system for a period of three months, a fine of 200 AED, And that by :

1- Deduction is made from the insured salary account as indicated by the Wages Protection System ( WPS) or any other alternative systems.

2- Deduction from the end of service gratuity or by using any other alternative system.

And it was also stated in the text of Article No. (15) that:

If it is proven that the employer colluded with the insured in order to obtain unemployment insurance benefits, an administrative fine of twenty thousand dirhams( 20,000 AED) for each case will be imposed by the Ministry on the establishment.