Fear of losing a job can be crippling especially when you have a family to look after and liabilities to pay for. Financial insecurity in wake of unemployment also makes it hard to look for a new job with determination.
Now get a sigh of relief from job loss anxiety as UAE is all geared up to protect its private and public sector employees from unwanted and sudden unemployment. With the mandatory involuntary unemployment protection scheme, workers in the country can now get compensated with cash when they lose a job because of uncertain circumstances that are beyond their control.
Let’s find out what the scheme is all about, who is eligible and what compensations will be awarded to the subscribers.
UAE Unemployment Protection Scheme
From January 1st, 2023, it has been made obligatory for all public and private sector employees to register for an unemployment protection scheme, offering them more security and financial safety. You can now relax and hunt for a new job with peace of mind knowing that you will be having sufficient cash when unemployed for a certain period. Under the scheme, all registered residents will be compensated with cash if they get sacked or fired from a job for a reason over which they have no control.
The scheme is designed for involuntary job loss only and will not entertain individuals who voluntarily resign or leave their jobs.
The compensation will be awarded by the UAE Federal Government for three months providing you with enough time to look for a new job without having to worry about the monthly expenses.
The financial support will be provided in exchange for the premium paid by the registered employee during his employment period.
Objectives of the Involuntary Unemployment Insurance Scheme
The goal behind the scheme is to support all public and private sector employees in the country by providing them with financial means to continue with a decent life until they find a reasonable job opportunity.
The insured employee may also register for additional benefits besides the basic compensation mentioned above.
The plan was proposed and launched by The Ministry of Human Resources and Emiratisation (MoHRE) in conjunction with 9 insurance companies based in UAE.
The scheme is now open for registration and employees who fail to register will be fined.
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Registration for the Scheme is mandatory and all employees must subscribe to the service before June 30th, 2023 to avoid fines and penalties.
Fine: The fine for non-compliance with the act is AED 400.
Exemptions: Domestic helpers, retired residents, investors, pensioners, and employees on temporary contracts are exempt from the mandatory subscription. Also, residents under the age of 18 years are not obliged to register for the unemployment protection scheme.
Workers who are fired because of disciplinary charges will not be provided compensational benefits.
Employees who leave the country after a job loss are also not eligible to receive cash compensation.
How does the Unemployment Scheme Works?
The unemployment insurance scheme has two categories. The first category is for those employees who earn AED 16,000 or less per month. The cost for employees who fall in this category is AED 5 per month or AED 60 per annum.
The second category covers employees who have a basic monthly salary that exceeds AED 16,000. The cost for insurance in this category is AED 10 per month or AED 120 per annum.
Payments by the employee can be made every month, quarterly, half-yearly, or annually.
The total value of the unemployment insurance policy correlates with the VAT (value-added tax).
The value of the insurance policy per month will not be more than AED 10,000 for employees who fall in the first category i.e. those who earn 16,000 or less per month. Employees who earn more than AED 16,000 a month will be compensated AED 20,000 cash per month for three months period.
The compensation is calculated per month at the rate of 60% of the basic salary allowance. The compensation will be awarded only for 3 months beginning from the date of unemployment.
After you lose a job, you must file a claim for compensation via official channels. Submit your claims either through the insurance pool’s online platform, smart application, or the official call center. You must file a claim within 30 days from the date of losing the job.
Compensation will be released within 14 days from the date of filing the claim. You must have worked for at least 12 months with an employer to be eligible for the compensation.
If the insured employee finds a job during the 3 months, the payment for compensation will be ceased.
A subscription period of at least 12 months must be passed to be eligible for claiming the compensation.
Entities Providing the Insurance Policy
Dubai Insurance Company is the major representative of the insurance pool that includes 9 other local insurance providers. The insurance pool consists of:
- Dubai Insurance Company
- Abu Dhabi National Insurance Company
- Al Ain Ahlia Insurance Company
- Emirates Insurance Company
- National General Insurance Company
- Orient Insurance Company
- Abu Dhabi National Takaful Company
- Oman Insurance Company
- Orient UNB Takaful Company
Since January 1st, over 60,000 subscriptions have been made and more will follow in the coming months. Register for the service as soon as possible to save yourself from heavy fines and penalties. Get insured and say goodbye to the job loss woes.
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