On 15 September 2022 the UAE government issued a Federal Degree Law No. 13 of 2022 concerning Unemployment Insurance (“the Law”), which came into force on 29 September 2022 and applied to all workers (UAE National and Expats) in the private sector and the Federal government sector in the State.
The Law defined the Unemployment, Insured, Employee and Compensation as follows:
Unemployment: Unemployment resulting from the termination of the service of the Insured by employer in accordance with the provisions of the law and the regulating Cabinet Decisions.
Insured: Employee who works in the private sector or in the Federal government sector in the State, who is subscribed to the Scheme in accordance with the provisions of the law and the regulating Cabinet Decisions.
Employee: Every natural person working in the private sector or in the Federal Government Sector in the State.
Compensation: Amount to which the Insured is entitled in the event of his unemployment in accordance with the provisions of this Law and regulating Cabinet Decisions.
Who will be benefits from the Unemployment Insurance:
All employees in the private and the Federal government sectors “including UAE national” who subscribed to the Scheme shall be entitled to the Insurance compensation, except for
(2) Domestic workers.
(3) Workers under temporary contracts.
(4) Juveniles who are under the age of (18) eighteen years.
(5) Retirees who receive a retirement pension and have joined a new job.
Unemployment Insurance Scheme:
According to this law, an Unemployment Insurance Scheme (“the Scheme”) shall be established with the aims to compensate the Insured with a cash amount for a limited period of time (not more than 3 months), in the event of his unemployment, the cabinet upon the proposal of the Minister shall determine the mechanism, functioning and application of the Scheme, the value of the monthly subscription and to set any conditions or procedures or impose any necessary to implement.
Conditions and requirements for entitlement and its suspension:
In order for the Employee to be eligible for compensation (otherwise the compensation will not be applicable to the employee), the following requirements must be fulfilled:
(1) The period of subscription of the Insured to the Scheme shall not be less than (12) twelve months in a row.
(2) He shall not have been dismissed from his job for disciplinary reasons in accordance with the provisions of the Law on the Regulation of Labour Relations and the Human Resources Law in the Federal Government, and any relevant legislation in force.
(3) The claim for compensation shall not be made through fraud or deception,
(4) The payment of the Compensation shall be suspended if the employee joins another job during the period of entitlement to the Compensation.
Value and duration of the Compensation:
The Compensation shall be paid on a monthly basis at a rate of (60%) of the contribution salary, with a maximum of AED (20,000) per month for a period of (3) three months from the date of unemployment.
The maximum period of compensation shall be (3) three months for each claim, provided that the coverage period does not exceed (12) twelve months during the period of service of the Insured in the labour market.
The insured may agree on additional benefits with the service provider. The payment of compensation to which is entitled under this law shall not prejudice any other entitlement prescribed in accordance with any law in force.
The aim of the law:
The objective of the new law is to ensure the availability of income for a limited period to the Insured during the period of his unemployment until alternative job opportunities are secure, to enhance the competitiveness of Emirati cadres in the labour market and, to attract the best international talents from among skilled workers and keeping them in the labour market in the State to reach a competitive knowledge economy.
As of now, the law is not clear as to the payment of the subscription amount “premium” whether it will be paid by the employer or the employee, as well as the compensation of 60% whether it will be calculated from the basic salary or the total salary. However, more details in the subject matter are expected to be concluded in the Cabinet Decisions.