UAE Unemployment Insurance: Your Complete Guide
The United Arab Emirates (UAE) has introduced a new unemployment insurance plan, offering fixed cash compensation for up to three months, starting from the first day of unemployment. This program provides 60% of the basic income, with a maximum monthly payment of AED 20,000 (approximately USD 5,445). It's important to note that as of October 1, 2023, all Emirati and foreign workers in both the public and private sectors were required to subscribe to this new job loss insurance program. Non-subscribers will incur a charge of AED 400, with an additional AED 200 for those who fail to make the payment within three months of the due date.
However, certain categories are exempt from the unemployment insurance scheme in the UAE. These include investors, who are the owners of companies they invest in, domestic helpers, temporary contract workers, juveniles under the age of 18, and retirees who are entitled to a pension and have taken up a new job.
Specific free zones in the UAE, such as the Dubai International Financial Center and the Abu Dhabi Global Market, have provided clarity regarding the necessity for employees working in companies within these zones to enroll in the unemployment insurance program. While it is not mandatory for these employees to register and join the scheme, they do have the option to do so. Some individuals may choose not to enroll due to associated fees or if they leave the country before becoming eligible for scheme benefits, which are exclusively available after a year of enrollment. This clarification was issued to address uncertainties concerning whether subscription to the program was mandated at a federal level within these specified regions.
To be eligible for unemployment insurance in the UAE, the insured individual must meet specific criteria, including a minimum subscription period of 12 consecutive months, no interruption in subscription for three consecutive months, timely payment of all insurance premiums, proof that unemployment was not due to resignation, and meeting other outlined conditions as part of the official Involuntary Loss of Employment Scheme.
Certain circumstances are excluded from eligibility for unemployment insurance under the scheme, including loss of employment due to war, riot, insurrection, armed rebellion, invasion, or civil disorder, among others.
The scheme is divided into two categories based on monthly income, with different premium rates. Compensation is calculated at 60% of the base salary, with specific maximums for each category. Payments can be received on a monthly, quarterly, semi-annual, or annual basis, and they are subject to value-added tax (VAT).
To receive unemployment compensation, terminated employees must have been insured for a minimum of 12 consecutive months. Monthly compensation is calculated based on the average salary over the 12 months preceding job loss, with a maximum of three months of compensation for each claim. The maximum period of benefits is 12 monthly benefits throughout the insured individual's work life in the UAE.
Unemployment insurance payments can be made through various channels, including the insurance pool's website at iloe.ae, app, or call center. The process involves providing the necessary information, making the payment, and receiving confirmation.