Unemployment
insurance system In September 2022, the UAE launched for the first-time unemployment
insurance, which will become mandatory for all workers. Federal Decree No. 13
of 2022 on unemployment insurance together with Government Decision No. 97 of
2022 on the implementation and control mechanisms of the unemployment insurance
system and Decision No. 60 of 2022 on the unemployment insurance system form
this that new legal framework.
Who
does the new law apply to?
The
new law applies to all employees of the private sector, state or federal
government, except investors (job owners), domestic workers, contract workers,
youth under 18 and pensioners. who joined a new employer. It was also clarified
that the scheme does not currently apply to workers in UAE free zones, but may
apply in the future. Is the insurance system mandatory? Yes, it is the
employee's responsibility to sign up and pay the fees. All public and private
sector employees must join the system. The system came to effective on January
1, 2023, and employee registration must be completed by June 30, 2023.
New
employees hired after January 1, 2023 must register with the system within four
months of receiving initial work permit approval and pass. or change their
status as needed. Although the employee is responsible for paying and joining
the system, the law requires institutions to encourage and direct their
employees to join the system and pay insurance premiums on time.
Are
there penalties for negligence? Yes,
non-payment or non-payment of premiums within three months of the due date will
result in termination of the scheme and the employee will be required to
purchase a new policy/enact and pay for that policy and a penalty of AED 00. .
has not joined (if the joining schedule is extended) or 200 AED if the employee
has not paid the insurance premium for more than three months. Fines must be
paid through Human Resources and Emiratization (MOHRE) approved channels. Fines
not paid within three months can be collected through the wage insurance
system, by deducting the service fee or through another system. Please note
that new work permits will not be issued to workers until all fines have been
paid. Resolution No. 60 2022, which determines the procedure for paying fines,
is attached to the MOHRE procedural manual.
How
much does it cost to take out insurance?
Currently,
contributions are AED 5 per month for employees with a basic salary up to AED
16,000 (Class 1 contributions) and AED 10 per month for employees with a basic
salary above AED 16,000 (Class 2 contributions). With commission-based pay,
employees can choose a membership class. How can employees join the system?
Employees can book online through Dubai Insurance. The employee's Emirates ID
and mobile phone number must be provided. Subscription payments can be made
through various channels including; On the Internet, ATMs, currency exchange
companies and many others. Payments can be made once a month, quarterly, twice
a year or once a year at the discretion of the insurer. Once completed, policy
documents will be emailed.
Who
is entitled to compensation? The
law defines the following eligibility parameters: To receive compensation, the
insured must have been insured for at least 12 consecutive months from the day
of joining the insurance system, and he has not been fired or left his job for
disciplinary reasons. Complaints cannot be lodged due to the strike. Insurance
premiums must be paid according to the payment schedule. The insurer may not
have a claim for compensation. Claims for compensation must not be made by
fraud or misrepresentation. The complaint must be submitted within 30 days
after the end of the employment or the decision of the labor court through the
website of the insurance company, smart application or call center. The insured
must be legally present in the United Arab Emirates when making a claim. The
insurance company is obliged to respond to the claim within two weeks from the
day of submission. How much unemployment is paid? The benefit is paid monthly,
calculated at 60% of the insured's basic salary and up to a maximum of AED
10,000 per month for Class 1 premiums and AED 20,000 per month for Class 2
premiums for a maximum period of three months. the date of unemployment of the
insured person by application, but a maximum of 12 months of benefits during
the period of insurance in the United Arab Emirates. Additional benefits can be
agreed with the insurance company. Payment of compensation stops if the insured
transfers to a new employer during the right to receive compensation. Who are
the insurers? The service providers are private insurance companies licensed by
the central bank that meet the requirements for providing unemployment
insurance issued by the government of the United Arab Emirates in consultation
with the central bank or other government agency providing unemployment
insurance services.
MOHRE
published a list of insurance companies represented by Dubai Insurance Company
which include:
-
Abu Dhabi National Insurance
Company,
-
Al Ain Ahlia Insurance Company,
-
Emirates Insurance Company,
-
Orient Insurance,
-
Oman Insurance,
-
National General Insurance Company
and
-
Orient UNB Takaful Company.
What can employers do?
Although the onus is
on the employee to obtain unemployment insurance, the law clearly states that
facilities must encourage and direct their employees to join the system, and
therefore employers should educate their employees about this new requirement
and the timeline for compliance. Failure to do so can have a direct impact on
the renewal of the employee's work permits, which in turn can cause
administrative disruptions and burdens for the employer.
