UAE sets 4 key conditions for job loss compensation

Abu Dhabi: The Ministry of Human Resources and Emiratisation (MoHRE) has outlined four key conditions for employees to qualify for and receive 'Unemployment Insurance Compensation' in the event of job loss. This system aims to provide a social safety net, ensuring a decent quality of life for employees and their families during periods of unemployment.

According to the ministry’s official website, the compensation offers financial support for a limited period until an alternative job opportunity arises, in line with Federal Decree-Law No. 13 of 2022 on Unemployment Insurance.

Eligibility criteria for compensation

In its latest update, the ministry emphasized that employees must meet the following conditions to qualify:

• A minimum of 12 consecutive months of subscription to the system.

• Job loss must not result from disciplinary action under the Labour Relations Law, the Federal Human Resources Law, or any other applicable legislation.

• Compensation claims must not be fraudulent or linked to fictitious employment.

• Compensation payments will be suspended if the beneficiary secures new employment during the compensation period.

Coverage scope

The decree-law applies to all employees in both the private sector and the federal government sector, including UAE nationals and residents. However, certain categories are exempt, including:

• Business owners working in their own establishments.

• Domestic workers.

• Employees on temporary contracts.

• Individuals under the age of 18.

• Retirees receiving pensions who have re-entered the workforce.

Compensation structure

Compensation is calculated at 60% of the insured salary (basic salary), with a maximum payout of Dh20,000 per month for up to three months from the date of unemployment. The total coverage period is capped at 12 months throughout an individual's entire tenure in the UAE job market.

The ministry also highlighted that employees can negotiate additional benefits with licensed insurance providers regulated by the Central Bank, without affecting other entitlements or compensations.

Enrollment and payouts

By the end of 2024, approximately 83% of the targeted workforce in the private sector had enrolled in the Unemployment Insurance System, with total compensation payouts exceeding Dh114 million for that year.

What is unemployment insurance?

Unemployment Insurance is a system designed to provide insured employees with financial compensation for up to three months if they lose their jobs due to contract termination. This is in exchange for a monthly subscription fee deducted during their employment period.

Compensation is paid from the first day of unemployment at a monthly rate of 60% of the insured salary (basic salary) for up to three months per claim.

Disqualification and suspension of compensation

An insured employee loses eligibility for compensation if:

• They are dismissed for disciplinary reasons under the Labour Relations Regulation Law, the Federal Human Resources Law, or any other applicable legislation.

• Their compensation claim is fraudulent or deceitful.

• Their employing establishment is proven to be fictitious.

• They secure alternative employment during the compensation period.