The Federal Decree-Law No. 13 of 2022 Concerning Unemployment Insurance (Unemployment Insurance Law) took effect on 1 January 2023. Under the UAE new insurance law, it mandates Emirati nationals and expatriate employees working full-time in the UAE’s federal and private sectors to enroll in an unemployment insurance scheme (the Scheme). For more details, you can consult Khairallah Law Firm.

uae new insurance law

UAE Unemployment Insurance Scheme

The Scheme pays employees a cash sum for up to three months if they lose their jobs. Compensation begins from the date of job loss and is calculated at 60% of their basic salary. Employees earning less than AED 16,000 are eligible to receive up to AED 10,000 per month, while those earning more than AED 16,000 can receive a maximum of AED 20,000 per month. Under the UAE new insurance law and the Unemployment Insurance Law, employees must have worked and subscribed to the Scheme for at least 12 months to benefit from it, and they must not have been dismissed for disciplinary reasons or resigned. Employees who work on a commission basis may also subscribe to the Scheme. However, insured employees are not eligible for payment if they have left the country or started a new job.

Who is Eligible to Receive Compensation Under the UAE New Insurance Law?

The eligibility criteria of this rule are as follows:

To draw on employment insurance, the insured must have been insured for at least 12 consecutive months, calculated from the subscription date, and not be dismissed for misconduct or resignation. Also, Nothing can be claimed when work stops. There must be no existing claim, and the premium must be paid as per the payment schedule. Applications for compensation must be bona fide and not fraudulent. Claims should be submitted up to 30 days after the end of the employment relationship or the date on which a Labour Court decision was made, through the insurance company website, smart application, or contact center. The same obviously applies to the claim, the insured must be lawfully present in the UAE when his claim is made.

The insurance provider is required to respond to a claim within two weeks of submission.

Employee Protection Insurance

In the past, UAE companies had to pay a bank guarantee for each worker hired as part of a CIC. While this requirement has been standardised across the UAE since June, some businesses have been given time to switch from a bank guarantee to an insurance policy.

Employers are now required to carry either bank guarantee of AED 3,000 per employee or an insurance policy as per MOHRE stipulation. Dubai Insurance Company released its Workers Protection Program (WPP Insurance) to meet the insurance requirements.

The WPP Insurance is set to protect employees in the event that their rights to their salary, end of service gratuity, workplace injury, owed repatriation costs, and repatriation of a deceased employees body have not been met. The government, its ownelves, and surrounding of the UAE employment insurance initiative at the identical time met the need of the labour sector and emphasized on their focus on the well-being of employees.

uae new insurance law

Insurance Providers under the UAE New Insurance Law

The law regulating the unemployment insurance schemes in the UAE. Insurance will be granted through insurers licensed by the Central Bank of the UAE that satisfy the requirements for providing unemployment insurance as issued by the UAE Cabinet from time to time.

Though the law is made effective but it is expected that a Cabinet Resolution will be implemented shortly in respect to the subscription amount month wise, the criteria for availing the scheme, other conditions, and penalties, if any.

When the original announcement about the UAE unemployment insurance scheme was announced in May this year, the start date for the scheme and the size of the subscriptions were subsequently reported. That said, this information may be subject to change.

Impact on Employment: Implications for Employers

The second allows Workers to file complaints/claims for denial of compensation and benefit under the new law, and for unemployment compensation to not prejudice any other entitlement which the insured employee may be entitled to pursuant to other legislation in force in the UAE.

To date, there are not any requirements for an employer to do so. More to follow for employers and employees.

Rest assured that we will be monitoring this position and will report back on any remaining developments with unemployment insurance.

Conclusion 

UAE’s new Unemployment Insurance Law will force both Emirati nationals as well as expatriate employees to enroll in a three-month-compensation, 60% basic salary plan from January 1, 2023, | To qualify, subscribers must have a continuous 12 months without termination for disciplinary or voluntary leave. The provisions also state that claims must be filed within 30 days of termination, or a Labour Court ruling, for insurers to reply within two weeks. For expert legal advice, contact the Khairallah Law Office (Best Lawyers in Dubai).

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