UAE’s unemployment insurance scheme opened for registration with the start of 2023. UAE-based employees can now subscribe to the mandatory job loss insurance scheme. Piloted by the Ministry of Human Resources and Emigration (MOHRE), the insurance scheme has very low monthly premiums of between Dh5 and Dh10 and allows policy holders to receive 60% of their base salary for three months in the event of job loss for reasons other than disciplinary action or resignation.various statutory entitlements, the UAE has made the scheme mandatory for all employees working in the region and falling within its scope under Mainland & Free zone.
Who can contribute?
The plan applies to all private and public sector employees, except:
Investors: business owners who own and operate their own businesses.
Domestic workers.
Temporary employees.
Retirees who are receiving a pension and have joined a new employer.
How does it work?
Employees are required to make contributions based on their current base salary. Employees with a base salary of AED 16,000 or less will be required to pay a monthly insurance premium of AED 5 or AED 60 per year. The employee can then receive 3 monthly payments of up to AED 10,000 per month as compensation for involuntary termination of employment. Employees with a base salary above AED 16,000 will pay a monthly insurance premium of AED 10 or AED 120 per year.
This allows the employee to receive three monthly payments of up to AED 20,000 per month as compensation following an involuntary termination of employment.
To be eligible for the above compensation, the employee must have paid the monthly premium for at least 12 consecutive months. The value of the insurance policy is subject to VAT. All accrued fines must be deducted from the employee’s salary as paid by the salary protection system or from any accrued end-of-service gratuity.
A grace period to register has been announced until June 30, 2023 after which fines will be applied.
Another step in UAE’s journey towards becoming the best country to live and protect labor in worldwide!
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