20th May 2022
As part of its ongoing strategy to position the UAE as a top destination to live and work, the country is introducing a new unemployment insurance scheme at the start of next year. Under the new scheme, which will be mandatory, anyone losing their job will get a basic monthly payment for a limited period, to help with living costs whilst they look for a new job.
Whilst, all the specific details are yet to be confirmed, here is what we know so far:
Who will be eligible for the UAE's unemployment insurance scheme?
Emiratis and expats, over 18, on permanent contracts working in the public sector
Emiratis and expats, over 18 on permanent contracts working in the private sector
Who will not be covered by the UAE's unemployment insurance scheme?
Individuals working on temporary contracts
Retired individuals who are receiving a pension, but have stepped back into the workforce
How much will the UAE's unemployment insurance scheme cost?
Every employee will be required to pay into the new scheme, which will be insurance company-based. Employees will be able to choose their preferred insurance package via existing insurance companies in the UAE. Whilst, the amount to be paid is not yet known, it is understood that it is not intended to be a financial burden to employees. According to The National, payments will be as low as AED40-AED100 for a basic plan.
How much money will claimants receive each month?
Anyone needing to claim unemployment support payments will receive approximately 60% of their basic salary, up to a maximum of AED20,000, per month. However, this will ultimately be dependent upon the level of insurance cover chosen by individuals.
How long can claimants receive unemployment insurance payments?
The payments will be for a limited period. We believe this will be a period of up to six months, but it is yet to be confirmed.
If the claimant starts a new job within the determined period, the social support payments will stop when the new jobs starts. However, if the claimant is unable to secure a new position within the period, the social support payments will stop at the end of the limited period.
What are the benefits of the unemployment insurance scheme for employees?
Financial safety net whilst searching for a new job following an involuntary termination
Financial peace of mind with a minimal investment
What are the benefits of the unemployment insurance scheme for employers?
Unemployment support will enhance the attractiveness of the UAE's working environment making it easier for companies to recruit top talent from around the world.
This latest announcement follows the recent restructuring of UAE residency visas, which is intended to provide more flexibility and stability to expats residing in the UAE.
We will continue to follow developments as they are announced later in the year and provide updates, accordingly.
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Written by Jenny Hunt, Founding Partner & Strategic Advisor to the Gateway Group of Companies, Abu Dhabi & Dubai UAE
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