Job Loss Insurance in the UAE

Job Loss Insurance in the UAE - Makebiz

Not so long ago, the United Arab Emirates passed a law on the compulsory purchase of job loss insurance. The regulation came into force on January 1, 2023. 

The initiator of the legislative act was the Ministry of Human Resources and Emiratization. This social security scheme provides local residents and residents working in the federal and private sectors with financial support in the event of job loss and dismissal. 

The insurance aims to provide a decent life for the unemployed and create a competitive economy by attracting and retaining the best international talent. Employees can choose to pay their premiums every month, quarterly, semi-annually or annually.

Employees with a base salary of less than AED 16,000 will be required to pay a monthly insurance premium of AED 5. Compensation for this category will not exceed the amount of AED 10,000 each month. In the case of a salary of more than AED 16,000, the amount of the mandatory premium is AED 10 and the compensation shall not exceed AED 20,000. The employee must have paid the premium for at least 12 consecutive months to participate in the program.

Application for compensation can be made within 30 days of job loss. It will be paid for three months or until employment. Payments will be suspended if the employee has been dismissed for disciplinary or fraudulent reasons in accordance with UAE labor laws, and if the place of employment was fictitious. 

Subscription to the insurance scheme is mandatory for every employee, otherwise a fine of AED 400 will follow. Non-payment of premiums is also subject to fines and cancellation of insurance. For non-payment of fines, amounts are deducted from wages automatically.

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