Mandatory unemployment insurance grace period has been announced by UAE for employees

The launch of a new insurance plan for unemployed government and private sector workers was announced by UAE, Last year. The plan will pay employees 60 percent of their basic salary for up to three months from the date of employment. The scheme caps out at AED 20,000 a month. The scheme came into effect on Sunday, January 1, 2023, and is mandatory for all employees in the UAE. However, authorities have now revealed a grace period for sign up.

“As per the Ministerial Resolution No. 604 of 2022 regarding the Involuntary Loss of Employment (ILOE), the eligible employees have a grace period of 6 months (till 30 June 2023) to subscribe in the ILOE,” the official portal for the scheme read.

In addition, workers who change their visa or begin work in the UAE after January 1, 2023, will have a grace period of four months to subscribe for unemployment insurance.

Workers who have a basic salary of AED16,000 or less will need to pay a monthly premium of AED5, or AED60 per year. The compensation for this plan will not exceed AED10,000 per month.

Workers with a basic salary exceeding AED 16000 will need to pay a monthly premium of AED10, or AED120 per year. The compensation for this plan will not exceed AED20,000 per month.

In both cases, unemployment insurance pay-outs will last for three months from the start of unemployment.

Insured amounts will not be applicable if the employee was dismissed for disciplinary reasons under the Labour Relations Law and Human Resources Law, in addition to any applicable legislation.

As has been previously reported on Arabian Business, the insured compensation will not be given if there has been fraud or deceit involved in the claim or if the listed place of employment is fictitious.

Fines and penalties will be issued in this case.

If the individual finds a job during the period of compensation entitlement, the payment will cease.