UAE: Unemployment Insurance Pool will start on 1 Jan 2023
Source: Middle East Insurance Review | Dec 2022
The Ministry of Human Resources and Emiratisation (MoHRE) has signed an agreement with nine local insurance companies to launch the framework of the new Unemployment Insurance Pool.
The new insurance scheme, taking effect on 1 January 2023, aims to provide protection for employees in the private sector and the federal government by providing them with cash compensation for a limited period not exceeding three months for each claim in the event of job termination for reasons beyond their control, reported the emirates news agency WAM.
The scheme also creates a safety net that supports employees in their career path and ensures their livelihood by relying on mechanisms that do not incur additional costs for employers and is paid for by the employee himself. It also provides a balance in the job market that allows for achieving the UAE’s strategic goals and supporting the continuity and growth of economic activities.
Under the new insurance scheme, federal government and private sector employees must subscribe to the scheme with effect from 1 January 2023. Those excluded from the insurance scheme include investors, owners of establishments in which they also work, domestic helpers, employees with temporary employment contracts, juveniles under 18 years of age, and retirees who receive a retirement pension and have joined a new job.
The insurance scheme is divided into two categories – the first covering those with a basic salary of AED16,000 ($4,356) or less. The insurance premiums for the insured employee in this category is set at AED5 per month (or AED60 annually). The second category includes those with a basic salary exceeding AED16,000, and the insurance cost is AED10 per month (or AED120 annually). The payment can be made by the employee monthly, quarterly, half-yearly, or on an annual basis. The value of the insurance policy is subject to value-added tax.
The employee who works on a commission basis may also subscribe to the scheme. M