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Galadari Alerts: UAE’s mandatory unemployment insurance begins on January 1, 2023

Effective from January 1, 2023, Federal Decree Law No. 13 of 2022 on Unemployment Insurance Scheme (“Unemployment Insurance Scheme”) has been issued and is mandatory for all Emirati and foreign employees in the private and public sectors. The Ministry of Human Resources and Emiratisation have signed an agreement with nine insurance companies, to launch the framework of the new Unemployment Insurance Scheme.

<span “color: #221551; font-size: 14pt; font-family: helvetica, arial, sans-serif;”>The Unemployment Insurance Scheme will provide terminated employees with sixty per-cent (60%) of their basic salary for a period of up to three months, to a maximum value of AED 20,000.

<span “color: #221551; font-size: 14pt; font-family: helvetica, arial, sans-serif;”>Employees must be employed and subscribed for at least twelve (12) months to claim the insurance benefit following termination, employees working on a commission basis also qualify for the scheme. Insured employees are not eligible for payment if their dismissal is due to disciplinary reasons, resignation, leave the country or start a new job. The insurance scheme does not cover investors, domestic helpers, part-time employees, individuals under the age of eighteen (18) and retirees who receive a pension and joined a new job.

<span “color: #221551; font-size: 14pt; font-family: helvetica, arial, sans-serif;”>The subscription fee and maximum compensation is dependent on the category of employee, premiums will begin at AED 5 per month or AED 60 per annum, the value is subject to VAT.  The insurance is paid for by the employee, and can be paid on a monthly, quarterly, half-yearly or annual basis. Failure by an employee to subscribe to the scheme within three months, or non-payment of their premium for three months will result in a fine ranging from AED 200 to AED 400. These fines may be deducted from the employee’s salary or end of service gratuity by the employer.

<span “color: #221551;”><span “font-size: 14pt; font-family: helvetica, arial, sans-serif;”>The insured employee must submit their claim via an approved claim channel within thirty (30) days from the date of termination. The insurance service provider shall transfer the amount of compensation within two (2) weeks from the date of receipt of the claim and capped at three months per claim.  There are currently three (3) approved claim channels: the insurer’s e-portal, smart application and call centre.The Unemployment Insurance Scheme is one the latest strategies by the UAE government to improve the economic sector and achieve a high level of well-being for UAE citizens and expats alike.

<span “color: #221551;”>If you have any queries related to UAE Employment law, please email Naji Khairallah on <a “color: #221551;” href=”mailto:naji@galadarilaw.com”>naji@galadarilaw.com.