Unemployment Insurance Law

Publish : 04 Jan 2023

Based on certain categories, as listed below, an employee, whether Emirati or an Expat in the United Arab Emirates (“UAE”) is mandatorily required to subscribe to the newly launched and applicable Unemployment Insurance Scheme as determined by Federal Decree Law No. 13 of 2022, issued on 15th September (the “Unemployment Insurance Law”). The insurance scheme provides employees in the UAE, whether in the private or public sector and irrespective of whether the employer is a local entity or an international one, entitlement to compensation in the event of unemployment for a limited period of time.


Exemptions from the Unemployment Insurance Scheme:

All employees, with the exception of the following categories, are covered by the Unemployment Insurance Law:

1. Investors (Business owners who own the entire business and manage it themselves);

2. Domestic Workers;

3. Contractual workers/employees on a temporary basis;

4. Juveniles under the age of 18; and

5. Pension-receiving retirees who have joined a new employer.



In order to be eligible for compensation, the employee must meet the following conditions:


1. The employee must have completed a minimum of twelve (12) consecutive months in their previous job, calculated from the day the employee subscribed to the insurance scheme;

2. The employee must not be dismissed for disciplinary reasons under the Labor Law in addition to any applicable legislation;

3. The employee shall not be entitled to compensation if there has been fraud or deceit involved in his/her claim or if the employer where he/she works is fictitious. If such a situation arises, the employer and the employee shall be subject to the penalties and fines stipulated in the Labor Law and any applicable legislation; and

4. During the period of compensation entitlement, the payment of compensation shall cease if the employee is hired by another employer.


Cost of Subscription:

The cost of subscription, as detailed below, can be paid by the employee on a monthly, quarterly, half yearly or yearly basis:


1. Employees with a basic salary of AED 16,000 or less will need to pay a monthly insurance premium of AED 5 (AED 60 annually).

2. Employees with a basic salary exceeding AED 16,000 will need to pay AED 10 per month (AED 120 annually).


Failure by an employee to subscribe to the scheme within three months or non-payment of premiums due for three (3) months, will result in a fine of AED400 or AED200 respectively. These fines may be deducted from the employee’s wages or end of service gratuity by the employer.


Compensation Amount & Claims

The compensation amount is calculated on a monthly basis at the rate of sixty (60) per cent of the basic salary and the compensation total is given for a maximum of three (3) months from the date of unemployment.

An employee must file a claim within thirty (30) days of his termination via the available channels which are: (1) the online portal, (2) a smart application or (3) a call center. Compensation will be paid within two weeks of filing the claim.


Written by:  Ahmad Al Khalil, Partner and Head of Corporate & Taspia Salsabil, Paralegal


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