Stock Insurance claim
Employees who work on a commission basis can also subscribe to the scheme. Image Credit: Shutterstock

The UAE’s Ministry of Human Resources and Emiratisation (MoHRE) has signed an agreement with nine local insurance companies to launch the framework of the new Unemployment Insurance Scheme, it was announced on Wednesday.

The new scheme aims to provide protection for employees in the private sector and the UAE’s federal government by providing them with a cash compensation for a limited period not exceeding three months for each claim in the event of job termination for reasons beyond their control.

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Federal government and private sector employees can subscribe to the scheme from January 1, 2023. Those excluded from the scheme include investors – owners of establishments in which he or she works, domestic workers, employees with a temporary employment contract, juveniles under 18 years of age, and retirees who receive a retirement pension.

The insurance scheme is divided into two categories – the first covering those with a basic salary of Dh16,000 and less. The insurance cost for the insured employee in this category is set at Dh5 per month (or Dh60 annually). The second category includes those with a basic salary exceeding Dh16,000. In this case, the insurance cost is Dh10 per month (or Dh120 annually). The payment can be made by the employee monthly, quarterly, half-yearly, or on an annual basis. The value of the insurance policy is subject to value-added tax (VAT).

Employees who work on a commission basis can also subscribe to the scheme.

Monthly compensation

The value of the monthly compensation will not exceed Dh10,000 for the first category, and Dh20,000 for the second category, where the insurance coverage compensation is calculated on a monthly basis at the rate of 60 per cent of the basic salary and for a maximum of three months for each claim from the date of unemployment.

The insured (the employee) must submit the claim through the three approved claim channels – the insurance pool’s e-portal, the insurance pool’s smart application, and the insurance pool’s call centre, provided this is done within 30 days from the date of unemployment.

Compensation will be paid within two weeks from the date of the claim and is capped at a maximum of three months per claim. Compensation for an employee is eligible if they have worked and subscribed for at least 12 months to the insurance scheme as long as they have not been dismissed for a disciplinary reason or because of resignation.

The insured (employee) is not eligible for a compensation if they have left the country or joined a new workplace.