An introduction to the UAE unemployment insurance scheme

The Ministry of Human Resources and Emiratisation recently announced that the law on the UAE unemployment insurance scheme has come into force.

Under Federal Decree Law No. 13 of 2022, insured employees in the federal government and private sectors will receive unemployment compensation up to a maximum of AED20,000 per month for a maximum period of three months. This article addresses what we know so far regarding the new insurance scheme.

Eligibility

The scheme will be open to all employees, other than investors (owners of the establishments in which they work), domestic workers, contractors / temporary employees, juveniles under the age of 18, and retirees who receive a retirement pension and have obtained subsequent employment.

To be eligible for unemployment compensation, the employee must:

• have been insured for at least 12 continuous months; and
• not have been dismissed for disciplinary reasons under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector (as amended) and the Federal Decree Law No. 11 of 2008 on Human Resources in the Federal Government (as amended).

Compensation

Eligible insured employees will receive 60% of their subscription salary up to a maximum of AED20,000 per month for a maximum period of three months from the date of unemployment. Additional unemployment benefits can be agreed between the employee and insurer.

Payment shall be suspended if the employee obtains alternative employment during the three month period and fraudulent claims for compensation may attract sanctions for both the insured employee and former employer.

Insurance providers

The new law governs unemployment insurance schemes in the UAE. The insurance will be provided by insurance companies licensed by the Central Bank of the UAE and that fulfil the conditions for providing unemployment insurance, which are issued by the UAE Cabinet from time to time.

Whilst the law has come into effect, it is envisaged that a Cabinet Resolution will set out any details on the monthly subscription amount payable, the application of the scheme and any other requirements in addition to any penalties.

The scheme commencement date and subscription amounts were publicised when the initial announcement on the unemployment insurance scheme was made back in May 2022. However, these details may be subject to change.

Impact on employment and what this means for employers

Unemployment compensation under the new law will not prejudice any other entitlements which the insured employee may be entitled to pursuant to other legislation in force in the UAE.

Currently there are no obligations on an employer to take any action. Employers and employees will need to look out for further updates.

We will continue to monitor the position and revert on any developments as they occur.

If you have any further questions relating to this article please feel free to contact Iain Skinner or Nadia Akhter.