January 2023: Implementation of a new unemployment insurance scheme in the United Arab Emirates!

Unemployment program in Dubai

The thought of losing your job when you live and work in Dubai can be quite frightening. Indeed, in the UAE there is no unemployment insurance in case you lose your job. That’s why HH Sheikh Mohammed Bin Rashid Al Maktoum has decided to set up this new unemployment insurance scheme in Dubai.

It was following a UAE cabinet meeting in Abu Dhabi earlier this month that Sheikh Mohammed revealed on Twitter plans for an “unemployment insurance system” for the UAE.

He stated that this system would “compensate the insured worker with a cash amount for a limited period of time in case of unemployment”.  He also added: “The aim is to strengthen the competitiveness of the labour market, provide a social umbrella for its workers and establish a stable working environment for all”.

The programme in detail

The news came as a bombshell to residents and especially expatriates. For the first time in the history of the Emirates, residents will be able to benefit from monthly payments in case of loss of their job (the exact conditions are yet to be confirmed).

This new programme is welcomed as a relief to Emirati citizens and expatriates working in the public and private sectors.

This new measure reinforces the authorities’ efforts to attract and retain qualified employees in Dubai while reducing the risks for businesses. Under the programme, employees who lose their jobs will receive financial assistance for a set period of time while they find new employment.

The scope of application

According to Dr. Abdulmannan Al Awar, Minister of Human Resources and Emiratisation, this law will be applicable to all employees, regardless of their nationality, and would come into force in January 2023.

Conditions for unemployment compensation in Dubai

Under this insurance scheme, workers made redundant in the UAE should receive compensation of 60% of their basic salary with a maximum of AED 20,000 per month (for a limited period) as a temporary income while they find a new job in the UAE.

In order to do so, employees will be required to pay an insurance package of between AED 40 and AED 100 per year. However, it will be entirely possible for employees to pay higher insurance packages.

Those excluded from unemployment insurance

However, investors, domestic workers, employees on temporary contracts, minors under 18 years of age and pensioners who have taken up a new job are totally EXCLUDED from the unemployment insurance scheme. This means that in case of loss of employment the above-mentioned categories will not be eligible for this benefit.

This announcement reflects the UAE’s positive commitment to worker protection. It is also part of the UAE’s strategy to attract the best to the country

The Ministry of Human Resources and Emiratisation (MOHRE) will play a central and major role in this major project to protect workers’ rights in the UAE. It is the same ministry that will monitor the work of insurance service providers.

This new federal law is in line with the UAE Cabinet’s desire to adopt resolutions and a set of incentives aimed at strengthening the participation of UAE workers in the private sector: the so-called Emiratisation strategy (visit our FAQ).

Experts believe that these new unemployment benefit measures in the UAE will help to avoid job insecurity and distress among employees. This unemployment insurance will certainly help reduce stress and provide crucial assistance at a time when people need it most.

Finally, these changes are in line with the policy measures taken in 2020 to revitalise the tourism sector and the UAE economy in general.

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